KATHMANDU: Economic Digest presents a brief yet comprehensive roundup of major business developments in Nepal, delivered in clear and accessible summaries.
Nepal’s latest economic indicators present a mixed outlook, combining strong short-term market optimism with persistent structural vulnerabilities. The sharp rebound in the Nepal Stock Exchange and rising turnover reflect renewed investor confidence, particularly in hydropower and tourism, even as the Nepal Rastra Bank continues absorbing excess liquidity to manage inflationary and financial risks.
Falling gold and silver prices may ease pressure on household spending, but the rapid rise in public debt, weak foreign direct investment inflows, and large capital outflows highlight deep concerns about long-term economic sustainability and investor confidence.
At the same time, the government’s efforts to exit the Financial Action Task Force grey list, promote ethanol blending, and resume tea exports indicate attempts to strengthen external credibility, reduce import dependency, and stabilize trade.
However, underutilized provincial budgets, delays in major infrastructure projects, unpaid telecom dues, and repeated implementation bottlenecks continue to expose governance weaknesses and low public-sector efficiency.
Despite these challenges, ongoing investments in hydropower, transmission lines, airports, and natural gas exploration suggest Nepal is positioning itself for future energy and infrastructure-led growth if execution capacity and regulatory discipline improve.
NEPSE gains 30 points as turnover reaches Rs 3.82 billion
Nepal Stock Exchange (NEPSE) climbed 30.08 points on Wednesday, recovering losses from the previous two trading sessions as both the market index and turnover increased. The benchmark NEPSE index rose 1.10 percent to close at 2,754.48 points. The sensitive index also advanced by 3.68 points to 471.06, while the float and sensitive float indices gained 1.03 percent and 0.82 percent respectively. A total of 10.66 million shares from 346 companies were traded through 52,336 transactions, generating turnover of Rs 3.82 billion. Daily turnover had stood at Rs 3.08 billion on Tuesday and Rs 2.45 billion on Monday. Share prices of 248 companies increased, while 21 declined and one remained unchanged. All 13 trading groups ended in positive territory, with hotel and tourism and hydropower leading gains at 1.89 percent each.
NRB absorbs Rs 30 billion in liquidity through open market auction
Nepal Rastra Bank successfully carried out an open market auction on Wednesday to absorb Rs 30 billion in excess liquidity from the country’s financial system. The central bank invited bids from licensed commercial banks and financial institutions, with the online auction process concluding at 3:00 PM. The liquidity absorption instrument has a maturity period of 91 days, and both principal and accrued interest will be settled on August 19. This move is part of the central bank’s ongoing open market operations, under which around Rs 600 billion in deposit collection instruments are yet to mature.
Gold and silver prices decline in domestic market
The price of gold fell in Nepal’s domestic market on Wednesday, according to the Federation of Nepal Gold and Silver Dealers’ Association. Gold prices dropped by Rs 3,300 per tola (11.66 grams), bringing the new rate to Rs 292,000 per tola. On Tuesday, gold had traded at Rs 295,300 per tola. Silver prices also declined by Rs 125 per tola and are now being traded at Rs 4,960 per tola, compared to Rs 5,085 the previous day.
Nepal’s public debt reaches Rs 2.975 trillion
The Public Debt Management Office reported that Nepal’s total public debt climbed to Rs 2.975 trillion as of May 14. Data shows debt expanded by Rs 532.91 billion over the past 10 months, while Rs 231.92 billion was repaid in principal, resulting in a net increase of Rs 300.99 billion. The overall debt includes Rs 1.381 trillion in domestic borrowing and Rs 1.593 trillion in external liabilities. A stronger US dollar added Rs 67.75 billion to external debt obligations, nearly doubling Nepal’s debt burden over the last seven years from Rs 1.433 trillion in fiscal year 2019/20.
Govt launches 15-point plan to exit FATF grey list
The Ministry of Finance, in coordination with the Office of the Prime Minister and Council of Ministers, held an emergency meeting with the Asia/Pacific Group on Money Laundering to accelerate Nepal’s removal from the international financial monitoring list. The Financial Action Task Force placed Nepal on its anti-money laundering grey list on February 21, 2025, giving the country two years to address structural and legal shortcomings. The government has committed to implementing a 15-point action plan prepared by the International Cooperation Review Group to strengthen regulatory oversight. Committees led by Nepal Rastra Bank are overseeing reforms related to transparent asset monitoring and financial tracking systems aimed at improving governance standards within the banking sector.
Govt seeks domestic ethanol supply to reduce fuel imports
The Ministry of Industry, Commerce and Supplies, on behalf of the Nepal Oil Corporation, has issued an open call for domestic biofuel producers to supply locally produced ethanol for blending with petrol. The initiative follows the “Ethanol Blending in Petrol Order, 2026,” published on March 12, which allows up to 10 percent ethanol blending per liter of petrol to help reduce fuel imports. Approved raw materials include molasses from sugar mills, Napier grass, straw, corn stalks, wheat straw, cassava, and spoiled non-food-grade grains. The policy bans the use of edible food crops, and producers must establish internal laboratories to ensure products meet strict quality standards before selling exclusively to the state-owned corporation.
