KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The developments collectively point to an economy marked by external strength but persistent internal weaknesses. While remittance inflows, foreign exchange reserves, low inflation, and multilateral support for digital transformation underscore macroeconomic stability and external resilience, domestic growth drivers remain subdued.
Weak capital spending, slow progress in National Pride Projects, and repeated budget downward revisions highlight structural bottlenecks in project execution and public financial management. Despite ample liquidity and falling interest rates, sluggish credit demand and a declining stock market reflect low investor confidence, further aggravated by political instability, governance shortcomings, corruption concerns, and the economic fallout from last year’s protests.
Sectoral bright spots, such as rising industrial output, steady remittance-backed consumption, healthcare expansion, and niche agricultural and service activities, offer some optimism, but without stronger governance reforms, accelerated capital expenditure, and improved policy predictability, these gains may not translate into sustained, broad-based economic growth.
NEPSE falls 10.25 points with Rs 8.61 billion turnover
The Nepal Stock Exchange (NEPSE) slipped by 10.25 points, or 0.38 percent, on Tuesday to close at 2,662.14. The Sensitive Index also declined, shedding 1.26 points to settle at 454.39. Trading turnover totaled Rs 8.616 billion, with 21.7 million shares changing hands through 89,834 transactions involving 324 listed companies. This marked the third straight day of losses after declines on Sunday and Monday. Of the 13 sectoral indices, 11 closed in the red, including commercial banking and life insurance, while mutual funds and trading posted gains. Share prices of 74 companies advanced, 179 declined, and seven remained unchanged.
Government trims total budget size by 14.04 percent
Finance Minister Rameshore Khanal has reduced the overall size of the national budget to Rs 1.688 trillion following the mid-term review, marking a 14.04 percent cut from the original Rs 1.964 trillion budget presented earlier. Under the revised estimates, Rs 1.125 trillion has been allocated for current expenditure, Rs 243.30 billion for capital expenditure, and Rs 319.4 billion for financial management. The adjustment reflects revenue collection trends and spending patterns observed in the first half of the fiscal year.
Gold and silver prices edge up slightly
Gold and silver prices recorded a marginal increase in the domestic market on Tuesday. Gold rose by Rs 900 per tola to Rs 305,500, while silver was priced at Rs 5,240 per tola. In the international market, gold was trading at USD 5,029 per ounce and silver at USD 81 per ounce.
Finance Ministry cuts capital spending estimate by about 21 percent
The Ministry of Finance has revised down its capital expenditure projection for the current fiscal year by around 21 percent. While the annual budget had allocated Rs 407 billion for capital spending, the mid-year review estimates that only Rs 319 billion will be utilized. Overall budget expenditure is also expected to undershoot initial targets. Current expenditure, originally set at Rs 1.180 trillion, is now projected to reach Rs 1.225 trillion. Meanwhile, spending under financial management has been revised downward to Rs 318 billion from the initially allocated Rs 375 billion.
Commercial bank lending rate drops to 7.12 percent as NRB absorbs excess liquidity
The average lending rate of Nepal’s commercial banks has declined to 7.12 percent, down from 8.69 percent a year ago, according to the Ministry of Finance. The weighted average deposit rate has also fallen to 3.56 percent. Despite lower interest rates, credit demand remains weak. During the first six months of the fiscal year (July 17, 2025 to January 14, 2026), deposits rose by Rs 417.48 billion to reach Rs 7.681 trillion, while private sector lending increased by only Rs 197.47 billion. To manage surplus liquidity, Nepal Rastra Bank has absorbed Rs 28.699 trillion from the market.
World Bank approves USD 50 million for Digital Nepal project
The World Bank’s Executive Board has approved USD 50 million to support Nepal’s Digital Transformation Project, aimed at strengthening digital public infrastructure and improving service delivery. Planned investments include an integrated online citizen portal, a digital locker for verified documents, and secure data-sharing systems. The project will also support electronic signatures and cybersecurity initiatives to build trust in the digital economy. The Asian Development Bank is expected to contribute an additional USD 40 million following its board approval in March.
Remittance inflows jump 39.1 percent, crossing Rs 1.6 trillion
Remittance inflows surged by 39.1 percent to Rs 1.62 trillion in the first half of the fiscal year, significantly strengthening Nepal’s external sector. The Ministry of Finance reported that foreign exchange reserves have climbed to USD 22.47 billion, resulting in a balance of payments surplus of Rs 501.24 billion. Average consumer inflation fell to 1.7 percent. Despite strong external indicators, economic growth in the first quarter is projected at a modest 3.0 percent, with agriculture slowing to 1.36 percent due to lower paddy output, while industry expanded by 5.44 percent.
Nepal scores 34 in Corruption Perceptions Index 2025
Nepal has retained a score of 34 out of 100 in the Corruption Perceptions Index (CPI) 2025 published by Transparency International. The score places Nepal among countries with weaker transparency and shows no notable progress in curbing corruption. Within South Asia, Bhutan topped the list with 71 points, while India and the Maldives scored 39 each. Transparency International Nepal attributed Nepal’s stagnant performance to political instability, weak governance, and lack of accountability. Its president Madan Krishna Sharma noted that despite youth-led and Gen Z protests, meaningful reforms in public services, procurement, and the judiciary remain absent.
