KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s latest economic and governance developments present a mixed but cautiously improving outlook, marked by financial market optimism alongside persistent structural and social challenges. The stock market’s 1.36 percent weekly rise and recovery in market capitalisation reflect renewed investor confidence driven by election certainty, while the rollout of transaction-based customs valuation signals meaningful reform to improve transparency and trade efficiency.
However, rising stress in household finance—evident in elevated credit card NPLs—and large insurance claims from Gen Z protests underscore underlying economic vulnerabilities and the cost of social unrest. Strong concentration of banking activity in Bagmati Province, modest tourism recovery amid security concerns, and underutilisation of international trade preferences highlight uneven growth and competitiveness constraints.
At the same time, infrastructure progress, regulatory clarifications in insurance, and targeted government interventions—such as the EPS task force—suggest policy efforts to stabilise employment, strengthen institutions, and support medium-term growth, even as project delays, aviation bottlenecks, and diplomatic sensitivities continue to weigh on broader economic momentum.
NEPSE rises 1.36 percent on election optimism, market value up by Rs 59 billion
The Nepal Stock Exchange recorded a solid weekly gain of 35.05 points, or 1.36 percent, driven by positive political signals supporting the timely conduct of the general election scheduled for March 5. The benchmark index began the week at 2,585.87 points and closed at 2,620.92 points on Thursday. Trading was conducted over four days, as Tuesday was observed as a public holiday for Tamu Lhosar. During the week, the index reached a high of 2,643.64 points and a low of 2,586.41 points, indicating a volatility range of 57.23 points. All sectoral indices advanced except trading, which slipped by 0.67 percent. Manufacturing and processing led gains with a 3.09 percent increase, followed by development banks at 2.96 percent. Weekly turnover jumped by 37.12 percent to Rs 20.15 billion, while market capitalisation rose by Rs 59 billion to Rs 4.40 trillion, offsetting the losses recorded in the previous week.
Government forms task force to address EPS workers’ demands
The Ministry of Labour, Employment and Social Security has formed a task force to resolve grievances raised by Employment Permit System (EPS) workers. Chaired by Labour Minister Rajendra Singh Bhandari, the team will recommend improvements in candidate data forwarding to South Korean employers and advocate for higher EPS quotas. Protesting workers are demanding prioritization of agricultural laborers, reinstatement of removed candidates, repeated forwarding of pending files, and safeguards against discrimination. Authorities aim to ensure employment placement for at least 95 percent of rostered workers and begin direct engagement with affected individuals.
Credit card lending records Nepal’s highest NPL ratio at 18.27 percent
Credit card loans have emerged as the most stressed segment in Nepal’s banking system, with non-performing loans reaching 18.27 percent by mid-October 2082, according to Nepal Rastra Bank. Overdraft loans followed with an NPL ratio of 10.46 percent, both significantly higher than the sectoral average of 5.26 percent. Bankers attribute the high default rate to steep monthly interest charges of around 2.5 percent, unsecured lending, and compounding interest that often exceeds the original loan amount. The migration of skilled professionals abroad has further weakened recovery prospects. NRB data also indicate elevated NPL levels in working capital and hire-purchase loans, while margin lending remains the least risky loan category.
Nepal replaces reference values with transaction-based customs valuation nationwide
Nepal has introduced a transaction value–based customs valuation system across all customs points, marking a significant overhaul of its customs administration. The reform officially abolishes the long-criticized reference value book system, which had been associated with lack of transparency, corruption, and inflated trade costs. After successful pilot implementation in Biratnagar and Birgunj, the system has now been rolled out nationwide in line with WTO-GATT standards. It relies on online valuation software, digital databases, and artificial intelligence tools. Under the new framework, importers’ self-declared values will be accepted as the primary basis for valuation, supported by risk-based inspections and post-clearance audits. Authorities expect the change to reduce revenue leakage, curb corrupt practices, lower trade costs, and facilitate faster foreign trade.
