KATHMANDU: Economic Digest presents a brief yet comprehensive roundup of major business developments in Nepal, delivered in clear and accessible summaries.
The latest economic and business developments present a mixed picture of Nepal’s economy, where strong investment momentum and infrastructure expansion are being offset by market volatility, fiscal pressures, and implementation challenges. While the government is pushing ahead with major capital investments through MCC projects, hydropower transmission networks, airport upgrades, and foreign-funded infrastructure programs, the sharp decline in the NEPSE index reflects lingering investor caution despite high trading volumes.
Rising EV imports, expanding tourism engagement through Himalayan Travel Mart, and growing support from business groups for tax and customs reforms indicate improving private-sector confidence and economic activity. However, concerns remain over the sustainability of public finances, with the government relying heavily on foreign loans and consumption-based taxes while maintaining fuel prices at a significant loss.
At the same time, power shortages affecting industries, debates over new taxes on electricity consumption, and persistent implementation bottlenecks underscore the challenge of translating ambitious fiscal targets into broad-based economic growth.
Overall, the emerging policy direction points toward investment-led expansion and structural reforms, but effective execution and fiscal discipline will be critical to achieving the government’s 7 percent growth target.
NEPSE drops 26.72 points on Monday
The Nepal Stock Exchange (NEPSE) declined by 26.72 points, or 0.96 percent, on Monday, closing at 2,755.37. Despite the market downturn, daily trading turnover exceeded Rs 5.61 billion. The Sensitive Index fell by 4.78 points to 470.72, while both the Float Index and Sensitive Float Index also registered losses. A total of 13.38 million shares of 349 listed companies were traded through 63,719 transactions. Only 35 companies posted gains, whereas 233 recorded losses and two remained unchanged. Of the 13 sectoral indices, 11 ended lower, with hydropower, hotels and tourism, manufacturing, and commercial banking among the biggest losers. Non-life insurance and the “Others” category were the only sectors to advance, gaining 1.37 percent and 3.36 percent, respectively.
Finance ministry allocates Rs 29.34 billion for MCC projects
The Ministry of Finance has earmarked Rs 29.34 billion for the implementation of Millennium Challenge Corporation (MCC) projects in fiscal year 2026/27. The allocation comprises Rs 5.56 billion from the national treasury and Rs 23.79 billion in foreign grant assistance. Government records show that MCC-funded projects spent Rs 2.34 billion in fiscal year 2024/25, while expenditure for the current fiscal year is projected to reach Rs 7.49 billion. The funding will primarily support electricity transmission and related infrastructure development.
Gold traded at Rs 310,900, silver at Rs 5,355 on Monday
The price of gold declined by Rs 200 per tola (11.66 grams) on Monday, while silver prices increased by Rs 10 per tola. According to the Federation of Nepal Gold and Silver Dealers’ Association, the price of gold was fixed at Rs 310,900 per tola on Monday. On the previous trading day, Sunday, gold was traded at Rs 311,100 per tola. Similarly, the price of silver reached Rs 5,355 per tola on Monday, up from Rs 5,345 per tola on Sunday. Notably, the price of gold had surged by Rs 20,500 per tola on Sunday.
Finance Minister targets Rs 1.6 trillion revenue and Rs 7.4 trillion GDP
At a post-budget interaction programme organised by the Nepal Association of Financial Journalists (NAFJ) on Monday, Finance Minister Dr Swarnim Wagle outlined the government’s economic projections for fiscal year 2026/27. The budget aims to generate Rs 1.6 trillion in revenue and expand Nepal’s gross domestic product (GDP) to Rs 7.4 trillion, with a target of achieving 7 percent economic growth. Officials noted that public debt remains manageable at 43 percent of GDP. To meet fiscal objectives, the government plans to prioritise consumption-based taxes and maintain the proposed 5 percent value-added tax (VAT) on household electricity consumption.
NOC maintains fuel prices despite rising international market rates
The Nepal Oil Corporation (NOC) has decided to keep domestic fuel prices unchanged even as global petroleum prices continue to rise amid tensions in West Asia. The decision, approved by the corporation’s board on May 31 and implemented from June 1, was made to shield consumers from higher costs. NOC stated that fuel prices would normally have increased under its automatic pricing mechanism following revised rates from the Indian Oil Corporation. Petrol prices remain fixed at Rs 214.50, Rs 216 and Rs 217 per litre, while diesel and kerosene continue to sell at Rs 222.50, Rs 224 and Rs 225 per litre depending on location. Liquefied petroleum (LP) gas remains priced at Rs 2,160 per cylinder. According to NOC, the decision is resulting in monthly losses of around Rs 628.6 million.
