KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The recent developments in Nepal reflect a mix of economic, infrastructural, and regulatory shifts, impacting various sectors. The Nepal Stock Exchange (NEPSE) has rebounded with a 23-point gain, signaling improved market sentiment after a period of significant losses.
Meanwhile, discussions around opening the electricity trading market to private players are gaining momentum, with the aim of enhancing competition and market expansion. However, monsoon disruptions have heavily affected the country’s transportation infrastructure, blocking nine major highways and complicating travel.
On the regulatory front, the Nepal Rastra Bank has tightened guidelines for banks’ Corporate Social Responsibility (CSR) spending to ensure more transparent and targeted use of funds. The government is also making strides to exit the FATF grey list by presenting progress on anti-money laundering measures.
At the same time, sugarcane farmers have threatened a national highway blockade over unmet demands, highlighting ongoing socio-economic issues. Additionally, Nepal’s increasing reliance on remittances, record gold prices, and developments in agricultural exports to China underscore the country’s economic dynamics. Lastly, while the life insurance sector shows strong growth, the government faces challenges in ensuring consumer protection and addressing infrastructural funding shortfalls in provinces like Karnali.
NEPSE rebounds: Index gains 23 points as market sentiment improves
The Nepal Stock Exchange (NEPSE) gained 23.03 points last week, ending a recent downturn that saw a loss of over Rs 378 billion. The index opened at 2,757.97 on Sunday and closed at 2,781 on Thursday, reaching a high of 2,824.85 and a low of 2,730.74. Ten out of the 13 market sectors saw gains, with the ‘Others’ sector rising by 4.57%. Bikash Hydropower saw a surge of 60.98%, while Narayani Development Bank dropped by 44.46%. Total turnover increased by 8.38% to Rs 32.26 billion, and market capitalization grew to Rs 4.647 trillion, leading to Rs 39 billion in investor gains.
Nepal explores private sector entry into electricity trading to boost competition
Following a report from the government task force, discussions have begun regarding the opening of Nepal’s electricity trading market to private sector participation. Currently dominated by Nepal Electricity Authority (NEA), the proposal suggests that private companies could enhance competition and expand the market. If implemented, provisions under the Electricity Act 2049 would allow private producers to sell power domestically and internationally, potentially through platforms like NepEx or direct market channels. Experts believe that private sector involvement could fast-track development and improve consumer access to affordable, high-quality electricity.
Heavy rain disrupts nine major highways across Nepal
Heavy rainfall has led to landslides and flooding, blocking nine key highways in Nepal, the Nepal Police reported. The affected roads include the Koshi Highway at Bhotkhola (Sankhuwasabha), the Nepal-China bridge in Rasuwa, Pasang Lhamu Highway (Rasuwa), and Arniko Highway (Sindhupalchowk). Other impacted routes are the Kaligandaki Corridor (Baglung), Beni-Darbang road (Myagdi), Jajarkot road (Rukum Paschim), Bheri Corridor (Dolpa), and Gokuleshwor-Darchula road (Darchula). Some roads, such as parts of the Mid-Hill, Prithivi, and Kaligandaki corridors, remain open for one-way traffic. Authorities continue to monitor the ongoing situation as monsoon-related disruptions affect travel across the nation.
NRB tightens rules on bank CSR funds: Transparent, targeted spending now mandatory
Nepal Rastra Bank has introduced new regulations to ensure that corporate social responsibility (CSR) funds are used transparently and effectively by banks and financial institutions. Banks must allocate a fixed percentage of their net profit to CSR, with at least 60% spent within the fiscal year. Institutions are required to prepare annual action plans and submit semi-annual reports detailing their CSR activities. The funds can be used to support education, health, environmental protection, financial literacy, and skill development for targeted communities.
Nepal advances plan to exit FATF grey list, showcases progress in Tokyo
Nepal has officially begun steps to exit the Financial Action Task Force (FATF) grey list after being included in February due to insufficient progress in combating money laundering and terrorism financing. At the Asia-Pacific Group (APG) plenary session in Tokyo, Nepal presented updates on its quarterly action plan. The Nepali delegation, led by PM Office Secretary Phanindra Gautam and Nepal Rastra Bank Deputy Governor Dr. Neelam Dhungana Timilsina, highlighted legal reforms, improved monitoring of high-risk sectors, and new coordination mechanisms. The government remains committed to implementing reforms to secure removal from the grey list.
