KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s current economic landscape reflects a mix of resilience, structural bottlenecks, and policy transition. Strong growth in property transaction revenue, rising tax collection, robust foreign direct investment commitments, and a sharp increase in gold prices indicate sustained domestic demand and investor interest, while banks’ growing reliance on non-interest income highlights weak credit absorption despite excess liquidity.
At the same time, slow capital expenditure on national pride projects, delays in major hydropower studies, uncertainty over electricity imports, and temporary trade disruptions with China reveal persistent implementation and coordination challenges. Election-related effects are visible across sectors, boosting short-term revenue mobilization but dampening tourism and complicating rural livelihoods.
Policy initiatives such as differentiated hydropower PPA rates, new food quality standards, digital public service reforms, and industrial incubation platforms suggest reform-oriented momentum; however, infrastructure delays, environmental trade-offs in large projects, and financing constraints underscore the need for stronger execution capacity to translate economic potential into sustained growth.
Gold prices surge by rs 2,300 per tola while silver edges down
On Sunday, the first trading day of the week, domestic gold prices recorded a sharp rise, while silver prices dipped slightly. The Federation of Nepal Gold and Silver Dealers’ Association reported that fine gold increased by Rs 2,300 per tola (11.663 grams), reaching Rs 305,800 per tola, up from Rs 303,500 on Friday. Meanwhile, silver declined modestly by Rs 15 per tola, falling from Rs 5,000 to Rs 4,985 per tola. Traders attribute the increase in gold prices to sustained demand and prevailing market trends, while silver’s minor decrease reflects short-term fluctuations in investor preferences and trading activity.
Budget spending for national pride projects remains slow in FY 2025/26
Nepal’s major “national pride” infrastructure initiatives, designed to boost economic development and create jobs, have shown weak budget utilization in fiscal year 2025/26. Of the Rs 67.08 billion allocated to 23 ongoing projects, only 15.49% had been spent by mid-January 2026. Projects already completed include the Upper Tamakoshi Hydropower Project, Gautam Buddha International Airport, and the first phase of the Melamchi Drinking Water Project. Progress on various highways and expressways ranges between 42% and 82%. The Ministry of Finance attributes delays to land acquisition challenges, forest clearance procedures, coordination gaps among agencies, and local-level obstacles. Authorities recommend finalizing detailed project reports (DPRs) and resolving land-related issues to speed up implementation and meet long-term economic and strategic objectives.
Over Rs 40 billion in foreign investment approved in seven months
During the first seven months of the current fiscal year, Nepal approved foreign direct investment (FDI) totaling NPR 40.28 billion across 524 industries, which are projected to create employment for 20,896 individuals, according to the Department of Industry. In Magh alone, 49 industries pledged NPR 104.72 million in investment — 37 through the automated system and 12 through standard procedures. The largest share of approvals went to the IT sector (288 industries, NPR 12.59 billion), followed by tourism (150 industries, NPR 10.86 billion), manufacturing (35 industries, NPR 2.4 billion), services (34 industries, NPR 3.54 billion), agriculture (14 industries, NPR 21.9 billion), minerals (2 industries, NPR 11.5 million), and energy (1 industry, NPR 18.42 million).
Property transaction revenue rises by rs 2.25 billion in first seven months of FY 2025/26
Nepal generated Rs 26.96 billion in revenue from property transactions during the first seven months (Shrawan–Magh) of fiscal year 2082/83. According to the Department of Land Management and Records, this marks an increase of Rs 2.25 billion, or 9.12%, compared to Rs 24.71 billion collected during the same period last year. Revenue collection was highest in Poush, reaching Rs 5.17 billion, alongside the peak monthly transaction volume of 140,000 deals. In total, 856,000 property transactions were recorded over seven months — 10,349 more than the previous year — indicating steady expansion in the real estate sector and related revenue generation.