Indian Tea Board eases export rules after 19-day border disruption
The Tea Board India issued a revised directive called “Corrigendum-2” on Tuesday, relaxing strict quality testing requirements and allowing Nepalese tea exports to resume after a 19-day border disruption. The issue began on May 1 when India introduced mandatory laboratory testing for every truck carrying imported tea, replacing the previous random testing system and leaving large quantities of processed tea stranded in factories. Under the revised arrangement, tea intended for India’s domestic market will again be subject to random customs-based testing rather than compulsory checks. However, mandatory testing will continue for third-country exports, though laboratories are now required to upload compliance reports within five days to prevent deterioration of CTC and Orthodox tea shipments worth around Rs 5 billion annually.
Nepal sees Rs 71.428 billion capital outflow over three years
The Sixty-second Annual Report of the Office of the Auditor General highlighted a large gap between approved foreign direct investment commitments and actual inflows into Nepal. During fiscal year 2027/28, the Department of Industry approved Rs 65 billion in investment pledges, but only Rs 12.01 billion was received. In fiscal year 2026/27, approved investments totaled Rs 81.691 billion, while actual inflows reached only Rs 10.292 billion, equivalent to 12.60 percent of commitments. Over the past three years, Nepal received Rs 30.342 billion in foreign investment, whereas outward capital remittances amounted to Rs 71.428 billion, exceeding inflows by 135 percent across sectors including agriculture, information technology, and tourism.
PM Balen’s social media post boosts DDC sales
The Dairy Development Corporation (DDC) reported a 200 to 300 percent rise in retail sales after a weekend social media post by Balendra Shah, popularly known as Balen. The increase in consumer demand comes as the state-owned company continues to face financial difficulties, including cumulative losses of Rs 2 billion and an additional Rs 400 million deficit from the previous fiscal year. DDC also owes local farmers Rs 500 million for milk supplied over the last four months. To reduce expenses, management discontinued staff milk and yogurt allowances on May 15, a move expected to save Rs 30 million annually. The corporation is also planning to open 50 additional sales outlets and increase daily processing capacity to 100,000 liters.
Ministry proposes Rs 10.139 billion budget exceeding allocated ceiling
The Ministry of Industry, Commerce and Supplies has submitted a proposed budget program worth Rs 10.139 billion, surpassing its assigned spending ceiling of Rs 8.319 billion. The proposed allocation includes Rs 5.78 billion for recurrent expenditure, Rs 3.89 billion for capital development, and Rs 469 million for financial investments in public enterprises. Key funding requests include Rs 3.038 billion for industrial investment promotion, Rs 2.23 billion for strategic trade corridors, Rs 1.65 billion for the Industrial Business Development Institute, and Rs 1.32 billion for industrial infrastructure projects.
Govt imports 40,000 tons of fertilizer to avoid supply shortage
The Ministry of Agriculture and Livestock Development has initiated government-to-government procurement procedures to import 40,000 tons of chemical fertilizer from India ahead of the upcoming rice plantation season. The first shipment will include 20,000 tons of urea and 20,000 tons of DAP fertilizer as part of an approved 80,000-ton import allocation for the Agriculture Inputs Company. The ministry currently maintains an emergency reserve of 150,000 tons, which is expected to meet minimum demand through July and August. Nepal requires approximately 250,000 tons of fertilizer for the rice season and around 800,000 tons annually. This year, fertilizer sales reached a record 458,000 metric tons, with Madhesh Province accounting for 29 percent of consumption, while Karnali Province used less than 2 percent due to transportation challenges linked to disruptions in the Strait of Hormuz.
66 telecom companies fail to clear Rs 1.29 billion in statutory dues
A report by the Office of the Auditor General uncovered revenue leakage in Nepal’s internet sector, showing that 66 companies failed to pay a combined Rs 1.29 billion in statutory liabilities. The unpaid amount includes Rs 353.6 million in royalties, Rs 734.4 million in frequency charges, Rs 43 million in renewal fees, and Rs 16.21 million allocated to the Rural Telecommunication Development Fund. In particular, 45 internet service providers did not pay the mandatory 4 percent royalty on a combined income of Rs 8.842 billion, while 13 firms avoided the 2 percent rural telecommunications levy on earnings of Rs 8.109 billion during fiscal year 2023/24. In response, the Nepal Telecommunications Authority issued a 15-day notice to 17 operators, including Beni Communication and Broadband Solutions, warning of possible license cancellation under Section 28 of the Telecommunications Act, 1997.