Sugarcane farmers threaten indefinite highway blockade from September 10
Sugarcane farmers from across Nepal, who have been protesting in the capital since August 24 over subsidies and government support, have warned of an indefinite blockade along the national highway in Hariwan, Sarlahi, beginning September 10 if their demands remain unmet. Protest coordinator Shyam Babu Ray emphasized that farmers had endured harsh conditions during the sit-in, yet their calls for help had been ignored. The protest, organized by the Sugarcane Producers Federation of Nepal, opposes subsidy cuts and seeks representation in price determination.
Nepalis abroad send Rs 4.72 billion daily, driving record remittance inflows
Nepali migrant workers sent a record Rs 1.72 trillion home in the last fiscal year, averaging Rs 4.72 billion daily, according to Nepal Rastra Bank. This represents a 19% year-on-year increase and nearly matches the government’s annual budget. The rise in remittances is attributed to increased outmigration, stronger foreign currencies like the US dollar, and a shift from informal to formal transfer channels. While remittances help uplift households, Nepal remains heavily dependent on foreign earnings due to a sluggish domestic economy and low investment levels.
Nepal social media listing standoff: Companies resist due to content control rules
Nepal’s Communication Minister Prithvi Subba Gurung has criticized social media giants like Meta, Alphabet, and Microsoft for refusing to register under the country’s 2080 BS social media directive. Although these companies are registered for tax purposes, they resist the government’s listing due to concerns over strict content control rules. The directive mandates the removal of content within 24 hours of complaints, which has raised fears of excessive government intervention. The Asia Internet Coalition has highlighted the challenges in enforcing fair content review, and the government has issued a seven-day ultimatum for compliance.
Life insurers collect Rs 3.27B in first premiums, Shrawan 2082/83
Nepal’s life insurance sector showed strong performance in Shrawan 2082/83, with companies collectively collecting over Rs 3.27 billion in first premiums. Nepal Life Insurance led the way with Rs 103 crore, followed by National Life (Rs 42.37 crore) and Citizen Life (Rs 25.01 crore). Other top performers included Himalayan Life, SuryaJyoti Life, LIC Nepal, and IME Life, reflecting strong investor interest and sector growth.
Gold smashes Rs 200,000 mark in Nepal as prices soar
Gold prices soared last week, crossing the Rs 200,000 per tola threshold for the first time, driven by global market trends. Prices rose by Rs 3,100, fluctuating between Rs 197,200 and Rs 200,600 per tola. The surge was driven by US interest rate cuts, a weaker Indian rupee, and increased gold purchases by China, India, and Turkey. Analysts see gold as a safe haven asset amidst market volatility. Silver prices also rose slightly, reaching Rs 2,360 per tola.
Nepal seeks Chinese flexibility to boost agricultural exports
Nepal has urged China to adopt flexible customs policies to ease exports of buffalo meat, dairy products, vegetables, fruits, and herbs. During a bilateral meeting in Kathmandu, Agriculture Minister Ramnath Adhikari and Chinese Customs Deputy Minister Wang Lingjun discussed the proposal. Nepal is seeking to export thermally processed buffalo meat, ghee, butter, silage, and animal feed, and has asked for concessions on citrus fruit standards. China has acknowledged Nepal’s priority status and agreed to establish a joint trade facilitation mechanism. Currently, 34 Nepali companies export agricultural products to China.
IBN approves license draft for 669 MW Lower Arun Hydropower project
Investment Board Nepal (IBN) has approved the draft license for the 669 MW Lower Arun Hydropower Project at its 66th meeting, chaired by Prime Minister KP Sharma Oli. The board also endorsed a draft for direct investment in the Arun-3 Hydropower Project in Sankhuwasabha and authorized the issuance of a survey license for the proposed ‘Auto Service Eco-Industrial Park’ project. The decision is seen as a step toward boosting Nepal’s energy sector.
Karnali’s bridge projects face funding shortfall, pushed to multi-year plan
The Karnali provincial government has allocated Rs 105 million for seven motorable bridges in Rukum West, but the funds are insufficient. Officials have proposed including the projects in a multi-year plan to secure additional funding. The Infrastructure Development Office in Chaurjahari submitted the proposal to the Ministry of Physical Infrastructure and Urban Development, warning that the bridges might remain incomplete without timely approval. The lack of bridges in key areas is disrupting local travel, schooling, and livelihoods, especially during the monsoon.
KMC fines distillery after fly found in sealed Mustang Gold bottle
Kathmandu Metropolitan City (KMC) has fined Dhanusha Distillery Pvt. Ltd. Rs 200,000 after a fly was found in a sealed bottle of its Mustang Gold alcoholic beverage. The fine follows a consumer complaint and an inspection by KMC’s Agriculture and Livestock Department. The department confirmed the presence of the inedible object after lab tests. KMC also inspected several other establishments, destroying inedible oil found in four restaurants and one sweet shop.
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