KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The developments collectively point to an economy under simultaneous pressure and transition, marked by external shocks, policy activism, and structural constraints. Record-high gold and silver prices reflect global economic uncertainty spilling into the domestic market, while weak exports, a widening trade deficit, and falling steel shipments underscore Nepal’s vulnerability to external trade barriers and sluggish domestic demand.
At the same time, the government is pushing institutional and infrastructure reforms—expanding local tax services, advancing large-scale energy and irrigation projects, and securing foreign grants for road upgrades—to improve long-term economic capacity. However, regulatory inconsistencies, such as the CDSC’s suspension of share dematerialization and controversial cooperative directives, are eroding investor and institutional confidence.
Persistent informality, highlighted by the dominance of Hundi despite rising formal remittance inflows, further complicates macroeconomic stability, suggesting that while reform momentum exists, governance coherence and effective enforcement remain critical challenges.
Gold price sets new record, surpasses Rs 300,000
Gold prices surged to an unprecedented level in the domestic market on Friday, breaking the Rs 300,000 mark for the first time. Data from the Federation of Nepal Gold and Silver Dealers’ Association shows that gold jumped by Rs 9,200 per tola to reach a historic high of Rs 301,400. Silver also climbed to a new peak, rising by Rs 320 to Rs 6,190 per tola. The sharp increase reflects strong gains in the international market, where gold reached USD 4,960 per ounce and silver rose to USD 98 amid global economic uncertainty.
Cabinet approves USD 2 million grant for Siddhartha Highway project
The Council of Ministers has approved a USD 2 million grant provided by the Asian Infrastructure Investment Bank (AIIB) to support preparatory work for upgrading the Butwal–Pokhara section of the Siddhartha Highway. The decision was taken at a cabinet meeting held at Singha Durbar on Thursday. The same meeting appointed Home Minister Om Prakash Aryal as the government’s official spokesperson and extended the tenure of the high-level panel investigating damage caused during recent Gen Z protests.
Authorities inspect 51 firms as market monitoring steps up
The Department of Commerce, Supplies and Consumer Protection carried out inspections at 51 businesses across Kathmandu, Lalitpur, and Bhaktapur within a three-day period. One firm was penalized Rs 201,000 under the Consumer Protection Act 2018, while another received a fine of Rs 50,000. Several others were summoned to submit required documents. Director Narhari Tiwari said the department is intensifying action against artificial shortages, black marketing, and missing MRP labels, stressing a zero-tolerance policy toward cartels and syndicates.
Tax services expanded to 56 local centers
The Ministry of Finance has expanded tax-related services at the local level to ease access for taxpayers, Finance Minister Rameshore Khanal announced. After the closure of 36 Inland Revenue Offices, services such as PAN registration are now being delivered through local government units. At present, 34 District Treasury and Controller Offices and 22 local units have begun providing these services. Residents in remote regions, including Chumnubri in Gorkha and Khumbu Pasang Lhamu in Solukhumbu, can now complete tax procedures locally, reducing both travel time and expenses.
Nepalgunj Customs collects Rs 9.346 billion in half a year
The Nepalgunj Customs Office generated Rs 9.346 billion in revenue during the first six months of the current fiscal year 2025/26, achieving 38.08 percent of its annual target of Rs 24.547 billion. Information Officer Pabitra Kumar Khadka stated that the office fell short of its monthly targets throughout the period. The highest monthly collection—Rs 1.741 billion—was recorded between September 17 and October 17, 2025. Total trade during the period stood at Rs 38.98 billion, with imports of Rs 37.62 billion and exports limited to Rs 1.35 billion, resulting in a trade deficit of 96.38 percent.
Iron and steel exports plunge amid Indian safeguard duty
Nepal’s iron and steel exports declined sharply in the first half of the fiscal year, largely due to trade barriers imposed by India. Exports of iron sheets dropped by 80 percent, falling from Rs 4.7 billion to Rs 780 million, while MS steel strip exports collapsed from Rs 630 million to just Rs 20 million. Industry representatives, including Rajesh Agarwal, attribute the downturn to India’s 12 percent safeguard duty on steel imports and delays in renewing BIS certifications for Nepali producers such as Aarti Strips. Domestic factories are also operating at only 35–40 percent capacity due to weak demand in the construction sector.
Formal remittance rises, but Hundi continues to dominate
Despite an increase in remittance inflows through formal channels, illegal Hundi transactions remain widespread in Nepal. Between July and December 2025, Nepal Police arrested 12 individuals and seized Rs 11.5 million linked to Hundi operations. Although the government offers incentives such as a one-percent higher interest rate for remittances sent through banks, informal transfers persist. Over the past seven years, authorities have detained 279 people with Rs 35.644 billion in undocumented cash. Studies indicate that 41 percent of Nepal’s economy remains informal. While formal remittance inflows reached Rs 870.31 billion in five months, continued Hundi activity is slowing Nepal’s progress toward removal from the FATF grey list.
CDSC suspends dematerialization over dual ISIN controversy
CDS and Clearing Limited (CDSC) has halted the dematerialization and lock-in processes for shares of several listed companies, including Emerging Nepal and Pure Energy. According to CEO Prawin Pandak, the suspension stems from CDSC’s plan to introduce a dual ISIN system separating promoter and public shares—a proposal yet to receive approval from the Securities Board of Nepal. Pure Energy has filed a writ petition at the Patan High Court after its request to lock in 8 million shares was blocked. Investors argue the decision violates constitutional property rights under Article 25 and has reduced the value of promoter shares worth Rs 640 million.
Babai Irrigation Project reaches 76 percent completion
The Babai Irrigation Project in Bardia, listed as a national pride project, has achieved 76 percent physical progress, 37 years after construction began in FY 1988/89. Initially studied in FY 1966/67 with support from UNDP and IDA, the project aims to irrigate 36,000 hectares across six local governments, including Gulariya and Bansgadhi. Project Chief Gopal Sharma said the completion timeline has been pushed to FY 2028/29 due to repeated delays, with estimated costs rising to Rs 26.69 billion. Current work focuses on extending main and branch canals in Gulariya to enhance agricultural output.
Work begins on Bheri Corridor 400 kV transmission line
The National Transmission Grid Company has initiated land acquisition for a 75-kilometer, 400 kV transmission line linking Maintada in Surkhet with Danipipal in Jajarkot. CEO Sagar Shrestha said the transmission line will cost Rs 8 billion, with an additional Rs 6 billion allocated for substations. The project is designed to evacuate up to 2,400 MW of electricity from hydropower projects such as Nalgad (417 MW) and Jagadulla (106 MW). Covering 352.04 hectares, the project is expected to be completed within four years after final budget approval from the Ministry of Finance.
New cooperative directives spark confusion amid reform push
The Department of Cooperatives has issued new directives following instructions from the Prime Minister’s Office, triggering uncertainty due to inconsistencies with existing laws. The directives require cooperatives to shut down branch offices, maintain a 90 percent credit-to-deposit ratio, and cap individual loans at 10 percent of share capital, down from the previous 15 percent of the capital fund. They also prohibit cooperatives from accepting companies as members and from buying land for resale. Information Officer Shashi Kumar Lamsal acknowledged that the directives were implemented exactly as instructed by the ministry, without alignment with current cooperative laws and regulations.
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