KATHMANDU: Economic Digest presents a brief yet comprehensive roundup of major business developments in Nepal, delivered in clear and accessible summaries.
Nepal’s latest economic developments present a mixed picture of recovery, fiscal restraint, and structural challenges. Investor sentiment improved as the NEPSE rebounded by 22 points and new capital market activities—including NMB Bank’s Rs 3 billion preference share listing and Sarvottam Paints’ upcoming IPO—signaled continued financial sector activity, although lower trading turnover suggests cautious participation.
Strong growth in tourism, with foreign arrivals rising 19 percent in May, and a 71 percent increase in dairy exports highlight expanding service and agricultural earnings, while the launch of direct Kathmandu–Shenzhen flights is expected to further strengthen trade and tourism links with China. At the same time, the government’s tighter fiscal approach is evident in reduced industrial infrastructure spending, stricter project selection criteria in provinces, and efforts by Nepal Rastra Bank to manage excess liquidity.
However, concerns persist over delayed infrastructure projects, the exclusion of key industrial initiatives such as the Birgunj–Pathlaiya Industrial Corridor, rising precious metal prices, and ongoing funding constraints that continue to hamper development and private-sector confidence.
Overall, the economy shows encouraging signs of growth and investment activity, but implementation bottlenecks and limited capital spending remain significant obstacles to sustaining higher economic momentum.
NEPSE rises 22 points as turnover declines to Rs 5.26 billion
The Nepal Stock Exchange (NEPSE) gained 22.21 points, or 0.80 percent, on Tuesday to close at 2,777.58 points, while daily turnover fell to Rs 5.265 billion from Rs 5.614 billion recorded the previous day. A total of 11.38 million shares of 346 companies changed hands through 61,527 transactions. The Sensitive Index increased by 0.59 percent to 473.51 points. Share prices of 184 companies advanced, while 77 declined and 10 remained unchanged. Among the 13 sectoral indices, only the manufacturing and processing sector posted a loss, slipping 0.42 percent. The finance sector led gains with a 6.03 percent increase, while all other sectors closed in positive territory.
Gold and silver prices rise in domestic market
Gold and silver prices increased in Nepal’s domestic market on Tuesday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the price of gold rose by Rs 400 per tola to Rs 311,300, up from Rs 310,900 on Monday. Silver prices also increased, gaining Rs 50 per tola to reach Rs 5,405. On the previous day, silver had been traded at Rs 5,355 per tola.
NRB uses standing deposit facility to manage interbank interest rates
A research report published by the Nepal Rastra Bank (NRB) on Tuesday stated that the Standing Deposit Facility is the central bank’s key instrument for maintaining stability in interbank interest rates. The study found that when banks and financial institutions are unable to place excess liquidity through this facility, interbank lending rates tend to fall below the lower limit of the interest rate corridor. To ensure market stability, the NRB maintains an interest rate corridor with the bank rate fixed at 5.75 percent as the upper limit, the policy rate at 4.25 percent, and the standing deposit rate at 2.75 percent as the lower limit. Under existing open market operation guidelines, commercial banks can deposit surplus funds daily and earn a return of 2.75 percent.
Dairy exports grow 71 percent over four years
The Ministry of Agriculture, Forestry and Environment reported that Nepal has achieved self-sufficiency in milk production, with total output reaching 2.72 million tonnes in fiscal year 2024/25. Milk production has grown at an average annual rate of 3.4 percent over the past five years, generating an estimated Rs 28 billion in economic activity between urban and rural areas. Over the past four years, dairy exports increased by 71 percent to Rs 4.64 billion, while imports declined to Rs 142.4 million. Domestic processors converted 497 million litres of milk into 4,150 tonnes of milk powder during fiscal year 2025/26.