No bidders for Nepal’s 100 mw electricity import tender from India
The Nepal Electricity Authority (NEA) encountered difficulties in securing additional electricity during the dry season after its tender to purchase 100 MW of power for February to May from India attracted no bids. Following the unsuccessful first round, a second tender was issued at the same ceiling rate of NPR 6.90 per unit. The revised tender permits Indian suppliers to offer between 25 MW and 100 MW per bid, with a mandatory deposit of NPR 5 million. Currently, NEA imports 180 MW at fixed rates from PTC India and up to 664 MW through the Indian energy exchange until March. However, given strong domestic demand in India, the availability of additional power remains uncertain.
Northern border trade with China likely to face temporary disruptions
Trade activities along Nepal’s northern border with China are expected to slow beginning February 17 (5 Falgun). Operations may be affected during the Tibetan New Year (February 5–18), when Chinese workers suspend activities. Additionally, Nepal plans partial closure of border checkpoints from February 5–21 for election-related arrangements, impacting crossings at Rasuwa, Tatopani, and other locations. Customs officials have stated that although inspection processes may experience delays, border points will not shut down entirely. China remains Nepal’s second-largest trading partner, contributing 20.87% of imports and 0.45% of exports. Nepal primarily imports textiles, fruits, toys, and electronic goods, while exporting handicrafts, felt products, and agricultural items.
Remittances sent abroad from Nepal surge 52.66% in first six months
Remittances transferred abroad from Nepal through formal channels rose sharply by 52.66% in the first six months of fiscal year 082/83, reaching NPR 6.98 billion compared to NPR 4.57 billion during the same period last year, according to Nepal Rastra Bank. The increase is attributed to a growing number of foreign nationals working in Nepal, with 22,439 individuals receiving labor permits. These workers are permitted to remit up to 75% of their earnings, mainly from employment in multinational companies, hydropower ventures, banking institutions, and insurance firms. Over the past five and a half years, a total of NPR 44.52 billion has been sent abroad as remittances. Informal transfers are not reflected in the official data.
New differentiated PPA rates introduced for reservoir-based hydropower
The government has announced a revised policy framework for reservoir-based hydropower projects, introducing variable power purchase agreement (PPA) rates. Projects with capacities up to 100 MW will receive a maximum of Rs 14.80 per unit during winter and Rs 8.45 per unit in the monsoon season. For projects exceeding 100 MW, rates will be determined based on actual project expenditures. The Electricity Regulatory Commission (ERC) will fix the rates, while the Nepal Electricity Authority will oversee implementation. The new directive allows inclusion of construction costs, loan interest, foreign exchange risks, and related expenses, along with periodic rate reviews and a three-stage PPA approval mechanism to ensure financial sustainability.
Proposed Muktinath Cable Car project may impact 229 households and 24,500 trees
The draft Environmental Impact Assessment (EIA) for the planned 81-kilometer Naya Pul–Muktinath cable car project, estimated to cost NPR 5.5 billion, has been released for public feedback. Stretching from Parbat to Mustang, the project is expected to affect 229 families and more than 24,500 trees located in government, community, and conservation forests. Construction activities would impact 93.6 hectares of forest land, 72.66 hectares of barren land, and 41.34 hectares of river areas. The system will include 20 stations, 442 towers, and 871 gondolas, with the capacity to carry 10,000 passengers daily. It will require 13 MW of electricity and manage wastewater through a 30-million-liter treatment facility. The project is projected to generate 1,769 jobs during construction and 439 permanent positions during operation.
Nepal Electricity Authority to roll out AI-powered ‘NEA AE-Sathi’ service
The Nepal Electricity Authority (NEA) is preparing to launch an AI-based customer support platform named ‘NEA AE Sathi,’ aimed at improving service delivery through digital solutions. The virtual assistant will enable customers to obtain information, lodge complaints, monitor bills and meter readings, and receive assistance through chat-based mobile and online interfaces. Developed as part of NEA’s broader digital transformation efforts, the initiative emerged from the AI Hackathon 2082, which produced 27 employee-driven proposals focused on enhancing customer service, administrative efficiency, and data analytics. The platform is expected to streamline operations, reduce staff workload, and provide round-the-clock support, setting a benchmark for AI integration within Nepal’s public sector.