Capital spending reaches just 12.12 percent in mid-year review
According to the Ministry of Finance, only Rs 690.78 billion of the total Rs 1.964 trillion budget was spent during the first half of fiscal year 2025/26. Capital expenditure remained particularly low at 12.12 percent, while current expenditure reached 41.25 percent. The ministry cited weak project preparation, land acquisition challenges, forest clearance issues, and infrastructure damage from protests in September 2025 as major reasons for the slow pace of capital spending.
National Pride Projects record only 15.49 percent financial progress
A mid-year assessment by the Ministry of Finance shows that financial progress on Nepal’s 23 ongoing National Pride Projects stands at just 15.49 percent. Of the Rs 67.86 billion allocated for these projects in the current fiscal year, only Rs 10.393 billion had been spent by mid-January. While the Mid-Hill Highway has achieved over 81 percent physical progress, the Kathmandu–Terai Fast Track remains at 42.13 percent. Delays have been attributed to compensation disputes, legal issues related to forest land, and frequent changes in project leadership.
Study estimates Rs 34 billion damage from Gen Z protests
A study by Chanakya Media titled Investor Confidence and Business Environment after the Gen Z Protest estimates physical damage worth Rs 34 billion from protests held on September 8 and 9, 2025. Based on a survey of 121 entrepreneurs, the report found that 97 percent believe the investment climate has deteriorated. About 70 percent of investors have adopted a wait-and-see approach, while 8 percent have abandoned expansion plans. The study notes that despite government relief measures, businesses remain shaken by targeted attacks on private property and misinformation against entrepreneurs.
Everest Sugar Mill begins payments to sugarcane farmers
Everest Sugar Mill in Mahottari has started paying sugarcane farmers for the 2025/26 crushing season, adhering to its policy of settling payments within seven days of purchase. Farmers are receiving Rs 620 per quintal, Rs 25 more than last year. The mill has so far crushed over 1.8 million quintals of sugarcane. According to Financial General Manager Bimal Chandra Thakur, Rs 935.5 million has already been disbursed for around 1.6 million quintals purchased by February 3.
Valentine’s Day rose trade expected to reach Rs 5.62 crore
Demand for roses is expected to surge ahead of Valentine’s Day, with an estimated 450,000 stems valued at Rs 56.2 million likely to be sold nationwide. The Floriculture Association Nepal said domestic production from 41 districts can meet only 30 percent of demand, with the remaining 70 percent to be imported. Prices are expected to range between Rs 100 and Rs 150 per stem. FAN also announced that the 27th Flora Expo will be held at Bhrikutimandap from March 19 to 22.
KMC provides Rs 10 million support to Kirtipur Hospital
Kathmandu Metropolitan City has signed an agreement to grant Rs 10 million to Kirtipur Hospital for the purchase of medical equipment. The funding will cover an anesthesia machine, a generator, and a digital X-ray system. Acting Mayor Sunita Dangol said the support aims to improve accessible and quality healthcare services, including burn treatment.
Tanahun service office collects Rs 4.6 million in revenue
The Tanahun Integrated Service Office collected Rs 4.6 million in revenue during the first six months of fiscal year 2025/26. Office Chief Ishwari Prasad Regmi said 335 new businesses were registered during the period, while more than 2,000 firms renewed their licenses. Monthly revenue peaked at Rs 925,000 in mid-January.
300-bed Sanjeevani Teaching Hospital to open in Dang
The Sanjeevani Institute of Advance Studies and Teaching Hospital in Ghorahi-3, Dang, is scheduled to begin operations on February 11. The privately funded, 300-bed facility will offer round-the-clock specialist services and advanced diagnostic technologies. The project has generated 350 jobs and plans to expand to 500 beds within three years, with future plans to launch MBBS and BDS programs.
Over 1,300 Nepali caregivers reach Israel
More than 1,300 Nepali caregivers have arrived in Israel as of January 29, following an easing of security conditions. The Department of Foreign Employment said another 750 workers are in the contract-signing process. Israel remains a preferred destination due to higher wages, and authorities are considering expanding recruitment quotas.
Food quality office to file cases against 19 businesses
The Food Technology and Quality Control Office in Hetauda is preparing to file cases against 19 businesses for food adulteration and quality violations. Office Chief Binita Pokharel said investigations are underway under the Food Hygiene and Quality Act. Recently, adulterated and expired goods worth over Rs 102,000 were seized and destroyed.
Winter drought reduces hydropower generation
Hydropower production in Nepal has fallen to seasonal lows due to insufficient winter rainfall and snowmelt. Nepal Electricity Authority Executive Director Hitendra Dev Shakya said reduced river flow has particularly affected run-of-river projects, making supply challenging in February and March. To bridge the gap, Nepal is importing around 419 megawatts of electricity from India.
Bhujung Hydropower IPO allotted through lottery
Shares of Bhujung Hydropower Company were allotted on Tuesday through a lottery system due to heavy demand. Of the more than 2.5 million applicants, 83,000 received 10 shares each. The company had issued 830,000 shares at Rs 100 per unit, with results available through official online platforms.
US court allows potential deportation of Nepali TPS holders
A US appeals court has lifted a stay blocking the termination of Temporary Protected Status (TPS) for immigrants from Nepal, Honduras, and Nicaragua, potentially allowing deportations to proceed. About 7,000 Nepalis were granted TPS after the 2015 earthquake. The ruling allows the government to move forward while legal appeals continue.
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