KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic landscape shows a mix of short-term optimism and emerging structural risks. The stock market surged to a 6 percent gain after the recent election results, reflecting renewed investor confidence, while monetary conditions remain loose with banks holding excess liquidity due to weak credit demand.
At the same time, external shocks—particularly the escalating conflict in West Asia—are beginning to ripple through the economy, raising concerns over remittance flows, foreign employment opportunities, and international flight connectivity. Rising global commodity prices have pushed up edible oil costs domestically, even as gold and silver prices declined.
Meanwhile, the government is adopting a cautious fiscal stance by lowering the next budget ceiling and seeking domestic borrowing through development bonds, while pushing regulatory reforms and infrastructure projects. Overall, the developments suggest an economy balancing political optimism with external vulnerabilities and structural challenges in investment and trade.
NEPSE hits third positive circuit breaker, closes with 6% gain
Trading on the Nepal Stock Exchange (NEPSE) was halted on Monday after the benchmark index triggered its third positive circuit breaker, climbing 162.93 points to close at 2,875.43, marking a 6 percent surge. Market sentiment strengthened sharply after the recent 2026 Nepal House of Representatives election results boosted investor confidence. According to NEPSE rules, trading pauses for 20 minutes if the index rises 4 percent, 40 minutes after a 5 percent rise, and the market closes for the day if the increase reaches 6 percent.
Gold drops by Rs 3,700 per tola; silver also declines
Prices of precious metals declined in the domestic market on Monday, according to the Federation of Nepal Gold and Silver Dealers’ Association. Gold prices fell by Rs 3,700 per tola (11.66 grams), bringing the rate down to Rs 313,200 per tola. The metal had been traded at Rs 316,900 per tola on Sunday, while the price stood at Rs 313,400 last Friday. Silver also recorded a decline, dropping Rs 65 per tola to reach Rs 5,410 per tola. It had been priced at Rs 5,475 per tola on Sunday and Rs 5,445 last Friday, indicating minor fluctuations in recent trading sessions.
Govt to raise Rs 6 billion through five-year development bonds
The Government of Nepal plans to mobilize Rs 6 billion in domestic borrowing by issuing five-year development bonds. According to the Public Debt Management Office, the instrument titled “Development Bond 2031” will open for competitive bidding tomorrow, with formal issuance scheduled in March. The bonds’ interest rate will be determined using a Dutch auction system. Eligible investors include banks, financial institutions, insurance companies, and individual Nepali citizens. The bonds can also be used as collateral for loans, offering investors a relatively secure investment option at a time of global economic uncertainty and domestic fiscal pressure.
NRB tightens “account payee” check rules for government transactions
The Nepal Rastra Bank (NRB) has introduced stricter provisions governing “Account Payee” checks used in government-related financial transactions. Under the Government Transaction Directive, 2019 (Second Amendment 2024), checks issued in the name of a government office or company must now be deposited only into the bank account of the specified payee. The earlier practice of endorsing checks for transfer to other accounts has been discontinued. Financial institutions have been instructed not to clear any check if the account holder’s name does not match the payee specified on the check. The rule aligns with the provisions of the Negotiable Instruments Act and is intended to reduce risks associated with the handling of government funds.
Govt suspends labor permits for 12 countries amid security risks
The Government of Nepal has temporarily halted the issuance of labor permits for 12 countries in the Middle East and Gulf region due to escalating regional tensions. From Monday onward, Nepali workers are barred from traveling for employment to Saudi Arabia, the UAE, Qatar, Kuwait, Bahrain, Oman, Iraq, Yemen, Jordan, Lebanon, Turkey, and Israel. Authorities say the measure is intended to protect the safety of Nepali citizens as the region becomes increasingly volatile. Although Nepal’s foreign exchange reserves currently cover around 18 months of imports, officials warn that a prolonged halt in overseas employment opportunities could strain the national economy and increase unemployment pressure at home.