EV imports through Birgunj surge by 143.6 percent
Imports of electric vehicles (EVs) through the Birgunj customs point increased by 143.6 percent in value during the first ten months of the current fiscal year, according to customs statistics. Between July 17, 2025, and May 14, 2026, Nepal imported 15,271 EVs worth more than Rs 4.02 billion, compared to 9,042 units worth Rs 1.65 billion during the same period last year. The growth was driven largely by imports of electric cars, jeeps and vans, with 657 units worth Rs 1.87 billion generating Rs 1.19 billion in customs revenue. Imports of electric motorcycles and scooters also rose significantly, reaching 8,867 units valued at Rs 1.17 billion. Overall imports of vehicles and spare parts through Birgunj climbed 44.58 percent year-on-year to Rs 31.31 billion.
Government identifies foreign funding sources for fiscal year 2026/27
The government has finalised plans to mobilise Rs 61.74 billion in foreign grants and Rs 247.28 billion in external loans during fiscal year 2026/27. The financing framework shows that the Asian Development Bank will be the largest contributor, providing Rs 112.28 billion in loans and Rs 1.16 billion in grants. The International Development Association is expected to extend Rs 89.88 billion in concessional financing, while the International Monetary Fund will provide a structural credit facility worth Rs 6.3 billion. Bilateral funding commitments include Rs 23.77 billion from the United States and Rs 2.68 billion from China.
Department launches automated work permit renewal system
The Department of Foreign Employment has introduced a fully automated online system for renewing re-entry work permits, in line with the government’s 100-point governance reform programme. Developed under the Ministry of Youth, Labour and Employment, the platform enables migrant workers returning to their previous overseas employers to obtain permit renewals instantly. To qualify, applicants must declare valid employment contracts and visas through the Foreign Employment Information Management System (FEIMS), possess a passport valid for at least three months, and provide proof of contributions to both the Social Security Fund and migrant welfare funds.
Budget mandates 20 percent reinsurance retention within Nepal
The Ministry of Finance has introduced significant reforms to the insurance sector through the fiscal year 2026/27 budget, requiring domestic insurers to place at least 20 percent of their insured liabilities with the state-owned Nepal Reinsurance Company. The company will also serve as the lead manager for long-term insurance pools and selected social security funds, including those managed by the Employees Provident Fund, Citizen Investment Trust and Health Insurance Board. Additional measures include raising the maximum third-party vehicle insurance compensation to Rs 1 million and creating an integrated depositor protection fund to facilitate repayment of savings trapped in troubled cooperatives.
CBFIN backs income tax reforms and diaspora bonds
The Confederation of Banks and Financial Institutions Nepal (CBFIN) and the Nepal Chamber of Commerce have welcomed several private sector-focused measures included in the fiscal year 2026/27 budget. The organisations endorsed the increase in the personal income tax exemption threshold to Rs 1 million and the reduction of the highest tax rate from 39 percent to 29 percent. They also supported the introduction of Diaspora Bonds aimed at attracting investment from Non-Resident Nepalis and praised plans to establish a National Asset Management Company to address non-performing loans. However, they cautioned that the proposed 3 percent education equity fee on private schools and the 5 percent VAT on household electricity could increase costs for consumers.
Koshi to distribute subsidised fertiliser under new directive
Koshi Province is preparing to implement the Chemical Fertiliser Subsidy Directive 2026 to ensure the distribution of subsidised fertilisers to farmers. According to Krishi Samagri Company, local committees comprising elected representatives and agriculture officials will oversee distribution. More than 15,900 metric tonnes of fertiliser and agricultural lime currently in stock across Koshi Province and parts of Madhesh Province will be distributed under the programme. The stock includes 1,829 metric tonnes of DAP, 10,842 metric tonnes of urea, 3,091 metric tonnes of potash and 159 metric tonnes of agricultural lime. Subsidised prices have been set at Rs 2,200 per 50-kg bag of DAP, Rs 705 for urea, Rs 1,600 for potash and Rs 430 for agricultural lime.
National grid company forms joint venture for West Seti transmission line
The National Transmission Grid Company has established a special-purpose vehicle named West Seti Transmission Limited to expedite the development of the West Seti transmission corridor. The project, being implemented under a public-private partnership model, will construct a 145-kilometre, 400 kV double-circuit transmission line linking power generation projects in western Nepal. The transmission network will connect the 160 MVA substation at Chainpur in Bajhang with the 315 MVA substation at Banlek in Doti before feeding electricity into the regional hub under construction at Dodhara in Kailali.