Insurance claims from Gen Z protests cross Rs 23 billion, payouts underway
Losses caused during the Gen Z movement have resulted in insurance claims totaling more than Rs 23.46 billion, according to data released by the Nepal Insurance Authority as of Poush 16. Fourteen non-life insurers and four micro-insurance companies reported a combined 3,316 claims. Of the total amount, Rs 5.48 billion has already been disbursed. Siddhartha Premier Insurance leads in settlements, paying Rs 191.56 million out of Rs 5.57 billion claimed across 409 cases. IGI Prudential Insurance has paid Rs 111.31 million against Rs 2.87 billion in claims from 220 cases, while Shikhar Insurance has disbursed Rs 731.8 million of Rs 2.37 billion claimed across 449 cases. Claim settlement processes are continuing.
Bagmati Province accounts for majority of Nepal’s deposits and bank lending
Bagmati Province continues to dominate Nepal’s banking sector, holding 65.8 percent of total deposits and 59.5 percent of total credit, according to Nepal Rastra Bank’s annual report for fiscal year 2081/82. Of the Rs 7.29 trillion in total deposits nationwide, nearly Rs 4.8 trillion originated from Bagmati. Similarly, over Rs 3.32 trillion of the Rs 5.58 trillion in total loans were disbursed in the province. The report notes a slight decline in agricultural lending, while industry and services remain the primary recipients of bank credit, highlighting the concentration of financial activity in Bagmati.
Tribhuvan International Airport generates nearly Rs 13 billion, leads aviation revenue
Tribhuvan International Airport remains Nepal’s largest revenue-generating aviation facility, earning Rs 12.90 billion in fiscal year 2081/82, according to the Civil Aviation Authority of Nepal. The airport also handled the highest passenger traffic, serving nearly 7.8 million travelers and managing over 112,000 flights in the first 11 months of 2025. Pokhara International Airport and Gautam Buddha International Airport ranked second and third in revenue generation, although their operations remain dominated by domestic flights. At the other end of the spectrum, Lamidanda Airport recorded annual earnings of just Rs 728. Overall, CAAN collected Rs 14.69 billion in aviation revenue nationwide.
Life insurance surrenders fall in Nepal, but policy lapses remain a concern
Life insurance policy surrenders declined by 17.65 percent during the first five months of the current fiscal year, according to the Nepal Insurance Authority. A total of 37,147 policies worth Rs 5.69 billion were surrendered, down from Rs 6.10 billion during the same period last year. Regulators credit the improvement to stricter agent licensing, improved training, and expanded insurance awareness initiatives. However, non-renewal of policies continues to pose a challenge, with unpaid premiums nearing Rs 37 billion and a marginal increase in lapsed policies. Insurers have introduced renewal discount schemes, though limited awareness and weak communication by agents have reduced their effectiveness.
Hilton Kathmandu staff transferred abroad after Gen Z protest damage
Following extensive arson damage during the Gen Z movement on September 9, 2025, most employees of the Hilton Hotel in Kathmandu have been temporarily relocated to overseas properties within the Hilton chain. The Naxal-based hotel, which employed 235 staff members, was forced to shut down after sustaining severe damage. To avoid layoffs, Hilton transferred workers to its Asia-Pacific hotels, with plans to bring them back once reconstruction is completed. Around 150 employees have already been accommodated under this arrangement. Hilton Kathmandu operates under Jagadamba Hospitality, a Shankar Group company chaired by Shankar Agrawal, with directors Sulav Agrawal, Sahil Agrawal, and Infinity Holdings Chairman Deepak Bhatta.
Insurance authority issues key rulings to clarify claims settlement principles
The Nepal Insurance Authority has issued several landmark decisions clarifying important principles related to insurance claims. These include rulings that life insurance claims remain payable even in cases of murder, provided beneficiaries are not involved; that fatal workplace machinery accidents qualify as third-party claims; and that claims cannot be settled unless premiums have been duly paid and documented. These decisions are intended to safeguard policyholders, reinforce insurer accountability, and provide clearer guidance for beneficiaries, agents, and insurance companies operating in Nepal’s expanding insurance market.