Edible oil prices surge in Nepal amid West Asia conflict
Prices of edible oil in Nepal have jumped sharply over the past month, increasing by as much as Rs 500 per crate, largely due to rising international raw-material costs. According to the Nepal Retailers Association, wholesale prices of sunflower oil exceeded Rs 2,700 per crate on Monday. In retail markets, sunflower oil is selling for around Rs 300 per liter, while Dhara mustard oil has reached Rs 3,450 per crate. Traders attribute the surge mainly to the ongoing Iran–Israel conflict, which has disrupted global supply chains and pushed up commodity prices. Increased exports to India have also contributed to higher domestic prices. Meanwhile, staple foods such as rice and lentils have largely maintained stable prices.
Banking system faces prolonged excess liquidity amid accommodative policy
Nepal’s banking sector has been dealing with persistently high liquidity levels since early 2023, according to the Nepal Rastra Bank. Although lending rates have fallen to historically low levels, credit expansion has remained sluggish, even as the central bank continues to pursue accommodative monetary policies. The NRB’s policy stance follows the post-COVID economic recovery, growth in remittance inflows, and easing inflation. By December 2025, banks’ excess reserves — including mandatory cash balances — had surpassed Rs 1.20 trillion. Earlier tightening policies helped stabilize inflation and foreign exchange reserves, but weak demand has limited the effectiveness of low interest rates in stimulating lending and investment. The central bank says it will continue careful monetary easing while monitoring liquidity conditions and financial stability.
Resource estimation committee sets Rs 1.89 trillion budget ceiling
The National Resource Estimation Committee has set a budget ceiling of Rs 1.89 trillion for the upcoming fiscal year 2026/27. The committee, chaired by the vice-chairperson of the National Planning Commission, fixed the limit at Rs 74 billion lower than the current fiscal year’s initial allocation of Rs 1.964 trillion, representing a reduction of about 4 percent. To support this framework, the government aims to increase revenue by 11 percent, targeting around Rs 1.2 trillion in collections. The cautious approach comes after the interim government had to cut the current budget by Rs 275 billion during a mid-term review due to revenue shortfalls.
War in West Asia threatens 41% of Nepal’s total remittance inflow
The escalating conflict in West Asia has raised serious concerns for Nepal’s economy, which depends heavily on remittances from the region. According to the Nepal Rastra Bank, 41 percent of Nepal’s total remittance inflow originates from Middle Eastern countries. NRB Executive Director Ram Sharan Kharel warned that the Rs 1.62 trillion in remittances recorded between December 16, 2025 and January 14 could decline sharply if the conflict intensifies. About 1.8 million Nepali migrant workers are currently employed in the region, including roughly 915,000 in the UAE, 385,000 in Saudi Arabia, and 358,000 in Qatar.
Over 54,000 Nepalis in West Asia register for emergency support
More than 54,786 Nepali citizens living in West Asia have registered their details through a new online system launched by the Ministry of Foreign Affairs. The registration portal was introduced to help authorities track and coordinate possible rescue operations for approximately 1.729 million Nepali nationals living in the region amid rising tensions. According to the Department of Consular Services, air travel remains limited. However, some flights by Flydubai and Air Arabia are still operating from the UAE, while Saudi Arabia and Oman maintain partial air connectivity.
Female participation in foreign employment rises to 11.25%
The proportion of Nepali women seeking employment abroad continues to increase steadily, according to the Department of Foreign Employment. Government data shows that 94,455 women out of 839,266 migrant workers went abroad during the last fiscal year, representing 11.25 percent of the total. In the first seven months of the current fiscal year, around 56,000 women have already received labor permits. Although Nepal has opened 111 countries for foreign employment, the UAE and Qatar together account for more than 60 percent of female migrant placements. Many women work as caregivers, nurses, and domestic workers, despite ongoing debates over safety and freedom of mobility.
International flight volume at TIA drops by 44% amid airspace closures
International flight activity at Tribhuvan International Airport has declined significantly following the closure of airspace in several Gulf countries. According to airport spokesperson Santosh Kumar Basnet, daily international flights dropped from 106 on February 27 to just 74 by Saturday, representing a 44 percent decrease. Passenger movement has also fallen sharply, with traffic dropping around 60 percent and only 6,802 travelers recorded on Thursday. Major airlines including Qatar Airways, Air Arabia, and Kuwait Airways have suspended operations, while Flydubai is operating limited rescue flights. Around 17 daily flights to Gulf destinations have been canceled.
