KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The developments collectively portray an economy at a crossroads, marked by policy liberalization and structural bottlenecks. While the government has moved to stimulate investment—lifting the cap on automatic-route FDI, revising hydropower PPA tariffs to attract private capital, launching new IPOs, and tightening governance standards in energy firms, monetary indicators reveal subdued domestic momentum, with the Nepal Rastra Bank struggling to absorb excess liquidity amid weak credit demand.
Persistent implementation gaps are evident in low political compliance with campaign finance rules, limited uptake of real estate licensing, and more than 30,000 stalled infrastructure projects, prompting contractors to demand higher capital spending and regulatory reform. Fiscal strain is also visible in the health insurance system’s mounting arrears, even as regulatory bodies intensify market inspections to curb price distortions.
At the grassroots level, agricultural commercialization and overseas labor migration continue to underpin household incomes, while gold’s price rise signals safe-haven demand in uncertain conditions. Overall, the picture is one of reform-oriented intent constrained by execution challenges and fragile private-sector confidence.
Gold climbs Rs 1,300 as silver declines
Gold prices rose by Rs 1,300 per tola in the domestic market compared to Monday, reaching Rs 314,800, according to the Federation of Nepal Gold and Silver Dealers’ Association. Meanwhile, silver fell by Rs 10 per tola and is now priced at Rs 5,885.
Government lifts cap on automatic-route FDI
The Ministry of Industry, Commerce and Supplies has scrapped the Rs 500 million ceiling on foreign direct investment approved through the automatic route as of February 16. Investors in sectors such as energy, tourism, and information technology can now obtain online approval without an upper limit. Director General Jitendra Basnet clarified that while IT ventures have no minimum threshold, other industries must propose at least Rs 20 million. Covering 23 service sectors—including healthcare and power generation—the reform follows the Third Investment Conference and legal changes empowering the Department of Industry to authorize FDI of any size.
NRB grapples with surplus liquidity control
The Nepal Rastra Bank is encountering difficulties in absorbing excess liquidity and keeping short-term interest rates within its targeted range. Even after deploying instruments such as NRB Bonds and deposit collection tools, the interbank rate slipped to 1.90 percent last week before recovering slightly to 2.4583 percent on Monday—still under the 2.75 percent floor of the interest rate corridor. Former Executive Director Nar Bahadur Thapa attributed the slowdown in credit growth to weak economic momentum and low private sector confidence. Deposits currently total Rs 7.744 trillion, while lending stands at Rs 5.804 trillion, leaving a liquidity surplus of Rs 838 billion.
Revised PPA tariffs aim to boost private hydropower
On February 3, the Electricity Regulatory Commission unveiled updated guidelines raising Power Purchase Agreement rates for reservoir-based hydropower schemes. Projects up to 100 MW will receive Rs 14.80 per unit in winter and Rs 8.45 in summer. Commission Chair Ram Prasad Dhital said the new pricing structure is intended to ease seasonal supply gaps. Independent Power Producers’ Association, Nepal Vice President Mohan Kumar Dangi welcomed the hike but objected to conditions such as the 17 percent return ceiling. Reservoir projects are defined as those capable of running at full capacity for 15 consecutive days with adequate storage.
Only nine political parties comply with bank account rule
The Election Commission announced Tuesday that just 1,213 of 3,406 first-past-the-post candidates have opened the mandatory bank accounts for the March 5 polls. Only nine of the 68 participating parties—including the Nepali Congress and the Janata Samajwadi Party—have fulfilled the requirement. Assistant Spokesperson Kul Bahadur GC said the Election Support Bank Account Procedure 2026 makes such accounts compulsory to ensure financial transparency and track spending caps. All campaign income and expenditures under both proportional and direct systems must pass through these accounts for legal oversight.
Contractors seek forty percent capital budget share
The Federation of Contractors’ Associations of Nepal has pressed the government to earmark 40 percent of the national budget for capital expenditure to speed up infrastructure work. President Ravi Singh argued that the present allocation of roughly 20.8 percent (Rs 407 billion) is inadequate and criticized the mid-term cut to Rs 243.30 billion. The federation also proposed automatically rejecting bids that fall more than 15 percent below estimated costs to safeguard construction quality. General Secretary Roshan Dahal further called for an integrated umbrella law and the prompt clearance of pending dues to prevent projects from stalling.
Only 36 real estate firms secure licenses
The Department of Land Management and Archive reported that just 36 companies have obtained the required licenses for property transactions, though 135 qualify. Many have yet to pay the stipulated fees under Land Revenue Regulations 2036. Director Khimananda Acharya noted that 30 applicants were disqualified due to blacklisting. Licensed firms may conduct transactions above Rs 30 million within six metropolitan and 11 sub-metropolitan cities, ensuring regulatory monitoring of high-value deals.