Narayanghat–Gaindakot cable-stayed ‘iconic bridge’ enters testing stage
Construction of the cable-stayed “iconic bridge” over the Narayani River, connecting Narayanghat and Gaindakot, has moved into a crucial testing phase. The Rs 1.68 billion project, undertaken by Tundi Construction Pvt. Ltd., is using O-Cell load-testing technology—a first in Nepal—to evaluate the bearing capacity of bridge piles. Built to international IRC standards and designed for a minimum lifespan of 100 years, the 420-metre bridge will feature advanced cable-stayed and suspension elements. Engineers aim to complete foundation and piling work within the current fiscal year, after which full-scale construction will accelerate.
Only 34 of Nepal’s 55 airports are operational, night flights remain limited
Nepal has a total of 55 airports—three international and 52 domestic—but only 34 are currently operational, according to the Civil Aviation Authority of Nepal. All three international airports—Tribhuvan, Gautam Buddha, and Pokhara—are functional, along with two domestic hub airports, Biratnagar and Nepalgunj, and 29 other domestic airports. The remaining 21 airports, including Baglung, Baitadi, Jiri, and Rolpa, remain closed. Only 10 airports support night operations, significantly restricting flight scheduling and flexibility. Nepal also has a heliport in Bhaktapur’s Nalinchok, while projects such as Nijgadh International Airport and Arghakhanchi Domestic Airport are under construction. The limited number of operational airports and night-flight facilities highlights the need for sustained investment in aviation infrastructure to improve safety, connectivity, and regional access.
Nepal’s economy projected to grow 4 percent in FY 2024/25
Nepal Rastra Bank has projected economic growth of 4 percent at current prices in FY 2024/25, with consumer price–based growth estimated at 4.6 percent. Growth for FY 2023/24 has been revised to 3.7 percent. The agriculture, industry, and service sectors are expected to contribute 25.2 percent, 12.8 percent, and 62 percent of GDP respectively. Bagmati Province remains the largest contributor at 36.5 percent, while Karnali has the smallest share at 4.2 percent. Per capita gross national income is projected at USD 1,517. The report also notes infrastructure losses of Rs 84.4 billion from the Gen Z protests. Inflation averaged 4.06 percent and is expected to remain around 4 percent, influenced by global fuel prices, domestic rice shortages, and election-related spending.
Patan High Court annuls membership of 18 FNCCI commodity associations
The Patan High Court has invalidated the commodity-based membership of 18 organizations affiliated with the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), stating that their inclusion contravened the federation’s statute. The ruling was issued by a joint bench of Judges Chandrabahadur Saru and Gopal Prasad Bastola in response to a writ petition filed by former FNCCI Vice President Kishore Pradhan. The court determined that the FNCCI Executive Committee’s decision on Falgun 26, 2081, to grant membership to 19 commodity associations went against the recommendations of the federation’s Membership Committee. Only Forum Health and Technical Science was permitted to retain its membership status.
US ends duty-free access for 77 Nepali products after limited uptake
The United States has formally withdrawn duty-free access for 77 Nepali products under the Nepal Trade Preference Program, which was introduced in 2015 to aid post-earthquake recovery. Despite being in place for a decade, Nepal exported only 29 of the eligible products, while 48 items saw no exports at all. Trade data show inconsistent performance, with modest recent gains failing to compensate for earlier declines. The scheme’s expiry coincides with a new US policy imposing an additional 10 percent tariff on Nepali goods. Analysts cite weak product selection, low production capacity, limited awareness, and procedural complexities as reasons for underutilization.
Pokhara–Muglin road project deadline extended for third time
The Pokhara–Muglin road expansion project along the Prithvi Highway has received its third deadline extension after repeated delays. Despite two earlier extensions, the Asian Development Bank–funded project has achieved only about 75 percent physical progress over four years. The Department of Roads has now set a new completion deadline of Asar 15, 2083, citing delays caused by utility relocation and tree clearance. While asphalt work on much of the 38.88-kilometre Jamune–Pokhara stretch is complete, remaining tasks include widening to four and six lanes, installing safety barriers, and road marking.
