KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The developments present a picture of an economy characterized by strong liquidity and investment intent, but constrained by structural, fiscal, and implementation challenges. The rise in the NEPSE index alongside high trading turnover reflects continued investor confidence and surplus funds in the financial system, a trend reinforced by Nepal Rastra Bank’s repeated bond issuances to absorb excess liquidity.
At the same time, declining gold and silver prices suggest a short-term shift away from traditional safe-haven assets. While large-scale commitments—such as the Rs 93.40 billion Betan Karnali hydropower project, extended electricity import approvals from India, and the launch of a feasibility study for a Korala border SEZ, signal momentum in infrastructure and trade connectivity, weak capital expenditure in Karnali Province underscores persistent governance and execution gaps.
Fiscal reallocation to secure election funding without external borrowing shows prudent budget management, yet the crisis in the textile sector, youth frustration over delayed foreign employment, and mixed outcomes in agriculture highlight unresolved policy inconsistencies and labor-market pressures. Together, these trends indicate that while macro-level stability and liquidity remain strong, translating resources into inclusive growth and productive employment continues to be Nepal’s key economic challenge.
NEPSE gains 10.87 points
The Nepal Stock Exchange (NEPSE) index moved upward by 10.87 points on Tuesday to close at 2,633.76. Market data show that 11.94 million shares from 342 listed companies were traded through 63,981 transactions, generating a total turnover of Rs 5.13 billion. All sectoral indices ended the session in positive territory, with the Manufacturing and Processing group posting the strongest rise of 1.61 percent. Shares of SY Panel Nepal and Ngadi Hydropower reached their upper price limits, while Wean Nepal Laghubitta Bittiya Sanstha hit the lower circuit. Green Venture Limited topped the market in terms of transaction value, with trades worth Rs 177.9 million from 349,744 shares.
Gold and silver prices decline in domestic market
Gold and silver prices fell on Wednesday after several days of continuous increases in the local market. According to the Federation of Nepal Gold and Silver Dealers’ Association, the price of gold dropped to Rs 261,000 per tola (11.66 grams), while silver was priced at Rs 4,470 per tola. On Tuesday, gold had been trading at Rs 262,100 per tola and silver at Rs 4,590 per tola.
NRB absorbs Rs 25 billion through one-year bonds
Nepal Rastra Bank withdrew Rs 25 billion from the financial system on Wednesday by issuing one-year bonds to manage excess liquidity. The instrument, named “Nepal Rastra Bank Bond 2025 B,” follows a similar Rs 25 billion issuance carried out earlier in the week. Interest rates will be set through a competitive bidding process, with interest payments made every six months and the principal due on December 31, 2026. Only Class A, B, and C financial institutions are eligible to participate, with a minimum bid size of Rs 50 million.
Finance Minister Khanal sets aside Rs 25 billion for election costs
Finance Minister Rameshore Khanal announced that funding for the March 5, 2026, national elections has been secured within the current budget framework. The government freed up resources by suspending around 4,000 unprepared projects valued at Rs 30 million each, releasing nearly Rs 120 billion. Khanal confirmed that Rs 60.9 million has already been disbursed to the Election Commission. Total election-related expenses are expected to include Rs 17 billion for temporary police deployment and between Rs 25 billion and Rs 26 billion for equipment and vehicles. He said the approach would allow the election to proceed without additional budgets or external financing.
India extends approval for Nepal to import 654 MW of electricity
India has renewed its approval allowing Nepal to import up to 654 MW of electricity through the Indian Energy Exchange at market-based rates. The renewed permission will remain valid from January 1 to March 31, 2026, ensuring electricity supply during the dry season. The approved volume includes 600 MW through the Dhalkebar–Muzaffarpur transmission line and 54 MW via the Tanakpur–Mahendranagar line. Energy Minister Kulman Ghising reportedly coordinated with Indian authorities to secure the extension before the earlier approval expired. Another renewal covering the period after April 1, 2026, is expected later.
