KATHMANDU: Economic Digest presents a brief yet comprehensive roundup of major business developments in Nepal, delivered in clear and accessible summaries.
Nepal’s economic and financial landscape reflects a mix of caution, reform efforts, and emerging opportunities. While the stock market declined despite higher trading turnover, rising gold prices and strong investor demand for mutual funds indicate that investors remain active but cautious amid economic uncertainty.
At the policy level, the government is simultaneously pushing infrastructure spending, digital transformation, and private sector-led growth, while also facing criticism over cuts to fiscal equalization grants, a narrow tax base, and delays in fertilizer imports.
Concerns over weak provincial growth—particularly in Madhesh—alongside export disruptions, governance weaknesses highlighted by the Auditor General, and pressure from FATF/APG to accelerate reforms suggest persistent structural challenges.
However, initiatives such as expanding data centers, launching Uber services, introducing project bank systems, and strengthening regulatory institutions signal Nepal’s gradual transition toward a more digital, investment-oriented, and reform-driven economy.
NEPSE falls 12.36 points despite rise in turnover
The Nepal Stock Exchange (NEPSE) index declined by 12.36 points on Thursday, the fourth trading day of the week, although overall market turnover increased. The benchmark index dropped 0.44 percent to close at 2,742.11 points, erasing part of Wednesday’s 30.08-point recovery. Earlier this week, the market had also slipped by 6.51 points on Tuesday and 1.03 points on Monday. The Sensitive Index also decreased by 1.57 points to 469.48, while the Float Index and Sensitive Float Index declined by 0.46 percent and 0.35 percent respectively.
Federal government moves to cut fiscal equalization grants
The federal government has initiated steps to reduce fiscal equalization grants allocated to provincial and local governments. Through the Office of the Financial Comptroller General, the Ministry of Finance has instructed Treasury and Accounts offices to release only 21.02 percent of the 25 percent allocation earmarked for the fourth quarterly installment. The move comes despite objections from the National Natural Resources and Fiscal Commission, which had advised against reducing grants already approved in the national budget. The federal government had allocated Rs 149.628 billion in fiscal equalization grants for the current fiscal year.
Gold price rises to Rs 293,800 per tola
Gold and silver prices increased in Nepal’s domestic market on Thursday, according to the Federation of Nepal Gold and Silver Dealers’ Association. Gold prices rose by Rs 1,800 per tola, reaching Rs 293,800 per tola (11.66 grams), compared to Rs 292,000 on Wednesday. Silver was traded at Rs 5,050 per tola.
SC bars promoters from contesting BFI board seats under public category
The Supreme Court has ruled that shareholders holding both promoter and public shares in banks and financial institutions (BFIs) are not eligible to contest board elections under the public shareholder category. A joint bench of Justices Kumar Regmi and Bal Krishna Dhakal rejected a writ petition filed by Citizens Bank International shareholder Ratneshwar Prasad Sharma, affirming the regulatory authority of Nepal Rastra Bank. Sharma had challenged the bank’s election committee after it disqualified his candidacy for a public director position due to his ownership of promoter shares. The dispute had delayed the bank’s board elections last November following an interim order.
Only 293 new projects added to project bank for next fiscal year
Nepal’s Project Bank has included only 293 new projects for the upcoming fiscal year, compared to 126 projects last year. To qualify for inclusion, projects must fulfill eight mandatory conditions, including environmental impact assessments, detailed project reports, cost estimates, land acquisition status, procurement plans, implementation frameworks, result indicators, and evaluation plans. In addition to the newly approved projects, the Project Bank contains 87 ongoing projects and around 5,000 projects listed for study purposes.
Finance Ministry guarantees Rs 54.5 billion for infrastructure projects
The Ministry of Finance has approved resource guarantees worth Rs 54.5 billion for 21 large multi-year infrastructure projects nationwide. The decision, taken under the leadership of Finance Minister Swarnim Wagle, marks a major shift from previous practices, where only a small portion of requested funds was typically approved. Following the approval, concerned ministries are required to begin procurement procedures and publish tenders within the next two months before the fiscal year concludes in mid-July.
Upcoming budget to prioritize private sector investment
Finance Secretary Ghanshyam Upadhyaya has said the upcoming national budget will focus on attracting private sector investment. Speaking at a meeting of the House of Representatives Finance Committee, he stressed that sustainable productivity growth cannot rely solely on government expenditure. According to him, the budget will serve as a catalyst to encourage private investment, boost production, and create employment opportunities.
Experts call for VAT cuts and tax reforms to revive economy
Economic experts participating in pre-budget discussions at the House Finance Committee have urged the government to reduce the Value Added Tax (VAT) rate from 13 percent and increase the personal income tax exemption threshold. They also recommended broader reforms in taxation and debt management to stimulate economic activity. According to the experts, declining market demand, rising living costs, and a less business-friendly environment have made structural reforms increasingly necessary.
Nepal’s tax burden remains concentrated in formal sector
Despite gradual expansion of Nepal’s social security system, experts say the country’s tax structure still places a heavy burden on a limited formal sector while much of the informal economy remains outside the tax net. According to the Inland Revenue Department, around 11,000 taxpayers paid taxes at rates of 30 percent or higher in fiscal year 2024/25, contributing nearly Rs 10 billion in revenue. Analysts argue that limited public services and benefits despite high tax contributions discourage compliance and increase the risk of tax evasion.