National planning commission prioritizes capital expenditure and project selection
The National Planning Commission has proposed a stronger focus on efficient budget allocation and careful project selection in the upcoming fiscal plan. Vice-Chairman Prakash Kumar Shrestha said the new budget will aim to restore public confidence by prioritizing impactful projects. The commission has recommended reducing recurrent expenditure from 39 percent to 36 percent of the total budget. Meanwhile, capital expenditure is projected to remain below Rs 4 billion, compared with Rs 407.88 billion allocated this year. A policy is also being proposed to exclude federal funding for projects costing less than Rs 30 million. Economic targets include 5.5 percent GDP growth and 6 percent inflation for the next fiscal year.
Rs 5.67 billion new parliament building faces delays
Construction of Nepal’s new federal parliament building is nearing completion but still facing delays. According to the Federal Parliament Secretariat, the inaugural meeting of the newly elected House of Representatives will be held in a multipurpose hall instead of the main parliamentary chamber. Roshan Shrestha of the Department of Urban Development and Building Construction said the Rs 5.672 billion project is about 94 percent complete.
Plywood exports drop 47% as BIS certification delays hit shipments to India
Nepal’s plywood exports have declined sharply due to delays in certification by Indian authorities. Data from the Trade and Export Promotion Centre shows exports during the first seven months of the fiscal year fell to Rs 2.69 billion, down from Rs 5 billion in the same period last year — a drop of 46.78 percent. Manufacturers blame delays in renewing the Bureau of Indian Standards (BIS) certification, which halted exports for nearly five months. Around 30 factories have recently received renewed certification and resumed shipments, mainly to Rajasthan, Delhi, Haryana, and Punjab, while exploring markets in Mumbai and Bengaluru. The sector currently includes about 80 factories employing around 25,000 workers. Producers have invested in 3,000 hectares of plantations to supply raw materials such as alder, eucalyptus, suar, and sacred fig. If certification problems are resolved, exports could potentially reach Rs 30–40 billion annually.
Khokana fast track dispute leads to revised project plan
The government has decided to revise the Detailed Project Report (DPR) for the Kathmandu–Terai/Madhesh Fast Track to resolve disputes in the Khokana area. Prime Minister Sushila Karki instructed officials to relocate the toll plaza to Pharsidol, about 3.3 kilometers away, in order to protect local heritage sites. The project, managed by the Nepal Army, spans 70.977 kilometers and has achieved around 46 percent physical progress so far. Approximately Rs 82.97 billion has been spent from the estimated Rs 211.93 billion project cost. The revised plan also includes a new bridge at Dukuchhap and connections to the Kanti Highway.
Herbal exports from Nepalgunj surge 33% in seven months
Exports of medicinal herbs through the Nepalgunj border point have increased significantly this fiscal year. About 1.3 million kilograms of herbs were exported in the first seven months, generating Rs 396 million, which represents a 33 percent increase compared with the same period last year. Products exported include timur, kaulo, satuwa, bojho, cinnamon, and amala, with roughly 85 percent of shipments going to India. For the first time, 39,486 tonnes of pine nuts valued at Rs 632,000 were exported, although a 100 percent export tax has limited further growth. Industry groups say reducing taxes and introducing supportive policies could help expand the sector and generate additional employment opportunities.
KMC bans financial transactions with non-citizens
Kathmandu Metropolitan City has directed cooperative institutions within its jurisdiction not to conduct financial transactions with foreign nationals. The directive was issued by Dhruba Kumar Kafle, head of the metropolitan cooperative department, following reports that non-Nepali citizens were being enrolled as cooperative members. Under the Cooperative Act, only Nepali citizens are eligible for cooperative membership. The KMC also warned that cooperatives failing to submit their annual general meeting reports could face liquidation proceedings. Around 1,900 cooperatives currently operate within Kathmandu, and authorities say monitoring has been intensified to protect depositors’ funds.
Comment