Health Insurance Board tightens payment rules for private hospitals
The Health Insurance Board has directed private healthcare providers to limit insurance package benefits to patients requiring emergency admission or surgical treatment. The directive, issued on June 1, states that claims submitted for routine check-ups falsely categorized as emergencies will not be reimbursed. The board said the measure aims to curb fraudulent claims and strengthen financial discipline within the health insurance system. It has also urged insured individuals not to pressure hospitals or medical personnel to misclassify treatments.
Budget allocation increased for Siddhicharan Highway upgrade
The government has allocated Rs 590.2 million in the fiscal year 2083/84 budget for the upgrading of the Mirchaiya–Katari–Ghurmi section of the Siddhicharan Highway, which connects five districts, including three in the upper Sagarmatha region. The allocation is higher than the Rs 475.2 million earmarked in the current fiscal year. Of the total amount, Rs 10.9 million has been set aside for recurrent expenditure and Rs 579.3 million for capital works.
Foreign tourist arrivals jump 19 percent in May
According to the Nepal Tourism Board, Nepal welcomed 102,626 foreign visitors in May 2026, surpassing the 100,000 mark for the month. The figure represents a 19 percent increase compared to the 86,216 tourists recorded in May last year and exceeds the pre-pandemic total of 78,329 visitors in May 2019. India remained the largest source market with 40,782 arrivals, followed by China with 11,514, the United States with 9,001, Bangladesh with 5,298, and the United Kingdom with 3,375 visitors. Tourists from SAARC countries accounted for 47.2 percent of total arrivals.
Pulse imports through Birgunj decline by 22 percent
The Birgunj Customs Office reported imports of seven varieties of pulses worth Rs 7.97 billion during the first ten months of the current fiscal year. This represents a 22 percent decline, or Rs 2.24 billion, compared to imports worth Rs 10.21 billion during the corresponding period last year. Lentil imports dropped from Rs 4.50 billion to Rs 3.20 billion, while imports of kidney beans fell to Rs 2.04 billion. Chickpea imports declined to Rs 1.92 billion, and other pulse varieties totaled Rs 420 million.
Government cuts industrial infrastructure budget
The Ministry of Finance has reduced funding for industrial infrastructure development, including projects related to Special Economic Zones, in the fiscal year 2026/27 budget. Total allocation for the programme has been set at Rs 563 million, down from the revised allocation of Rs 935.6 million in the current fiscal year. The reduction of Rs 372.6 million reflects tighter government spending on industrial infrastructure projects.
Lumbini tightens project selection criteria
The Lumbini Province government has begun preparations for the fiscal year 2026/27 budget amid increasing demand from local representatives seeking project funding. As the province moves to reduce spending from the current Rs 38 billion budget, the Provincial Planning Commission has decided to exclude small and low-impact projects. Under the new guidelines, all proposals must be registered in the provincial project bank, with minimum funding thresholds set at Rs 3 million for infrastructure projects and Rs 1 million for other sectors.
Funding constraints stall major projects in Sudurpashchim
A review of the Sudurpashchim Province budget has revealed that limited funding and slow expenditure have delayed several major infrastructure projects. Plans to upgrade the 315-kilometre Attariya–Khodpe–Darchula road into a double-lane highway remain stalled due to insufficient budget allocation. Likewise, the Rs 21.19 billion project to improve the Gaddachauki–Attariya section of the East-West Highway has been delayed because engineering studies have yet to be completed. Budget limitations have also slowed work on a 47-kilometre section of the Mahakali Corridor, while construction of the 210 MW Chainpur Seti Hydropower Project has not yet commenced.
Birgunj industrial corridor excluded from national budget, business community dissatisfied
Business leaders in Birgunj have expressed disappointment over the fiscal year 2026/27 budget, arguing that it overlooks several key projects critical to the region’s economic development. Local trade associations described the government’s revenue target of Rs 1.406 trillion as overly ambitious, noting that revenue collection for the current fiscal year has remained around Rs 1.1 trillion. They also criticized the increase in recurrent expenditure to Rs 1.289 trillion and the introduction of a new green tax. Concerns were further raised over the absence of funding for the proposed Birgunj–Pathlaiya Industrial Corridor and the lack of policy measures to support the domestic pharmaceutical industry.
