KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economy is increasingly feeling the ripple effects of escalating West Asian geopolitical tensions, which are driving up construction material costs, disrupting industrial supply chains, and threatening sectors like bottled water due to raw material shortages.
At the same time, global trade is projected to slow, adding external pressure to an already fragile domestic economy marked by excess liquidity, weak revenue mobilization, and sluggish capital expenditure across provinces. Most provincial governments show alarmingly low spending—particularly in development budgets—highlighting structural inefficiencies, administrative delays, and political disruptions that continue to stall infrastructure growth.
While some localized progress in revenue collection, road development, and fertilizer supply offers limited relief, broader concerns persist around declining migrant employment, potential remittance risks, and last-minute fiscal spending that could undermine project quality, pointing to a widening gap between policy intent and execution.
Cement and steel prices rise amid regional conflict
The ongoing conflict involving the US, Israel, and Iran has driven up prices of construction materials in Nepal. Cement and steel costs have risen in recent days, affecting infrastructure projects, while authorities have intensified market monitoring amid concerns over artificial shortages.
Raw material disruption threatens bottled water industry
Conflict in the Red Sea and the Strait of Hormuz has disrupted the supply of key raw materials like PET resin and HDPE, pushing Nepal’s bottled water industry toward a potential shutdown. Prices of plastic granules have surged sharply, while shipping and financing constraints have further strained operations.
Global trade growth seen slowing to 1.9 percent: WTO
The World Trade Organization (WTO) has projected global merchandise trade growth to slow to 1.9 percent in 2026, down from 4.6 percent in 2025. Its latest outlook warns that escalating tensions in West Asia could further dampen trade if energy prices surge or transport disruptions continue. Director-General Ngozi Okonjo-Iweala said risks around the Strait of Hormuz remain significant, particularly for global food and fertilizer supply chains, although sectors linked to AI and resilient supply networks offer some stability.
NRB Governor calls for mobilizing rs 900 billion idle liquidity
Governor Biswo Nath Poudel of Nepal Rastra Bank has urged the government to channel around Rs 900 billion in excess liquidity into productive sectors. He emphasized creating an investment-friendly environment, including tax incentives for emerging industries, while cautioning that prolonged geopolitical tensions could impact remittances and supply chains.
Bagmati Province collects rs 24.49 billion revenue
Bagmati Province has collected Rs 24.49 billion in revenue in the first eight months of the current fiscal year, meeting just over one-third of its annual target. Officials attributed slower growth to liquidity constraints and economic disruptions.
Rs 13 million allocated for river embankments in Kailali
Funds worth Rs 13 million have been allocated for embankment construction along six rivers in Kailali to prevent erosion and protect agricultural land ahead of the monsoon season.
Over 2,300 Nepalis return from West Asia
More than 2,300 Nepali nationals have returned from West Asia amid rising regional tensions. Authorities say evacuation is not yet necessary but continue to monitor the situation closely as thousands register concerns.
Nepalgunj customs achieves over 80 percent revenue target
The Nepalgunj Customs Office has collected over 80 percent of its revenue target in the current fiscal year, showing improved performance compared to last year, though meeting the annual goal remains challenging.
FNCCI urges NRN investment in national economy
President Chandra Prasad Dhakal of the Federation of Nepalese Chambers of Commerce and Industries has called on non-resident Nepalis to invest in national development, emphasizing recent policy reforms aimed at attracting foreign capital.
Koshi Province spends rs 8.59 billion in eight months
Koshi Province has spent Rs 8.59 billion so far this fiscal year, with capital expenditure remaining relatively low. Officials cited political disruptions and budget constraints as key factors behind the slow pace of spending.
Madhesh Province spends just over 11 percent of budget
Madhesh Province has used only 11.17 percent of its Rs 46.58 billion budget as of March 8. Capital spending remains especially weak at 6.53 percent, while recurrent expenditure has reached 19.58 percent. The Provincial Public Service Commission posted the highest spending at 45.95 percent, whereas the Ministry of Sports and Social Welfare recorded just 1.66 percent. Finance Secretary Ram Kumar Mahato attributed the poor performance to halted small projects and administrative disruptions following the protests on September 8 and 9, 2025.
Bagmati Province capital spending trails at 17 percent
Bagmati Province utilized Rs 15.05 billion, or 22.31 percent of its Rs 67.47 billion budget, in the first eight months of fiscal year 2025/26. Capital expenditure remains a concern, with only 17.12 percent of the allocated Rs 41.43 billion spent by late February (Falgun). Recurrent spending stood at 30.56 percent. Officials caution that the large unspent balance of around 78 percent may lead to a last-minute spending surge, potentially affecting project quality and feasibility.