CIAA probes tax exemptions in Pokhara airport project, causing diplomatic unease
Nepal’s anti-corruption watchdog, the Commission for the Investigation of Abuse of Authority (CIAA), has launched an inquiry into tax exemptions granted during the construction of Pokhara International Airport. The probe expands beyond alleged cost escalation and follows Auditor General findings that tax waivers were granted even though the USD 244 million contract with a Chinese contractor was tax-inclusive. Although the project was financed through a China Exim Bank loan—normally tax-exempt—auditors argue that contractor payments should have been adjusted accordingly. The investigation has unsettled both the Finance Ministry and the Chinese Embassy, with Nepal’s former Chinese ambassador reportedly raising objections before leaving the country.
Foreign tourist arrivals in Upper Mustang decline amid security concerns
Upper Mustang recorded a drop in foreign tourist arrivals in 2025, welcoming 3,872 visitors compared to 4,093 in 2024. The decline is largely attributed to security concerns following Gen Z protests and a jail break in October. French tourists remained the largest group, though their numbers also fell year-on-year. October and April continue to be peak seasons for visitors exploring Lo Manthang, monasteries, caves, and traditional villages. While ACAP Lo Manthang has installed new signboards to assist travelers, local entrepreneurs are calling for reduced fees and longer stay allowances to revive tourism. Upper Mustang has been open to foreign visitors since 1992.
Maulakali cable car resumes service after Gen Z protest damage
The Maulakali Cable Car in Gandakot, East Nawalparasi, has resumed operations after undergoing repairs for damage sustained during Gen Z movement protests involving vandalism and arson. The bottom station suffered major losses, forcing a temporary shutdown. Restoration was carried out with technical assistance and equipment from Austrian manufacturer Doppelmayr. According to Station Manager Suraj Paudel, the cable car now operates on its regular schedule from 6:00 am to 10:00 pm. Passenger numbers have increased by more than 30 percent since reopening. Operational since Baisakh 2080, the cable car has served around 600,000 passengers and plays a key role in religious tourism and the local economy.
Syangja orange production reaches Rs 1.32 billion on good weather and expansion
Syangja, Nepal’s top orange-producing district, produced 23,238 tonnes of oranges worth Rs 1.32 billion this fiscal year. Cultivation covered 2,400 hectares, of which 1,420 hectares were fruit-bearing. Production rose by Rs 200 million compared to last year, driven by favourable weather, expanded orchards, and an increase in mature trees. About 10 percent of the harvest is consumed locally, with the remainder supplied to markets such as Pokhara, Kathmandu, and Chitwan. Designated pocket areas and newly identified zones are supporting output growth, with individual farmers earning between Rs 25,000 and Rs 5.5 million annually.
Chinese tourist arrivals fall short despite ‘Visit Nepal Year in China’ push
Despite China’s 2024 commitment to send 500,000 tourists to Nepal in 2025, arrivals from China declined by 6.3 percent to 95,480. Overall tourist arrivals stood at just over one million in 2025, reflecting only a 1 percent increase from the previous year. Tourism momentum was disrupted by Gen Z protests in September 2025, which led to unrest, property damage, and political instability. Additional challenges included flight cancellations, high airfares, and lingering post-pandemic effects. While earlier initiatives such as visa waivers and charter flights boosted arrivals, recent promotional efforts failed to sustain demand, leaving tourism below its pre-pandemic peak.
Kathmandu metropolis warns 107 inactive schools of deregistration
Kathmandu Metropolitan City has warned 107 schools found to be non-operational to contact its education department, or face steps toward deregistration. The notice follows field inspections that found the schools inactive or absent from their registered locations despite prior approval. Based on a decision by the Metropolitan Education Committee, schools claiming to be operational must submit proof within 15 days. Failure to comply may result in cancellation under the Kathmandu Metropolitan Education Act, 2018.
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