Betan Karnali hydropower project secures Rs 93.40 billion investment
The 439 MW Betan Karnali Hydroelectricity Project has advanced after receiving a generation license and investment approval worth Rs 93.40 billion from the Investment Board. The project, led by the Employees Provident Fund, is currently finalizing a power purchase agreement with the Nepal Electricity Authority. Managing Director Krishna Prasad Acharya said earlier disagreements with India-based firm GMR regarding reservoir height were resolved through board-level coordination. The project includes construction of a 140-meter-high dam and carries an estimated total cost of Rs 88.19 billion, including interest. Work on a 95-kilometer access road has already begun.
Karnali province records low capital budget spending
Karnali Chief Minister Yam Lal Kandel has expressed concern over the slow pace of budget implementation by provincial government employees. Of the total annual budget of Rs 32.996 billion, only 9.87 percent was spent during the first five months of the fiscal year, from July 17 to December 15. Capital expenditure remains particularly weak, with just 4.36 percent—or Rs 870 million—spent from an allocation of Rs 19.98 billion. Currently, Rs 29.73 billion remains unused in the provincial treasury. Secretary Arjun Kumar Bam has directed officials to recover advances from stalled projects and initiate legal action against contractors who have failed to perform.
Textile sector in crisis as Rs 20 billion investment under threat
Nepal’s textile industry is facing a severe downturn following the removal of a 70 percent VAT refund policy five years ago. The Nepal Textile Industries Association reported that the number of operating factories has fallen sharply from 250 to around 50, putting an estimated Rs 20 billion in investment at risk. Although domestic demand stands at Rs 600 billion, the association said illegal imports from India dominate the market, accounting for nearly Rs 500 billion. Local producers struggle to compete with India’s 5 percent GST compared to Nepal’s 13 percent VAT. The association has called for immediate policy reforms and stronger border controls to protect the industry.
Orange output in Myagdi falls by 5.56 percent
Orange production in Myagdi district declined by 5.56 percent this year, even though the cultivation area expanded to 430 hectares. The Agricultural Development Office in Myagdi attributed the drop not to weather or pest issues, but to the natural bearing cycle of orange trees. Total output is estimated at 4,515 metric tons, compared to 4,781 metric tons last year. Despite lower production, farmers are benefiting from higher prices, with oranges selling for Rs 70 to Rs 75 per kilogram. The total market value of this year’s harvest is estimated at Rs 316 million, with major supply destinations including Kathmandu, Pokhara, and Muglin.
Feasibility study launched for special economic zone at Korala border
Ojas Engineering has begun conducting a feasibility study for establishing a Special Economic Zone (SEZ) at the Korala border point between Nepal and China. The study, financed by an Rs 1.8 million allocation from the Ministry of Finance, covers an area of 254,366.41 square meters designated for customs facilities, warehouses, and immigration offices. Engineer Roshan Sapkota said the Mustang Customs Office has already collected more than Rs 5 billion in revenue this fiscal year despite operating from just five small rooms. Since August, imports worth nearly Rs 11 billion have passed through the border. Local business communities have urged the government to replace existing tents and temporary shelters with permanent infrastructure.
Nepal Agritech International Expo to begin in Bharatpur on January 16
The Nepal Agritech International Expo will be held from January 16 to 18 at the Chitwan Exhibition Center in Bharatpur. Organized by Media Space Solutions and Futurex Trade Fair and Events, the expo will feature more than 100 stalls representing Nepal, India, and China. Exhibits will include innovations in poultry, dairy farming, and agricultural machinery. Supported by the National Agricultural Modernization Program, the event will offer free entry and aims to introduce cost-effective tools and large-scale equipment to farmers. Key institutional partners include the National Dairy Development Board and the Nepal Poultry Federation, with a focus on improving farmers’ financial and technical knowledge.
EPS-qualified youths protest in Gwarko demanding deployment to South Korea
More than 200 youths who passed the Employment Permit System (EPS) language and skills tests staged a protest at the Gwarko office in Kathmandu on Wednesday, demanding immediate placement in South Korea. Some protesters said they have remained on the waiting roster for nearly two years. Although 17,030 candidates qualified for EPS in 2025, many are still awaiting labor contracts. Director Binda Acharya said the Nepal government has submitted requests to South Korea seeking roster extensions and sector changes. Currently, more than 100,000 Nepali workers are employed in South Korea. In 2025, Nepal sent 11,200 workers under EPS, up from 9,200 in 2024.
Comment