Gandaki Province achieves 23.38 percent budget use
Gandaki Province spent Rs 7.472 billion, equivalent to 23.38 percent of its Rs 31.97 billion budget, by March 12. Capital expenditure reached 20.92 percent, down from 27.38 percent during the same period last year. The Ministry of Industry and Tourism recorded the lowest spending at 7.88 percent, while the Office of the Chief Attorney led with 42.79 percent. With only four months left, the province faces mounting pressure to speed up stalled infrastructure works amid recent political changes.
Lumbini Province expenditure stands at 22.42 percent
Lumbini Province used 22.42 percent of its Rs 38.91 billion budget by February 13. Including grants to local governments, total spending rose to 23.65 percent, amounting to Rs 9.20 billion. The Ministry of Health recorded the highest expenditure at 68.18 percent, largely due to a Rs 700 payment for the Lumbini Provincial Hospital. In contrast, the Ministry of Internal Affairs and Law posted just 0.11 percent in capital spending. A policy requiring tenders for projects above Rs 500,000 has left around 800 smaller projects pending.
Karnali Province spending drops to 19 percent amid unrest
Karnali Province managed to spend only 19 percent of its Rs 32.99 billion budget in the first eight months of fiscal year 2025/26, a notable decline from 30 percent during the same period last year. Chief Accounts Officer Dipendra Magarati said most expenditure went toward salaries, while major development projects remain stalled. The Ministry of Physical Infrastructure and Urban Development has spent just 15.63 percent of its Rs 10.73 billion allocation, leaving Rs 26.51 billion idle in the provincial treasury.
Sudarpaschim Province capital spending falls below 10 percent
Sudarpaschim Province reported overall budget utilization of 16.22 percent by March 14, spending Rs 5.49 billion out of Rs 33.43 billion. Capital expenditure is particularly low at 9.73 percent, with only Rs 1.92 billion spent on development works. Information Officer Baldev Kapadi cited lengthy tender procedures, administrative bottlenecks, and staff shortages as key reasons. The September 2025 protests and election preparations further disrupted project planning and execution, delaying infrastructure and growth targets.
Fuel shortage in india pushes Nepali workers to return
A shortage of cooking gas in Indian cities has prompted Nepali migrant workers to return home via border points such as Trinagar in Kailali. Workers cited job losses as businesses shut down due to supply disruptions linked to the West Asia conflict, even as Nepali authorities maintain that domestic fuel supplies remain stable.
Buddhabhumi Nepal Hydropower to launch 100 percent rights shares
Buddhabhumi Nepal Hydropower Company will issue 100 percent rights shares starting May 5. The company plans to offer 4 million shares at a face value of Rs 100 each in a 1:1 ratio for existing shareholders. The book closure was completed on February 13, and the issue will remain open until April 26. NIC Asia Capital has been appointed as the issue manager. Following the issuance, the company’s paid-up capital will increase from Rs 400 million to Rs 800 million.
Fertilizer supply remains stable in Koshi province
Farmers in Koshi Province have reported stable availability of chemical fertilizers during the current cropping season. Stocks of urea, DAP, and potash remain sufficient, although officials warn that prolonged global disruptions could affect future supplies.
Baglung advances 11 road projects worth Rs 495 million
The Road Division Office in Baglung has launched upgrades for 11 road projects across the district, with a combined investment of Rs 495.4 million. The largest project, the Harichaur–Malm–Pandavkhani–Ramua road, is nearing completion with 70 percent physical progress at a cost of Rs 250 million. Other projects include the Dullebensi–Amarpuri road at 60 percent completion and the Adarsha Prabi–Syalkhapala road at 54 percent. Officials say these projects, mostly contracted after fiscal year 2024/25, aim to improve rural connectivity and boost trade by mid-July 2026.
Funding shortage delays Pathari-Shanischere municipal building
Construction of the Pathari-Shanischere Municipality administrative building has slowed due to funding gaps from the Department of Local Infrastructure. Although the municipality has already spent Rs 57.4 million and achieved 70 percent progress, only Rs 8.1 million of the department’s pledged share has been released. Officials warn that local funds cannot cover the remaining cost of the Rs 110.8 million project. Engineers note that the department’s Rs 2 billion budget is stretched across 166 projects, causing delays in payments.
Rabi Prasad Acharya elected president of NTVA Gandaki
Rabi Prasad Acharya has been unanimously elected president of the Nepal Tourist Vehicles Association (NTVA) Gandaki Province during its seventh annual general meeting and fourth convention. The new team includes Bikas Prasad Kandel as first vice president, Bhubani Prasad Adhikari as second vice president, and Shyam Prasad Lamichhane as general secretary. The new leadership has pledged to improve tourist transport services and uphold the reputation of the green number plate system.
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