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 cautious reform, fiscal stress, and sectoral transition as the government initiates preparations for the FY 2083/84 budget amid weak revenue performance and slow capital spending at both federal and provincial levels. While financial regulators are tightening oversight through new microfinance, loan classification, and restructuring rules to safeguard stability, concerns persist over rising non-performing assets, delayed health insurance payments, and security risks to the banking system.
Market indicators remain subdued but resilient, with NEPSE posting marginal gains despite political uncertainty, while gold prices signal heightened global risk aversion. Structural shifts are underway in energy and trade, highlighted by the opening of power trading to the private sector, major hydropower investment decisions, and renewed momentum toward a Nepal–Bangladesh trade pact.
At the same time, initiatives such as the NEA’s AI hackathon and the US-backed Creator’s Mela point to growing emphasis on innovation and the digital economy, even as implementation capacity and fiscal discipline remain key challenges for sustaining long-term growth.
Resource estimation process begins for FY 2083/84 budget
Preparations for Nepal’s fiscal year 2083/84 budget have officially commenced, with the National Resource Estimation Committee starting its assessment of available resources and expenditure limits. Led by the National Planning Commission in coordination with the Ministry of Finance, the process follows the Financial Procedure and Fiscal Responsibility Act, 2020. Preliminary projections of revenue and spending for the next three years will guide the medium-term expenditure framework and the upcoming annual budget. A technical team has already begun macroeconomic analysis, seeking data from institutions such as Nepal Rastra Bank and the National Statistics Office.
NEPSE records slight gain amid political unrest in NC
The Nepal Stock Exchange (NEPSE) inched up by 0.89 points over the past week to close at 2,641.43, despite ongoing political tensions within the Nepali Congress. Trading took place on only three days due to public holidays. The market opened weak but recovered modestly in later sessions. Out of 13 sector indices, five ended lower, with microfinance leading the decline, while hydropower posted the strongest gains. Radhi Bidyut Company topped turnover rankings, and Three Star Hydropower emerged as the best-performing stock. Although overall trading volume dropped sharply, market capitalization increased slightly, adding Rs 1.49 billion to investor wealth.
Social Security Fund disburses over Rs 18.34 billion since 2019
Nepal’s Social Security Fund (SSF) has distributed more than Rs 18.34 billion to 262,264 contributors since it began collecting contributions in mid-July 2019, according to official records. The payments cover health, accident, disability, dependent family, old-age security, and voluntary contribution programs. As of January 13, 2026, the SSF has enrolled 2.74 million contributors, largely driven by mandatory registration for foreign employment. Total contributions have reached Rs 99.56 billion. While participation from formal sector workers is increasing, enrollment from informal and self-employed groups remains limited, indicating persistent coverage gaps.
Gold prices surge by Rs 9,400 per tola amid global uncertainty
Gold prices in Nepal jumped sharply last week, rising by Rs 9,400 per tola to reach Rs 277,200, according to the Federation of Nepal Gold and Silver Dealers’ Association. Prices climbed steadily throughout the week despite a brief midweek dip. The surge has been attributed to geopolitical tensions, expectations of US interest rate cuts, increased central bank gold purchases, and global economic uncertainty driving demand for safe-haven assets. Silver prices also rose significantly, increasing by Rs 865 per tola and briefly touching a record high.
NRB introduces unified rules on microfinance capital and lending limits
Nepal Rastra Bank has issued a consolidated directive for “Category D” microfinance institutions, setting minimum requirements of 4 percent core capital and 8 percent total capital based on risk-weighted assets. The directive clarifies eligible capital components, excludes certain reserves, and requires regular internal audit certification. It also imposes strict lending caps, limiting wholesale loans to 25 percent of core capital per client or related group, while setting borrower-level ceilings for retail loans in priority sectors such as low-income households, micro-enterprises, renewable energy, and women. Non-compliance will result in corrective measures, dividend restrictions, and full provisioning for excess loans.
Delayed payments put Nepal’s health insurance scheme at risk
Nepal’s national health insurance program, which serves 3.3 million households and about 10 million people, is facing the threat of suspension due to delayed government reimbursements. Introduced in 2016 in two districts, the program has expanded nationwide across all 77 districts and 753 local levels. Several hospitals, including Tribhuvan University Teaching Hospital, have already stopped providing insured services as unpaid claims mount, with as much as 54 percent of claims outstanding because of budget constraints. Continued delays could lead to further service disruptions and erode public confidence in the program.
Private sector allowed into power trading after three decades
Nepal’s electricity market has opened to private participation following the issuance of the Open Access Directive 2082 by the Electricity Regulatory Commission. The reform permits private entities to trade electricity using the Nepal Electricity Authority’s transmission network, effectively ending NEA’s long-standing monopoly. The sector is transitioning from a single-buyer system to a competitive multi-buyer, multi-seller model, allowing producers to sell power directly to industrial and commercial consumers. While the move has been welcomed, full implementation will depend on finalizing technical standards, pricing mechanisms, and infrastructure readiness.