New budget funds Bharatpur Airport night flight extensions
The Ministry of Finance announced major regional connectivity upgrades for Chitwan inside the fiscal year 2026/27 state budget today, allocating funds to upgrade Bharatpur Airport to handle night flight operations. The infrastructure plan provides Rs 440 million to reconstruct the Narayani Irrigation Project alongside the Gandak and Koshi pump setups. Additionally, the budget funds the launch of a 40-kilometer highway widening project along the Nagdhunga-Muglin section of the Prithvi Highway, sets up tunnel engineering surveys from Majhimtar to Shaktikhor, and launches localized primary education funding targeting vulnerable Chepang communities. Concurrently, state equity in the Dhauwadi Iron Mine will drop to shift it to a public-private partnership model.
Technology federations form strategic alliance to combat mobile gray market
The Computer Association of Nepal Federation (CAN Federation) and the Nepal Mobile Distributors Association (NMDA) established a strategic institutional alliance today, Monday, at the federation headquarters in Khusibu. The joint initiative aims to resolve core structural vulnerabilities within the domestic smartphone market, focusing heavily on regulating the unauthorized mobile device gray market. Both organizational committees committed to launching rigorous public policy advocacy campaigns directed at the central government to enforce the mobile device management system (MDMS) strictly. The collaborative roadmap focuses on standardizing transparent import procedures, securing business ecosystems, and curbing state tax revenue leakage caused by illegal hardware smuggling.
Himalayan Travel Mart 2026 opens with delegates from 27 countries
The sixth edition of the Himalayan Travel Mart (HTM) 2026 began in Lalitpur on Monday, bringing together more than 100 international delegates from 27 countries, including 75 global buyers and representatives from over 80 tourism organizations. Organized by the Pacific Asia Travel Association Nepal Chapter under the theme “New Frontiers in Tourism,” the event aims to strengthen business ties between Nepal’s tourism industry and international markets. Speaking at the opening, Suresh Singh Budal highlighted growing global demand for sustainable, wellness-focused and authentic travel experiences, saying Nepal is well positioned to benefit. Discussions will focus on adventure tourism, sustainability, destination weddings, MICE tourism, digital payments and regenerative tourism, with organizers expecting new partnerships and business opportunities.
Sanigaad Hydro opens IPO
Sanigaad Hydro Company formally launched its initial public offering (IPO) for the general public today, Monday, issuing 4,674,000 ordinary shares valued at Rs 100 per unit to raise Rs 467.4 million. The public equity tranche follows specialized subscription phases reserved for project-affected locals, migrant workers, and institutional funds out of an authorized 30 percent capital allocation totaling 8,550,000 shares. Individual retail investors can apply for a minimum of 10 units up to a maximum cap of 20,000 units via the C-ASBA banking platform until June 4, with Laxmi Sunrise Capital managing the investment float.
NICCI welcomes structural custom bracket reforms
The Nepal-India Chamber of Commerce and Industry (NICCI) released its official structural analysis today, endorsing the Rs 2.124 trillion national budget presented for the fiscal year 2026/27. Trade analysts praised specific updates that slashed custom duties on manufacturing raw materials across 273 product classifications, keeping industrial input costs lower than finished consumer imports. Additionally, the complete abolition of excise duties on 360 individual goods and the simplification of the central customs hierarchy from 11 tiers down to seven tiers won strong backing. The chamber also supported the introduction of a low 1 percent income tax slab for earnings under Rs 1 million.
FNCCI Vice President calls budget 2026/27 ambitious
Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Vice President Naresh Lal Shrestha has described the budget for fiscal year 2026/27 as ambitious, while warning of challenges in resource management and implementation. Speaking at a post-budget discussion organized by the Nepal Association of Financial Journalism (NAFIJ), Shrestha welcomed measures such as raising the personal income tax threshold to Rs 1 million, easing investment procedures through the Investment Board, plans for an AI compute center, and startup support programs. However, he urged the government to reconsider taxes on higher electricity consumption, education, health services, and electric vehicles, arguing they would burden consumers and the private sector. He also called for reforms to environmental approval processes, customs concessions for hotel infrastructure and raw materials, and stronger support for exports, warning that implementation failures have undermined previous budgets.
Power overloads disrupt industrial operations in Dhangadhi distribution center
The Nepal Electricity Authority (NEA) Far-Western Regional Office recorded critical power grid deficits inside the Dhangadhi distribution center today, as local power demand spiked to 32 MVA against an active 8 MVA transformer capacity. Extreme summer heatwaves triggered severe low-voltage drops and three to four transmission line trips every single hour, interrupting regular commercial manufacturing across regional corridors. Engineering crews are working on an emergency 10-day upgrade to install a larger 24 MVA transformer unit. However, full structural relief requires building a dedicated 132 kV substation and transmission line connecting Attariya to Dhangadhi, which is currently stuck in the project design stage.
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