KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The developments collectively reflect a period of heightened fiscal, regulatory and electoral activity in Nepal, marked by tighter financial oversight and early budget preparation amid revenue constraints. The government has initiated structured planning for the 2026/27 budget through a Revenue Advisory Committee, even as the National Natural Resources and Fiscal Commission resists cuts to constitutionally mandated grants despite significant revenue shortfalls.
Simultaneously, the Election Commission has intensified transparency measures ahead of the March 5 polls, enforcing mandatory campaign bank accounts, penalizing code violations and monitoring digital misinformation, though compliance gaps remain in some districts. Financial regulators are also asserting accountability, with Nepal Rastra Bank pursuing action against former bank directors, while political parties’ income disclosures raise transparency concerns.
Broader economic signals are mixed: life insurance premiums show steady growth, hydropower and digital investment initiatives indicate long-term infrastructure ambitions, yet calls to delay Nepal’s LDC graduation and concerns over fiscal stress underscore structural vulnerabilities in the economy.
Finance Ministry sets up revenue advisory body for 2026/27 budget
The Ministry of Finance has begun groundwork for the 2026/27 fiscal budget by forming a Revenue Advisory Committee under the coordination of Revenue Secretary Bhupal Baral. Established by Finance Minister Rameshore Khanal, the committee includes representatives from the FNCCI, CNI and Nepal Rastra Bank. It will review tax structures such as VAT, income tax and digital service tax, while exploring additional revenue avenues. Nine thematic subcommittees will assess sector-specific challenges including agriculture, energy and capital markets. The move follows the National Planning Commission’s issuance of a budget ceiling on February 19.
Fiscal Commission objects to reduction in equalization grants
The National Natural Resources and Fiscal Commission has instructed the federal government not to cut financial equalization grants allocated to provinces and local governments. Citing constitutional provisions under Articles 60 and 251, the commission stated that only it has the authority to determine such grants. Despite revenue collection falling short — Rs 588.514 billion collected against a Rs 1.533 trillion target — the commission stressed that approved budget transfers must proceed to maintain local administrative stability.
Janakpur–Jayanagar railway services suspended for polls
Nepal Railway Company announced a three-day suspension of services on the Bhangaha–Janakpur–Jayanagar route from March 3 to March 5 to maintain security during elections. Services will resume on March 6.
EC tightens financial disclosure rules for candidates
Ahead of the March 5 House of Representatives election, the Election Commission (EC) has required all candidates to operate dedicated bank accounts for campaign-related transactions to ensure financial transparency. Records show that 11 political parties and 1,670 candidates have opened such accounts and submitted their details. In line with Article 37 of the Election Code of Conduct, 2026, candidates are also obligated to file their election manifestos with the Commission, with 43 parties having complied so far. The measures are intended to track campaign financing and enforce spending limits.
Budget drafting process formally begins
According to Finance Ministry Spokesperson Tanka Prasad Pandey, the budget formulation process officially commenced after a February 11 ministerial decision. The Revenue Advisory Committee, chaired by Bhupal Baral, will recommend reforms in income tax, VAT, excise duty and digital taxation. Subcommittees must submit findings by April 13, and the final consolidated report will be presented to the finance minister by May 14.
Election commission penalizes candidates and strengthens oversight
With election logistics dispatched to all 77 districts, the Election Commission reported receiving 254 complaints regarding code violations. Candidates Shakti Bahadur Basnet, Dr Kamal Bhusal and the Shram Sanskriti Party were each fined Rs 25,000. Authorities will close international borders 72 hours before polling and enforce a nationwide alcohol ban seven days prior. The commission also identified 612 cases of misleading digital content, including AI-generated deepfakes.
NRB seeks clarification from Karnali bank’s former directors
Nepal Rastra Bank has issued a second notice to five former directors of Karnali Development Bank, including ex-chair Dr Om Prakash Mishra, demanding written explanations within 10 days regarding alleged regulatory failures. Non-compliance could result in further legal action.
Major parties disclose significant annual income
Financial disclosures submitted to the Election Commission show that major political parties generated substantial revenue in fiscal year 2024/25. CPN (UML) reported the highest income at Rs 63.6 million, followed by the Rastriya Swatantra Party at Rs 44.1 million and the Nepali Congress at Rs 38.8 million. However, concerns have emerged regarding transparency in donations exceeding Rs 25,000.
Investment Board promotes digital economy collaboration
At the Nepal-India Tech Forum 2026, Investment Board Nepal CEO Sushil Gyewali highlighted opportunities in IT parks and data centers, encouraging strategic cooperation between Nepal and India to harness digital growth.
Life insurers record 13 percent premium growth
Fourteen life insurance companies collected Rs 16.67 billion in premiums in the first seven months of the fiscal year, marking a 13.28 percent increase from last year. Nepal Life Insurance led the market.
Many candidates in Rautahat yet to open mandatory bank accounts
In Rautahat, 77 of 142 parliamentary candidates have not initiated the required bank account process for campaign transactions. District Election Officer Chhotelal Das warned that non-compliance could complicate financial reporting, particularly with only five days remaining before the election.
Labor department to operate during election holidays
The Department of Foreign Employment confirmed it will continue issuing labor permits throughout the election period to assist migrant workers, processing an average of 2,300 permits daily.
FNCCI calls for postponement of Nepal’s LDC graduation
FNCCI President Chandra Prasad Dhakal has urged the United Nations to delay Nepal’s graduation from Least Developed Country status until 2029, arguing that premature transition could negatively impact small agricultural industries and export subsidies.
Cabinet approves financing model for Budhigandaki project
The government endorsed a 70:30 debt-equity financing plan for the 1,200 MW Budhigandaki Reservoir Hydropower Project, estimated at Rs 406 billion, targeting commercial operation by 2034.
Tanahu hydropower advances transmission construction
The Tanahu Hydropower Project received approval to clear over 9,000 trees for its 220 KV transmission line, with major construction components progressing steadily.
CBFIN welcomes monetary policy review
The Confederation of Banks and Financial Institutions Nepal (CBFIN) praised the central bank’s mid-year monetary policy review, stating it would enhance credit flow and economic stability.
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