NRB updates loan classification rules for non-performing assets
Nepal Rastra Bank has revised its loan classification framework, allowing non-performing (inactive) loans to be upgraded directly to the “good” category three months after full repayment of principal and interest. Previously, such loans were required to remain on a watch list for six months. Under the new guidelines, restructured or reclassified loans outside formal restructuring schemes must remain in their existing category—substandard, doubtful, or loss—for three months after repayment before being upgraded. The change is intended to streamline recovery and reclassification procedures.
NRB governor consults police and bankers over financial system risks
Nepal Rastra Bank Governor Dr. Bishwanath Paudel held discussions with senior Nepal Police officials and banking sector leaders amid growing concerns about threats to financial stability. The meeting, attended by Police Chief Dan Bahadur Karki and chief executives of banks and financial institutions, focused on protecting banks, depositors, and staff. NRB stressed the need for coordinated efforts among regulators, banks, and law enforcement to prevent disruptions, ensure lawful loan recovery, and respond to intimidation against bankers. With elections approaching, banks were urged to strengthen security, act prudently, and report incidents promptly to preserve public confidence.
NRB consolidates guidelines on loan restructuring and rescheduling
Nepal Rastra Bank has issued a unified directive combining all previous circulars related to loan restructuring and rescheduling for licensed banks and financial institutions. Loans impacted by extraordinary circumstances—including Jan Andolan protests, natural disasters, and infrastructure delays—may be restructured at the borrower’s request following an assessment of financial impact, cash flow, and business viability. Banks may retain a portion of interest (5–10 percent), and restructured loans must retain their existing classification until the next review. Non-performing loans that return to regular status will be subject to a three-month monitoring period before reclassification.
Midyear review highlights weak budget execution and revenue performance
Nepal’s budget implementation and revenue collection remain sluggish at the midpoint of the fiscal year, according to the Office of the Financial Comptroller General. By mid-January, only 38.38 percent of the Rs 1.964 trillion annual budget had been spent, while revenue collection stood at Rs 588.51 billion, resulting in a deficit of more than Rs 102 billion. Capital spending is particularly poor, with just 12.12 percent of the development budget utilized. Meanwhile, public debt servicing accounts for a relatively high share of expenditure, underscoring rising fiscal pressure.
Govt clears investment framework for 1,200 MW Budhigandaki project
The Ministry of Finance has approved the investment structure for the 1,200 MW Budhigandaki reservoir hydropower project in Dhading and Gorkha, allowing the Ministry of Energy, Water Resources, and Irrigation to move forward. The project’s base cost is estimated at $277 million (around Rs 374 billion), with total construction costs—including interest—reaching Rs 406 billion over an eight-year timeline. Financing will follow a 70:30 debt-to-equity model, with the government holding 80 percent equity and the Nepal Electricity Authority 20 percent. The project will create a 63-square-kilometer reservoir, generate 3.38 billion units of electricity annually, and play a key role in strengthening Nepal’s energy security and regional development.
Bagmati Province capital expenditure stays below 9 percent in first half
Bagmati Province has utilized only 8.99 percent of its capital budget in the first six months of fiscal year 2025/26, indicating sluggish progress on development works. Overall budget spending between mid-July and mid-January reached 14.10 percent, down from the same period last year. Recurrent expenditure performed relatively better at 22.48 percent. Out of the total Rs 67.4 billion budget, Rs 9.58 billion has been spent so far. The highest spending agencies include the Public Service Commission, the Office of the Chief Attorney, and the Provincial Assembly Secretariat. Economists caution that persistently low capital expenditure could hinder provincial development.
NHPC seeks Rs 40 billion viability gap funding for West Seti project
India’s state-owned NHPC Limited has asked Nepal’s Investment Board to provide Rs 40 billion as a Viability Gap Fund (VGF) for the West Seti hydropower project, citing weak financial feasibility and the requirement to supply 21.9 percent electricity free of cost. Nepal’s PPP and Investment Act allows VGF support for infrastructure projects that offer long-term public benefits but limited short-term returns. NHPC has already submitted the project’s Detailed Project Report, which is currently under review. Originally designed as a 750 MW project and later expanded to 800 MW, West Seti has faced repeated delays, including the cancellation of an earlier agreement with China Three Gorges International Corporation.
Nepal and Bangladesh move forward to revive preferential trade deal
Nepal and Bangladesh have agreed to fast-track the signing of a long-pending Preferential Trade Agreement (PTA), following years of delays caused by tariff and para-tariff disputes. During the eighth meeting of commerce secretaries in Dhaka, both sides decided that Nepal’s Trade Negotiation Committee would be convened within three months to finalize the PTA draft, product lists, and rules of origin. The two countries also committed to simplifying customs procedures, easing cross-border payments, addressing non-tariff barriers, and enhancing cooperation in tourism and investment. Although Nepal’s exports to Bangladesh grew by 20 percent last year, high para-tariffs—sometimes exceeding 130 percent—continue to restrict market access for Nepali goods.
