KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic landscape reflects a mix of financial caution, structural weaknesses, and reform efforts. While the stock market has edged down for four consecutive days despite strong turnover, rising gold prices suggest investors may be shifting toward safer assets amid uncertainty. The government’s downward revision of growth to 3.5%, weak provincial capital spending, and cuts in equalization grants point to slowing economic momentum and fiscal strain.
At the same time, regulatory tightening, including NRB’s liquidity absorption, FATF-related reforms, SEBON’s new margin trading rules, and action against insurance firms, signals a push for greater financial discipline. However, persistent infrastructure delays, declining imports through key trade routes, and implementation bottlenecks highlight structural inefficiencies that continue to hinder growth.
Overall, the economy appears stable in terms of inflation and liquidity management, but faces deeper governance and execution challenges that may limit near-term expansion.
NEPSE edges down with Rs 8.692 billion in turnover
The Nepal Stock Exchange (NEPSE) slipped marginally by 0.04 points on Wednesday, closing at 2,662.09 and marking its fourth consecutive day of decline. The Sensitive Index, however, gained 0.81 points to settle at 455.20. Total market turnover reached Rs 8.692 billion, with 22,282,050 shares traded across 329 companies. Of the 13 sectoral indices, five recorded gains — including Hydropower and Development Banks — while eight, such as Hotels and Tourism, ended in the red. Overall, 113 companies advanced, 133 declined, and 13 remained unchanged. Earlier in the week, daily turnovers stood at Rs 11.659 billion, Rs 10.773 billion, and Rs 8.616 billion, respectively.
Gold prices climb by Rs 1,100 per tola
Gold and silver prices rose in the domestic market on Wednesday. Fine gold increased by Rs 1,100 per tola to Rs 306,600, up from Rs 305,500 the previous day. Silver prices also climbed by Rs 50 per tola, reaching Rs 5,290. Traders attribute the uptick to international market fluctuations and heightened demand, marking one of the highest price levels recorded this month.
NRB absorbs Rs 50 billion to ease excess liquidity
Nepal Rastra Bank (NRB) collected Rs 50 billion from banks and financial institutions on Wednesday to manage surplus liquidity in the financial system. The amount was mobilized through an online bidding process using a deposit collection instrument that concluded at 3:00 PM. The funds will remain with the central bank for 46 days, with principal and interest repayable on March 29. Interest rates were determined through a multi-rate bidding mechanism. Institutions were permitted to bid a minimum of Rs 100 million. The move is aimed at temporarily absorbing excess cash and maintaining monetary stability.
Govt lowers economic growth projection to 3.5%
In its mid-term budget review, the government revised the economic growth forecast for fiscal year 2025/26 down to 3.5%, falling short of the initial 6% target. The downgrade is attributed to declining paddy output, slower construction activity, and a downturn in the real estate sector. GDP growth in the first quarter stood at 3%. While the industrial sector expanded by 5.44% , largely driven by energy projects, agricultural value-added growth remained modest at 1.36%. Despite slower expansion, average inflation during the first six months remained stable at 1.7%, significantly lower than last year’s 4.97%.
Provincial spending limited to 14% in first half of fiscal year
Nepal’s seven provincial governments have utilized only 14% of their combined budgets during the first six months of fiscal year 2025/26 (July 17, 2025–January 14, 2026). Out of Rs 287 billion allocated, just Rs 40.70 billion had been spent by mid-January. Madhesh Province recorded the lowest spending at 7.71%, while Lumbini Province reported the highest expenditure at Rs 7.95 billion. Bagmati Province used 14% of its Rs 67.47 billion budget. By comparison, spending during the same period last fiscal year reached 16%. Officials noted that weak capital expenditure remains a major obstacle to infrastructure expansion and economic growth.
Insurance Authority to take action against six companies
The Nepal Insurance Authority is preparing punitive measures against six insurance firms after on-site inspections revealed serious irregularities. The companies include Neco Insurance, Asian Life Insurance, Nepal Re-Insurance, Prabhu Insurance, Himalayan Re-Insurance, and Sanima GIC Insurance. A show-cause notice has been issued, asking the firms to justify why regulatory action should not be taken. If their responses are deemed unsatisfactory, the Authority’s Board of Directors will proceed with formal disciplinary measures. While specific violations were not disclosed, officials described them as significant breaches of insurance regulations.
Finance Ministry reduces equalization grants amid revenue shortfall
Due to lower-than-expected revenue collection, the Ministry of Finance has begun trimming the third installment of Financial Equalization Grants allocated to provincial and local governments. With only 81.75% of the revenue target achieved in the first half of the fiscal year, the Financial Comptroller General Office has been instructed to release just 20.43% of the scheduled 25% installment. This effectively reduces cumulative transfers by mid-quarter from 75% to 70.43%. Although Rs 38.187 billion has already been disbursed to provinces, local officials warn that mid-year cuts disrupt development projects and annual planning.