Sudurpaschim records Rs 24.117 billion unspent budget surplus
The Sudurpashchim Province Government has an unspent budget balance of Rs 24.117 billion with only two months left in the 2025/26 fiscal year. Out of a total annual allocation of Rs 33.455 billion, provincial agencies have spent only Rs 9.337 billion, equivalent to 27.91 percent of the overall budget. The Province Accounts Controller Office reported capital expenditure of Rs 4.177 billion, accounting for 21.06 percent of the Rs 19.838 billion capital budget. Recurrent spending reached Rs 5.16 billion, or 37.92 percent of the Rs 13.606 billion recurrent allocation. Delays caused by political activities and elections slowed project execution, although officials estimate final budget utilization could reach between 65 percent and 70 percent by the end of the fiscal year.
Gandaki to begin budget session on May 25
The Gandaki Province Assembly will begin its annual budget session on May 25. The session was formally called by the provincial head on Wednesday following a recommendation from the cabinet of the Gandaki Province Government. According to a notice issued by the Province Assembly Secretariat, the meeting will start at 2:00 PM at the Province Assembly Hall in Pokhara. During the summer session, the provincial government is expected to unveil its policy agenda, development priorities, and budget for fiscal year 2026/27.
Pokhara International Airport operates first direct charter flight to India
Pokhara International Airport completed its first direct flight to India since operations began on January 1, 2023. A medical rescue charter operated by Shree Airlines departed at 3:09 PM on Wednesday, carrying an ill tourist from Bhopal to Raja Bhoj International Airport. The passenger had fallen seriously ill while returning from a pilgrimage to Muktinath Temple and had been receiving treatment at Charak Memorial Hospital. The flight carried six people in total, including the patient, three medical staff, and two family members. Until now, the airport had only operated charter flights to Bhutan and China.
Delays in Asian Highway expansion add Rs 3 billion in extra costs
The 86.83-kilometer Kanchanpur-Kamala section of the East-West Highway remains unfinished after six years, increasing project costs by nearly Rs 2.972 billion. The expansion project is financed through 71.22 percent funding from the Asian Development Bank and 28.78 percent from the government under an original Rs 15.66 billion agreement signed on June 25, 2020. Initially scheduled for completion by October 28, 2023, the deadline has now been extended to June 30, 2026. Physical progress has reached 68 percent, leaving nearly one-third of the work incomplete. In the eastern section, 24.58 kilometers of blacktopping have been completed out of 39.42 kilometers, with 63.77 percent of the Rs 7.27 billion budget already spent. In the western section, 35.61 kilometers out of 47.41 kilometers have been blacktopped, utilizing 59.42 percent of its Rs 8.807 billion allocation.
Construction begins on Rs 70 billion Tila-II hydropower project
Developers officially launched construction of the 420-megawatt Tila-II Hydropower Project in Serabada, Khandachakra Municipality-8, Kalikot, on May 16. The project, estimated to cost Rs 70 billion, is being developed by Urja Tila Power Company. It will harness water from the Tila River through a tunnel stretching from Dhanada in Tilagufa Municipality to Serabada. Environmental impact assessments have been completed, while land acquisition work is in its final stage. The hydropower plant is expected to address ongoing electricity shortages in the five districts of Karnali Province, where facilities such as a Rs 130 million cold storage unit in Jumla remain underused because of limited power supply.
Ghorahi-Madichaur transmission line project reaches 80 percent completion
The Ghorahi-Madichaur 132 KV Transmission Line Project has achieved 80 percent completion and is expected to connect hydropower projects in Rolpa and Rukum to the national electricity grid. The 38-kilometer transmission corridor extends from Zingni in Ghorahi Sub-Metropolitan City-3, Dang, to Khugri in Sunil Smriti Rural Municipality-2, Rolpa. Construction teams have installed 101 of the required 121 transmission towers and have started wire-stringing work. The Rs 1.50 billion project is being financed through 40 percent government funding and 60 percent support from the Asian Development Bank. Additional infrastructure, including substations, staff housing, and control facilities, is also under construction at Khugri. Environmental clearance procedures related to forest areas are currently being finalized.
District leaders push for faster progress on Dailekh gas project
A joint meeting of representatives from Dailekh and Kalikot districts held at Mahabulek on May 17 urged the government to accelerate extraction work at the natural gas reserve in Jaljale, Bhairabi Gaupalika-1. The project has been operating since 2019 under a Rs 2.17 billion grant provided by the government of China through the China Geological Survey. Geological studies estimate reserves of 80.70 billion cubic meters of methane gas, enough to meet Nepal’s energy needs for 50 to 60 years. Exploration teams have drilled to a depth of 4,138 meters. The meeting issued a six-point declaration demanding that the project receive top national priority in the fiscal year 2026/27 budget and calling for the completion of unfinished road sections in the Mahabu corridor.
Prabhu Capital completes allotment of Taksar IPO
Prabhu Capital finalized the share allotment process for the Initial Public Offering of Taksar Pikhuwa Khola Hydropower Company on Wednesday. The company issued 2,515,455 shares worth Rs 251.5 million at a face value of Rs 100 per share. The public offering remained open from May 6 to May 11 and attracted 2,948,966 applicants seeking 33,746,200 shares. Due to heavy oversubscription, 2,771,252 applications were rejected, and a lottery system distributed 10 shares each to 251,545 investors, while five applicants received 11 shares.
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