270 MW Bheri-1 hydropower project cleared for development in Karnali
The 270-megawatt Bheri-1 Hydropower Project has received approval for construction in Jajarkot and Rukum (West) districts of Karnali Province. The Environmental Impact Assessment report prepared by Gajewa Group Power Investment Nepal Pvt. Ltd. was endorsed last week. Designed as a semi-reservoir system with peaking capacity, the project will generate electricity during periods of high demand. The estimated construction cost stands at approximately NPR 71.97 billion. Key components include a dam, intake structure, settling basin, tunnel, surge tank, powerhouse, and penstock. The electricity produced will be integrated into the national grid, and environmental mitigation measures will be implemented under a dedicated management plan.
Morang Industrial Organization launches industries experience zone to foster innovation and market growth
Morang Industrial Organization has officially introduced the Industries Experience Zone, along with a Business Incubation Center and a virtual platform, to strengthen industrial promotion, innovation, and market access. A delegation from the Department of Industry, including Director General Jitendra Basnet and Director Vishnumaya Bhattarai, reviewed the initiatives and commended the integrated ecosystem created by the platforms. The Experience Zone provides both virtual and on-site insights into company profiles, production systems, workforce skills, and partnership opportunities. Meanwhile, ViratBazar.com is designed to expand market reach. The platforms also showcase products from startups and women-led enterprises, encouraging collaboration, knowledge exchange, and sustainable industrial advancement in Nepal.
Rapti handmade paper industry creates jobs for 150 locals in Dang
The Rapti Nepali Handmade Paper Industry, based in Deukhuri, Dang, has generated employment for more than 150 local residents by sourcing raw materials such as babiyo grass from community forests. Since beginning operations in March 2023, the factory has directly employed 24 workers daily and produces between 700 and 800 quires of handmade paper in five different varieties, achieving annual sales of approximately Rs 12.5 million. Its products are distributed across Dang, Butwal, Kathmandu, Pokhara, Birgunj, and other western regions. Despite ambitions to expand operations, operator Damar Bahadur GC reports limited government backing, with only Rapti Rural Municipality purchasing the paper. The enterprise stands as an example of rural industrialization driven by local entrepreneurship and resource utilization.
Election activities lift revenue collection despite decline in interest income
Government revenue mobilization has strengthened ahead of the House of Representatives election scheduled for 21 Falgun. In the first seven months of fiscal year 082/83, total revenue reached NPR 665 billion, representing a 3.45% rise compared to the previous year. Customs, VAT, and excise collections posted notable gains, while income tax revenue declined by 0.81% due to reduced earnings from bank interest. Customs revenue climbed 7.53% to NPR 135.32 billion, VAT increased 7.58% to NPR 196.44 billion, and excise revenue expanded 10.88% to NPR 105 billion. Education service fees surged by 61%. Overall tax revenue grew 5.95% to NPR 599 billion, although non-tax income fell. Capital expenditure remains modest at 15.62% of the allocated budget.
Bajura herders face voting challenge during livestock migration season
Sheep and goat herders in northeastern Bajura are confronting difficulties ahead of the March 5 parliamentary elections, as they must choose between returning home to vote and continuing seasonal livestock grazing. During winter, herders from Himali, Jagannath, Swamikartik Khapar, and Budhinanda municipalities migrate with their flocks to lower grazing areas in Achham and Doti, typically returning in April. Heavy snowfall in the highlands makes early return risky due to limited pasture availability. Herders argue that holding elections in March disrupts their routine and suggest alternative months such as September, April, or May. Across Bajura, approximately 41,029 sheep and goats are housed in 673 sheds, underscoring the scale of the issue.