Nepal Electricity Authority to organize AI hackathon for digital innovation
The Nepal Electricity Authority (NEA) has announced plans to host the “AI Hackathon Program 2082” under the theme NEA AI Vision: Powering Tomorrow. The program aims to promote digital transformation by developing artificial intelligence solutions for NEA’s operational, technical, and managerial challenges. Emphasis will be placed on secure and cost-efficient deployment using NEA’s own data infrastructure. Employees from all NEA offices may participate in teams of up to five, submitting concept proposals within 30 days. Shortlisted teams will present prototypes, and top performers will receive recognition along with opportunities for overseas AI training.
Gandaki Province records weak budget utilization in first half of fiscal year
Gandaki Province has spent only 16.68 percent of its total budget during the first half of the current fiscal year, according to the Provincial Treasury Controller’s Office. By mid-January, expenditures totaled NPR 5.33 billion out of an approved budget of NPR 31.98 billion, lower than the 19.36 percent spent during the same period last year. Capital spending remains particularly poor, with just NPR 2.69 billion utilized from a capital allocation of NPR 19.10 billion, raising concerns about stalled infrastructure and development projects.
Nineteen insurance companies declare dividends for FY 2081/82
A total of 19 insurance companies in Nepal—11 life insurers and 8 non-life insurers—have announced dividends for fiscal year 2081/82. Life insurance companies such as Asian Life, IME Life, Nepal Life, and LIC Nepal declared dividends ranging from 5 percent to 21.05 percent through a mix of bonus shares and cash payouts. Non-life insurers including Neco Insurance, Siddhartha Premier, and Shikhar Insurance declared dividends between 5 percent and 25 percent, mostly in cash. These dividends are based on profits from the previous fiscal year and follow the completion of annual general meetings.
Nagdhunga–Naubise tunnel project delayed again, opening likely by April
Nepal’s first tunnel road linking Kathmandu and Dhading through the Nagdhunga–Naubise section of the Prithvi Highway is nearing completion but has missed multiple opening deadlines. Although 98 percent of physical construction has been completed and major systems—such as lighting, ventilation, fire safety, emergency response, and electronic toll collection—are in place, a landslide near the western portal in Dhading has delayed operation. Stabilization and retaining wall works are ongoing along the affected 150-meter stretch. Officials now expect the Rs 23 billion JICA-funded project to open by April.
Nepal allows industrial import of betel nut, cardamom, and pepper
The government of Nepal has permitted the import of betel nut, cardamom, and black and white pepper for industrial use in fiscal year 2082/83. Importers must obtain mandatory approval from the Department of Industry, which will assess industrial necessity, availability, and required quantities. Newly established industries must submit registration, tax, and production documents, while existing firms are required to provide historical data on imports and usage. The decision aims to ensure proper industrial utilization, control illegal trade, and support domestic manufacturing. Earlier notices issued in FY 2081/82 have been revoked.
Commercial banks’ non-banking assets rise sharply in early FY 2082/83
Nepal’s 19 commercial banks accumulated non-banking assets worth Rs 43.05 billion by mid-December of fiscal year 2082/83, representing a 31.83 percent increase compared to the same period last year, according to Nepal Rastra Bank. Fifteen banks recorded growth in such assets, with Prime Commercial Bank and Nepal SBI Bank posting the largest increases. In contrast, Kumari, Machhapuchhre, Everest, and Rastriya Banijya banks reported declines. Global IME Bank held the highest non-banking assets, while Nepal Bank had the lowest. Standard Chartered Bank reported none.
Sixteen banks pay nearly Rs 32 crore to CEOs in FY 2080/81
Sixteen commercial banks in Nepal paid their chief executive officers a combined total of NPR 31.95 crore in fiscal year 2080/81, based on annual reports. Prabhu Bank led the list, paying CEO Ashok Sherchan NPR 4.34 crore, including salary, bonuses, and allowances. CEO compensation across banks ranged from NPR 63 lakh at Nepal Bank to nearly NPR 3.89 crore at Nepal Investment Mega Bank. The figures include cash payments as well as non-cash benefits such as vehicles and medical facilities. Some banks have yet to publish updated reports.
US Embassy Creator’s Mela 2026 starts in Chitwan
Creator’s Mela 2026 started on Saturday at Hotel Siraichuli in Chitwan, marking the beginning of a multi-city initiative aimed at strengthening Nepal’s digital creator ecosystem. The first-ever edition in Chitwan saw the participation of over 800 young and emerging digital creators. The day-long program featured parallel sessions across two halls, combining panel discussions, spotlight conversations, hands-on workshops, live performances, and the flagship Pitch to Success platform. According to the US Embassy in Nepal, it is accelerating the growth of Nepal’s creative economy with the start of Creator’s Mela 2026: Vision to Venture. This year’s edition marks a bold evolution of the flagship platform, shifting the focus from content creation to building sustainable, professional businesses.
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