KATHMANDU: Economic Digest presents a brief yet comprehensive roundup of major business developments in Nepal, delivered in clear and accessible summaries.
Nepal’s recent economic and policy developments reflect a mix of external financing support, structural weaknesses, and sectoral stress. While the country is set to receive an additional Rs 6.5 billion from the IMF, ongoing reliance on foreign loans is further highlighted by plans to borrow nearly Rs 250 billion externally to finance the upcoming budget, alongside continued dependence on institutions like the Asian Development Bank.
At the same time, fiscal inefficiency remains a concern, with capital expenditure persistently below targets for years and large underutilisation of allocated budgets, raising questions about administrative capacity. Structural challenges are also visible in weak manufacturing growth, reduced Home Ministry allocations, and delays in major infrastructure projects such as Budhigandaki, even as ambitious plans like the Kathmandu rail corridor move toward feasibility studies.
On the investment side, institutions like the Social Security Fund are shifting toward hydropower and renewable energy, signalling a long-term green focus, while sectors such as tourism and agriculture show mixed trends, with rising mountaineering revenue but falling tourist arrivals in Lumbini and worsening fertiliser shortages affecting farmers in multiple districts.
Social issues, including wage exploitation in the informal sector and distress in cooperatives, further underline governance and regulatory gaps, collectively pointing to an economy facing both financing opportunities and persistent implementation and productivity constraints.
Nepal to secure additional Rs 6.5 billion from IMF
Nepal is expected to receive an additional loan of approximately Rs 6.5 billion from the International Monetary Fund (IMF) under the Extended Credit Facility (ECF). The IMF Executive Board recently completed the seventh and final review of the ECF programme, qualifying Nepal for the final disbursement. The amount will be released following the implementation of agreed reforms and compliance with IMF conditions. Under the arrangement, Nepal will receive SDR 31.32 million, equivalent to around USD 42.9 million.
Gold and silver prices fall in domestic market
Gold and silver prices declined in the Nepali market on Sunday. The Federation of Nepal Gold and Silver Dealers’ Association fixed the price of gold at Rs 300,800 per tola (11.66 grams), down from Rs 309,000 per tola on Friday. This represents a decrease of Rs 8,200 per tola within two days. The price of 10 grams of gold has been set at Rs 257,890. Silver prices also fell alongside gold, according to the Federation.
Social Security Fund focuses investment on hydropower and clean energy
The Social Security Fund has selected hydropower projects, electricity transmission infrastructure, solar energy, and renewable energy-based industries as priority areas for investment through loans and co-financing arrangements. As of June 3, the fund had accumulated contribution deposits totaling Rs 111.07 billion. With contributions steadily increasing, the fund has determined that it must broaden its investment portfolio. Accordingly, it has adopted a policy of investing in hydropower and renewable energy ventures in collaboration with state-owned enterprises.
Capital expenditure remains sluggish despite higher budget targets
Nepal’s capital expenditure performance continues to lag behind expectations. During the past five fiscal years, annual capital spending has not exceeded Rs 250 billion. Expenditure stood at Rs 222 billion last fiscal year and Rs 191 billion the year before, while spending in earlier years ranged between Rs 216 billion and Rs 233 billion. In every case, less than 65 percent of the allocated budget was utilized. Economists note that to implement the Rs 2.124 trillion budget unveiled by Finance Minister Swarnim Wagle, capital spending would need to increase significantly from current levels. Although revenue collection targets may be challenging to achieve, experts believe greater administrative efficiency could help meet capital expenditure goals.
Global EOI sought for DPR of Kathmandu rail project
The Rail, Metro Rail and Monorail Development Project has invited international Expressions of Interest (EOI) for the preparation of a Detailed Project Report (DPR) for a 27.5-kilometre rail corridor linking major areas of Kathmandu. Officials believe the project could significantly improve the capital’s transportation system. Rapid urban growth, narrow road networks and a rising number of vehicles have made travel within the Kathmandu Valley increasingly difficult. Commuters frequently spend hours navigating traffic congestion between locations such as Ratnapark, Narayangopal Chowk and Satdobato. Authorities expect the proposed rail system to provide a long-term solution to these challenges.
Home Ministry budget slashed by almost 50 percent
The government has significantly reduced funding for agencies under the Ministry of Home Affairs in the upcoming fiscal year. The allocation has been cut by 48.25 percent compared to the current fiscal year’s budget. While Rs 208.62 billion was allocated for the ongoing fiscal year, only Rs 107.95 billion has been earmarked for the next fiscal year. This represents a reduction of Rs 100.76 billion.
Government plans foreign borrowing of nearly Rs 250 billion
The government intends to raise nearly Rs 250 billion in foreign loans during fiscal year 2026/27. Presenting the budget on May 29, Finance Minister Dr. Swarnim Wagle stated that the portion of the Rs 2.124 trillion budget not covered by domestic revenue would be financed through borrowing. Of the planned borrowing, Rs 247 billion is expected to come from foreign sources. The largest share is projected to be provided by the Asian Development Bank (ADB), from which the government plans to secure Rs 116 billion. The financing package also includes grant assistance.
Budhigandaki dam design to undergo fresh review
The height of the proposed dam for the 1,200-megawatt Budhigandaki Reservoir Hydropower Project, one of Nepal’s national pride projects, will be reassessed before construction begins. A final design completed in 2015 recommended a 263-metre-high curvature arch dam across the Budhigandaki River, which flows along the boundary of Gorkha and Dhading districts. More than a decade later, authorities are preparing to review the proposed height before moving forward. Construction is targeted to begin in 2028, with a fresh technical assessment planned beforehand.