Sudurpashchim Assembly begins discussions on budget framework
The Sudurpashchim Provincial Assembly on Tuesday began deliberations on the principles and priorities of the appropriation bill for fiscal year 2026/27. The discussions were initiated following a proposal from the Ministry of Economic Affairs. Lawmakers from the Nepali Congress, CPN-UML, and other coalition partners participated in the debate as part of the process of shaping the province’s upcoming budget. The government has said the new budget will seek to balance development priorities with available financial resources.
Himalaya Airlines launches direct Kathmandu–Shenzhen flights
Himalaya Airlines has announced the launch of direct flights between Kathmandu and Shenzhen, one of China’s major economic and technology hubs. The new Kathmandu–Shenzhen–Kathmandu service will begin on June 4, with two weekly flights in each direction. Flights from Kathmandu’s Tribhuvan International Airport to Shenzhen Bao’an International Airport will operate on Tuesdays and Thursdays, while return flights will run on Wednesdays and Fridays. According to the airline, the new route is expected to strengthen tourism, trade, and business ties between Nepal and China. Vice Chair Bijay Shrestha said the service would contribute to greater economic and people-to-people connectivity between the two countries.
Tarigaun Airport expansion allocated Rs 250 million
The government has earmarked Rs 250 million in the fiscal year 2026/27 budget to expand the runway at Tarigaun Airport in Dang. The project will extend the airport’s runway from 750 metres to 1,500 metres, enabling larger aircraft with up to 72 seats to operate from the facility. In addition, Rs 550 million has been allocated under a multi-year programme for the Tulsipur–Dagaura Khola road project. The budget also includes funding for the construction of a new concrete bridge over the Babai River at Sitalpur to improve regional transportation infrastructure.
NMB Bank lists Rs 3 billion preference shares on NEPSE
NMB Bank has listed perpetual non-cumulative preference shares worth Rs 3 billion on the Nepal Stock Exchange (NEPSE). The listing comprises 30 million units with a face value of Rs 100 per share. Trading in these instruments has been restricted to institutional investors, with retail investors and mutual funds excluded from participation. Issued under capital adequacy guidelines set by the Nepal Rastra Bank (NRB), the preference shares offer a fixed annual dividend yield of 8.25 percent.
Mandu Hydropower approves 10 percent bonus shares
The board of directors of Mandu Hydropower has approved a dividend package that includes a 10 percent bonus share distribution to shareholders. The company has also proposed a 0.5263 percent cash dividend to cover tax liabilities associated with the bonus shares. The proposal, approved on June 1, will now be submitted to the Electricity Regulatory Commission for review before being presented to shareholders for final endorsement at the company’s annual general meeting.
Sarvottam Paints to open IPO for general investors
Sarvottam Paints Industries is set to open its initial public offering (IPO) for the general public on June 11 after completing the share allocation process for migrant workers. The company has received approval to issue 850,000 ordinary shares worth Rs 85 million, representing 25 percent of its capital. Of the total shares, 85,000 were allotted to migrant workers and 42,000 to mutual funds. The remaining 705,500 shares, valued at Rs 70.5 million, will be available to general investors until June 16. Global IME Capital has been appointed as the issue manager.
Kathmandu to host Global Consumer Expo 2026
The second edition of the Global Consumer Expo 2026 will be held at Bhrikutimandap in Kathmandu from June 12 to June 16. Organized by Event Solution, the five-day exhibition will feature more than 100 domestic and international exhibitors. Organizers expect over 35,000 visitors, including consumers, entrepreneurs, and business representatives. The exhibition will showcase a wide range of products and services, including household goods, kitchen appliances, consumer electronics, fashion items, and handicrafts.
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