Nepali banks turn to service charges and trading income amid weak loan demand
Commercial banks in Nepal are increasingly relying on non-interest income streams, including service charges and trading operations, due to sluggish loan demand. Revenue sources include debit and credit cards, digital banking services, QR payments, electronic transfers, balance certificates, loans, letters of credit, and bank guarantees. Treasury earnings from shares, gold, foreign exchange, remittances, and trade finance also contribute significantly. As of 16 Magh, deposits reached a record NPR 4.04 trillion, but loan demand remained subdued, with credit deployment at NPR 1.72 trillion. Excess liquidity of NPR 8.64 trillion has accumulated at the central bank, complicating interest rate management. The average loan-to-deposit ratio stands at 73.97%, below the regulatory ceiling of 90%.
Upcoming election slows foreign tourist arrivals before peak season
Although Nepal’s peak tourism season generally begins in March with a rise in arrivals from February, this year visitor numbers have not increased as expected due to the elections scheduled for March 5. Many travelers have postponed or canceled plans, leading to a drop in hotel occupancy in destinations such as Pokhara to around 25%, compared to roughly 50% during the same period in previous years. Tour operators report that European trekkers and Indian tourists, who usually arrive at this time, are delaying their trips. Officials suggest that clear government assurances regarding safety during the election period could help restore traveler confidence.
Consultant selection for Sun Koshi-3 reservoir study restarted, causing delays
Progress on the long-planned Sun Koshi-3 reservoir hydropower project, envisioned under Nepal–Bangladesh energy cooperation, has been hindered after the consultant selection process for the Detailed Engineering Study (DES) was canceled and reopened. Initially announced in January 2024, the process has already exceeded 25 months without completion. Despite proposals from shortlisted international firms, uncertainties and ambiguity regarding Bangladesh’s commitment have slowed advancement. The project’s capacity was originally estimated at 536 MW and later revised to 683 MW. Restarting the request for proposal (RFP) process further delays the study timeline and may affect investor confidence, even though the project is viewed as strategically important for Nepal’s energy security.
Government sets quality standards for rolled oats and soya chunks
For the first time, national quality benchmarks have been introduced for rolled oats and soya chunks in response to rising demand among health-conscious consumers. The Ministry of Agriculture and Livestock Development published the standards in the Nepal Gazette, covering imported, domestically produced, and repackaged goods. The regulations define acceptable limits for moisture, protein, ash content, aflatoxin, and pesticide residues, while banning artificial colors, fragrances, and harmful contaminants. Producers must also comply with packaging and labeling requirements. Authorities state that the standards aim to safeguard public health and ensure consistent product quality as consumption of nutritious processed foods grows.
ACAP transports over four tonnes of waste from Mustang in six months
In the past six months, the Annapurna Conservation Area Project (ACAP) office in Jomsom has transported 4,391 kilograms of waste from Waragung Muktikshetra, Gharpajhong, and Thasang rural municipalities in Mustang to Pokhara for recycling. The initiative seeks to maintain environmental cleanliness in the Himalayan district. Non-biodegradable plastic waste is processed by Green Waste Management Pvt Ltd. ACAP covers transportation expenses and has provided Rs 500,000 to each municipality to support waste management infrastructure, including collection centers and vehicles. During the previous fiscal year, 10,190 kilograms of waste were transported, reflecting continued efforts to preserve the region’s environmental appeal.
BP Highway repairs begin but bridge upgrades face delays
Rehabilitation work has commenced on the BP Highway following flood damage in September 2024, though construction of new bridges along the route has yet to start. Traffic congestion continues at existing single-lane bridges, which handle more than 4,000 vehicles daily. Preliminary studies for bridge replacements at Bhakunde Besi, Dapcha, Roshi, and Narke are underway, but actual construction is unlikely to begin within the current fiscal year. Road repairs are progressing under separate contracts managed by various joint ventures. Plans include upgrading bridges to two lanes; however, delays in awarding bridge contracts and reliance on external funding, including support from JICA, are slowing progress.
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