Supreme Court upholds termination of national pride project contract
The Supreme Court has rejected a writ petition filed by Patel-Raman JV challenging the government’s decision to cancel its contract for the Sunkoshi-Marin Diversion Multipurpose Project. A joint bench of Justices Hari Prasad Phuyal and Nityananda Pandey lifted a previous interim order, allowing the government to seize Rs 3.60 billion in bank guarantees. Although 33 months had passed since the January 25 commencement date, the contractor had completed less than 1% of permanent construction work. The Rs 14.075 billion agreement was terminated due to non-performance on the National Pride Project, which aims to provide irrigation and electricity.
NRB Governor sees FTTF Gray List as reform opportunity
NRB Governor Biswo Nath Poudel stated that Nepal’s placement on the Financial Action Task Force (FATF) gray list presents an opportunity to strengthen anti-money laundering systems. Speaking at an international conference on money laundering and terrorism financing in Kathmandu, he stressed the need for transparent internal mechanisms aligned with global standards. He warned that technological advancements are increasingly being exploited for financial crimes and called for enhanced resources for supervisory bodies. Failure to act, he cautioned, could divert funds away from critical sectors like health and education, deepening inequality.
NOC begins direct lpg distribution amid shortage complaints
The Nepal Oil Corporation (NOC) has initiated direct sales of Liquefied Petroleum Gas (LPG) from its Teku headquarters following reports of shortages at retail outlets. Emergency distribution counters have been established to serve consumers with empty cylinders. NOC spokesperson Manoj Thakur confirmed that cylinders from Nepal Gas, Everest Gas, and Sugam Gas are being supplied. The corporation clarified that import levels remain stable and urged the public not to be influenced by rumors of a nationwide crisis.
Nepal-Qatar joint business council convenes inaugural meeting
The Nepal-Qatar Joint Business Council (JBC) held its first meeting in Chandragiri, Kathmandu, to formalize bilateral trade and investment cooperation. The council was formed following the April 2024 visit of Qatari Emir Sheikh Tamim Bin Hamad Al Thani. Discussions focused on business-to-business (B2B) and government-to-government (G2G) collaboration. FNCCI President Chandra Prasad Dhakal encouraged Qatari investment in energy, tourism, and information technology, highlighting Nepal’s streamlined digital approval systems. Qatar Chamber representative Mohamed Bin Ahmed Al Obaidly emphasized the importance of clear legal frameworks and banking facilitation to attract long-term capital.
Railway imports via birgunj dry port decline
Railway freight imports through the Birgunj Dry Port fell during the first half of fiscal year 2025/26. A total of 572 railway racks arrived, compared to 588 during the same period last year — a decrease of 16 units. Officials attribute the decline to operational “haltage” issues within the Indian Railway system. Fertilizers, coal, and iron are typically transported from Kolkata, Haldia, and Vishakhapatnam. Authorities report that services are gradually stabilizing after delays linked to elections and festivals in Bihar.
Multi-year road projects in sudurpashchim face major setbacks
Sudurpashchim Province currently has 145 ongoing multi-year road and bridge contracts valued at Rs 20.087 billion. However, 39 projects are in poor condition, and 28 have received repeated deadline extensions. The Jayagadh-Ramaroshan road in Achham has reached only 43% completion, while the Martadi-Kolti road in Bajura stands at 50% after seven years of work. Officials warn that clearing past liabilities will impose a heavy financial burden next fiscal year, limiting the initiation of new infrastructure projects.
SEBON introduces new margin trading guidelines
The Securities Board of Nepal (SEBON) has issued the Margin Trading Facility Guidelines 2026, effective February 13. The regulations allow stockbrokers to extend loans to investors for share purchases under defined conditions. Eligible companies must have at least 2.5 million listed shares and a net worth exceeding paid-up capital. Investors are required to maintain a 30% initial margin and a 20% maintenance margin. Brokers may issue margin calls or liquidate shares if values fall below required thresholds. A daily mark-to-market mechanism will ensure transparency.
Agriculture Ministry signs ai partnership for digital advisory services
The Ministry of Agriculture and Livestock Development, along with the National Agriculture Modernization Program (NAMP), signed an agreement with Connect Kisan Pvt. Ltd. to provide AI-based advisory services to farmers. The initiative will deliver guidance through voice and text platforms on pest control, fertilizer use, and market access. The system will also gather agricultural data to assist in long-term policy planning. Officials say the move reflects Nepal’s efforts to adopt technology-driven farming practices similar to those implemented in India.
Comment