Over 30,000 infrastructure projects stalled
The Federation of Contractors’ Associations of Nepal says more than 30,000 projects nationwide remain incomplete because of funding gaps and impractical rules. Since fiscal year 2016/17, close to 100,000 schemes worth Rs 1.9 trillion have begun, yet many have halted. Dahal pointed out that even flagship initiatives such as the Melamchi Water Supply Project and the Nagdhunga Tunnel face setbacks. The federation is pushing for amendments to the Public Procurement Act 2007, streamlined monthly payments, and an umbrella act to revive the construction industry, which supports over 2.5 million jobs.
New governance rules proposed for public energy firms
The Electricity Regulatory Commission has prepared draft Institutional Governance Standards for Licensed Entities 2026 to strengthen accountability in publicly listed energy companies. The proposal requires boards to fill vacant director posts and include at least one woman member. It also introduces a two-year cooling-off period for senior officials. Commissioner Madhusudhan Adhikari said the measures aim to protect investors and ensure transparent procurement, barring contracts that pose conflicts of interest.
Health insurance board to release rs 1 billion to hospitals
The Health Insurance Board will distribute Rs 1 billion to affiliated hospitals after receiving Rs 750.9 million from the Ministry of Health and Population. Executive Director Krishna Paudel said the funds were reallocated from 22 programs, including Rs 500 million previously designated for basic hospital operations. Despite the transfer, unpaid liabilities exceeding Rs 10 billion remain since mid-August 2025. The payment will prioritize services for low-income patients and partially clear outstanding dues.
Department inspects 26 businesses in kuleshwor
The Department of Commerce, Supplies and Consumer Protection inspected 26 firms in the Kuleshwor area to curb black marketing and artificial shortages ahead of the election. While 25 businesses were given directives for improvement, Ramesh Fruit Traders was ordered to submit documentation within three days over irregularities. Authorities, accompanied by local officials and consumer advocates, pledged stricter monitoring to safeguard consumer rights and maintain price stability.
Commercial potato farming boosts Salyan incomes
More than 550 families in Baphukhola, Bagchaur Municipality of Salyan, are generating substantial earnings from large-scale potato cultivation. Ward Chair Tikaram Oli said his ward alone produces potatoes worth over Rs 100 million annually, while regional exports total Rs 180 million. Farmer Gopilal Oli shared that traders buy directly from fields at Rs 6,000–7,000 per quintal. Supplies reach cities such as Dang, Nepalgunj, and Butwal, with improved electricity access aiding irrigation.
FCAN demands apology over controversial remarks
The Federation of Contractors’ Associations of Nepal held a press meet condemning comments by Balendra Shah of the Rastriya Swatantra Party. During a February 18 rally in Dhangadhi, Shah allegedly suggested harsh measures against contractors to expedite work. Singh described the statement as uncivil and contrary to the election code. The federation called for a public apology and urged the Election Commission to intervene, arguing that such rhetoric overlooks structural obstacles behind project delays.
Municipality to begin door-to-door tax drive
Siddharthanagar Municipality plans to launch a campaign to register unlisted businesses and expand the tax base. Deputy Mayor Uma Adhikari said the initiative will educate entrepreneurs across 13 wards. Administrative Officer Kamal Kant Khanal confirmed the drive will start after the election. Authorities also decided to operationalize Block A of the local agricultural market to enhance revenue collection and clarify tax policies.
Construction starts on engineering campus in Ghorahi
Work has begun on a five-story building for the Tribhuvan University Institute of Engineering at Mahendra Multiple Campus in Ghorahi, Dang. The Rs 208.7 million project, undertaken by Khadka Nirman Sewa Private, is scheduled for completion by fiscal year 2027/28. The formal foundation ceremony has been deferred due to the election code of conduct. The facility is expected to position Dang as an emerging IT education hub once classes commence in 2027/28.
Palpa cement industries opens Rs 450 million ipo
Palpa Cement Industries has launched a public share offering of 4.5 million units worth Rs 450 million after earlier allocations to locals and migrant workers. Investors may apply for 10 to 100,000 shares at Rs 100 each until February 27. Nabil Investment Banking Limited is managing the issue, while Infomerics Credit Rating Nepal assigned an IRN Double B Plus rating, signaling moderate credit risk.
UAE remains top destination for Nepali workers
According to the Department of Foreign Employment, 472,577 Nepalis secured labor permits in the first seven months of the fiscal year. The United Arab Emirates leads with 106,687 permits, followed by Qatar, Saudi Arabia, and Malaysia. Spokesperson Chandra Bahadur Siwakoti noted the UAE has topped the list for two consecutive years. Analyst Rameshwar Nepal linked the trend to post-pandemic construction and service-sector expansion there.
Advanced wheat training modernizes farming practices
A grower from Sammarimai Rural Municipality in Rupandehi adopted improved cultivation methods after attending a program by the National Wheat Research Program. The week-long training covered certified seeds, balanced fertilization, and disease control for 40 participants from 24 districts. Coordinator Roshan Basnet emphasized line sowing and soil testing. Director Tek Prasad Gotame noted that 54 advanced wheat varieties have been developed over six decades, including high-yield strains capable of producing 5.5 tons per hectare.
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