Manufacturing sector growth remains weak
The slow pace of growth in Nepal’s manufacturing sector continues to raise concerns. Government data indicate that expansion in the sector has remained limited in recent years. A strong manufacturing base is considered essential for promoting self-reliance, maximizing the use of domestic resources and generating employment opportunities. The National Statistics Office has estimated overall economic growth at 3.85 percent for fiscal year 2025/26, while the manufacturing sector is projected to grow by only 2.83 percent.
Nepal earns Rs 1.26 billion from spring mountaineering season
Nepal issued climbing permits to 1,195 mountaineers for expeditions on 31 Himalayan peaks during the spring 2026 climbing season. According to the Mountaineering Branch of the Department of Tourism, the country generated Rs 1.2647 billion, equivalent to around USD 8.47 million, in royalty income between March 1 and June 1, 2026. The climbers included 908 men and 287 women from 79 countries, organized into 149 expedition teams to scale various mountains across Nepal.
More than 145,000 agricultural insurance policies issued in 10 months
According to the Nepal Insurance Authority, a total of 145,862 agricultural and livestock insurance policies were issued during the first 10 months of the current fiscal year. Insurance companies collected premiums worth Rs 1.57 billion during the period. Of the total, Rs 1.13 billion, or 72.45 percent, came from policies eligible for the government’s 80 percent premium subsidy. Policies qualifying for a 65 percent subsidy, which applies to insured amounts ranging from Rs 5 million to Rs 10 million, accounted for a relatively small share of the total.
Informal sector workers face widespread wage injustice
Workers in Nepal’s informal sector continue to experience significant wage-related exploitation, according to a recent study. The research found that 73.4 percent of workers receive only partial payment for their labour, while 66.2 percent are asked to work on the assurance that they will be paid later. The study was conducted by ActionAid between March and May 2026 in Bardiya, Surkhet, Kanchanpur, Doti, Dadeldhura, Kapilvastu, Chitwan, Makwanpur, Bara, Parsa, Mahottari, Dhading and Kathmandu, highlighting widespread challenges faced by informal workers across the country.
Distressed cooperatives panel publishes names of major loan defaulters
The Office of the Problematic Cooperative Management Committee under Bagmati Province has released the names of major borrowers linked to five troubled cooperative institutions. Acting on a decision taken on Friday, the committee made public the identities of 114 large borrowers associated with Laligurans Saving and Credit Cooperative Limited, Sumeru Saving and Credit Cooperative Limited, National Namobuddha Saving and Credit Cooperative Institution Limited, Darshan Saving and Credit Cooperative Institution Limited, and Civil Saving and Credit Cooperative Limited.
Sudurpashchim government enters final phase of budget preparations
The Sudurpashchim Provincial Government has nearly completed preparations for its budget for the next fiscal year, which must be presented to the Provincial Assembly by June 15. Ministries are currently finalizing their proposed allocations. The province’s budget for the ongoing fiscal year stands at Rs 33.45 billion, but the upcoming budget is expected to be smaller due to reduced funding from the federal government. Authorities have prioritized unfinished projects in the new budget framework.
Government repeats Karnali Tourism Decade commitment
The government has once again announced plans to launch a “Karnali Tourism Decade” campaign aimed at promoting the region’s unique tourism potential. The programme seeks to market the slogan “Nepal’s destination is Karnali” internationally, particularly in India and China, while also upgrading tourism information centres. Other measures, including startup loans for young entrepreneurs and the establishment of business incubation centres, have also been carried forward from previous budgets. However, implementation challenges in public service delivery remain unresolved.
Heatwave reduces foreign tourist arrivals in Lumbini
Soaring temperatures have led to a decline in the number of tourists from third countries visiting Lumbini, although arrivals from India have increased. While 2,600 third-country tourists visited the birthplace of Buddha in May last year, the figure has dropped slightly this year. Chinese tourists formed the largest group with 978 visitors, followed by travellers from Sri Lanka (238), Vietnam (163), and the United Kingdom (113). Visitor numbers from other countries remained below 100.
Applications sought for vacant Nepal Tourism Board positions
The government has opened applications for five vacant seats on the Executive Committee of the Nepal Tourism Board. In a public notice issued on Friday, the Ministry of Culture, Tourism and Civil Aviation invited eligible candidates to submit their biodata within five days.
Fertiliser shortage pushes Bardiya farmers to Indian markets
Farmers in Bardiya have begun travelling across the border into India to purchase fertilisers as shortages continue in Nepal during the paddy planting season. With limited availability of urea and DAP fertilisers, many farmers are cycling long distances to Indian border markets to secure supplies. Bardiya has around 110,447 hectares of cultivable land, of which nearly 50,100 hectares are used for paddy farming.
Nabil Bank launches Nepal-India cross-border remittance facility
Nabil Bank has introduced a Nepal-India cross-border person-to-person (P2P) remittance service. According to the bank, the new facility enables customers to transfer and receive funds instantly between the two countries through a secure digital platform. Indian citizens with accounts at Nabil Bank can send money directly to relatives and friends in India using mobile banking applications. Likewise, Nepali and Indian citizens can conveniently transfer funds to Nabil Bank account holders in Nepal.
Mahottari farmers struggle with shortages during rice planting season
Farmers in Mahottari are facing major challenges during the peak rice cultivation period due to shortages of fertiliser, improved seeds, irrigation facilities and agricultural infrastructure. They say delays in the supply of key inputs could significantly reduce paddy production this year. Farmers in Aurahi, Gaushala, Bardibas, Balwa, Loharpatti, Jaleshwar and Matihani are actively engaged in nursery preparation and rice transplantation, but many have been forced to buy chemical fertilisers from private suppliers at higher prices.
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