FATF/APG team urges Nepal to accelerate reforms
An international assessment team from the Asia-Pacific Group (APG) under the Financial Action Task Force (FATF) has urged Nepal to speed up reforms aimed at strengthening anti-money laundering mechanisms. Officials said the team recently completed field visits and discussions with Nepali authorities on financial crime investigations, prosecution, illicit asset recovery, and regulatory enforcement. However, the team did not formally indicate whether Nepal would remain on or be removed from the FATF grey list.
Government says magnesium glycinate supplements not approved for sale in Nepal
The government has clarified that dietary supplements containing magnesium glycinate have not been approved for sale or distribution in Nepal. In a public notice, the Department of Food Technology and Quality Control said it had taken serious note of misleading advertisements related to magnesium glycinate circulating on social media. The department stated that under the Food Hygiene and Quality Act 2024 and the Dietary Supplement Food Regulation Procedure 2015, all food, health, nutritional, nutraceutical, probiotic, and dietary supplement products must be registered before they can be marketed in Nepal.
Government and private sector expand data centers under Digital Nepal initiative
Both the government and private sector are increasing investment in data centers as part of Nepal’s “Digital Nepal” initiative. The government is also advancing policies to shift more public services online. The National Information Technology Center is overseeing data management and working to expand a government cloud system. The integrated data management center inside Singha Durbar currently handles government domain registration, website hosting, IT infrastructure support, network operations, and data backup services.
Government begins process to appoint Electricity Regulatory Commission leadership
The government has started the appointment process for the vacant chairperson and four member positions of the Electricity Regulatory Commission. A recommendation committee formed under the Ministry of Energy, Water Resources and Irrigation issued a public notice on Thursday inviting applications for the posts. Interested candidates can apply by June 4 during office hours. The commission will consist of one chairperson and four members, including at least one woman.
Auditor General report highlights weak financial discipline in local governments
The 63rd annual report of the Office of the Auditor General has raised concerns over weak financial transparency and accountability in metropolitan and sub-metropolitan cities. The report, submitted by Auditor General Toyam Raya to President Ramchandra Paudel, stated that audits could not be completed in two metropolitan cities and 31 local governments after documents were reportedly destroyed during protests in September 2025. According to the report, Bharatpur Metropolitan City and Birgunj Metropolitan City cited document destruction as the reason audits were not completed.
Stakeholders seek long-term solution to tea export restrictions
Tea sector stakeholders have called for a long-term solution after India tightened restrictions on Nepali tea exports beginning May 1, disrupting shipments for 19 days. Although exports have resumed following temporary relaxation by Indian authorities, producers and exporters say the uncertainty continues to threaten the sector. Industry representatives warned that the impact of the disruption is likely to be felt throughout the year despite the resumption of exports.
Large volume of fertilizer imports unlikely to arrive on time
A significant volume of fertilizer imports contracted under the current and upcoming fiscal year budgets is unlikely to arrive as scheduled. According to officials, 112,650 metric tons contracted through the Agriculture Materials Company — including 50,000 metric tons of urea and 62,650 metric tons of DAP fertilizer — may not reach Nepal. In addition, another 29,900 metric tons planned under the next fiscal year’s budget and 42,450 metric tons of urea procured through Salt Trading Corporation are also unlikely to arrive on time.
Sudurpashchim to launch project bank system from next fiscal year
The Sudurpashchim Province Government has announced plans to implement a project bank system from fiscal year 2026/27. The system will operate through project bank management information software aimed at preventing duplication, enabling online entry, reducing paperwork, and providing cloud-based storage. According to the Provincial Policy and Planning Commission, major provincial projects included in the project bank will receive priority in future budget allocations.
Bagmati and Gandaki projected to outpace national GDP growth
Bagmati Province and Gandaki Province are expected to record higher economic growth rates than the national average in fiscal year 2025/26, according to estimates by the National Statistics Office. The national GDP growth rate is projected at 3.85 percent, while Bagmati Province is expected to grow by 5.40 percent and Gandaki Province by 5.01 percent at constant prices.
Strong investor demand closes LS Horizon 12 subscription early
Investor demand for the “LS Horizon 12” scheme managed by Laxmi Sunrise Capital Limited has led to the early closure of its public subscription process. The company said applications exceeded the available units before the scheduled deadline. The closed-end mutual fund scheme is promoted by Laxmi Sunrise Bank Limited, and the public offering for 12 million units had opened on May 13.
Madhesh projected to record lowest provincial economic growth
Madhesh Province is projected to record the lowest economic growth among Nepal’s seven provinces in fiscal year 2025/26. According to the National Statistics Office, the province’s growth rate is estimated at just 1.31 percent, significantly below the national growth estimate of 3.85 percent. Madhesh Province had recorded 4.43 percent growth in the previous fiscal year.
Uber informally launches ride-sharing service in Kathmandu Valley
American ride-hailing company Uber has informally launched its services in Nepal through a test operation in the Kathmandu Valley. Passengers can now book rides through the Uber app across different parts of the valley. Ahead of the launch, the company intensified registration of bike riders, taxi drivers, and car owners. Uber has also entered into a strategic partnership with local ride-sharing platform TaxiMandu to strengthen its operations in Nepal.
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