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 picture of macroeconomic stability alongside persistent structural weaknesses. While strong foreign exchange reserves, rising per capita income, growing remittance inflows, and continued foreign direct investment — particularly from China — signal resilience in the external sector, weak credit expansion, declining tourist spending, and sluggish post-pandemic budget growth highlight limited momentum in productive economic activity.
Public enterprises continue to struggle with poor financial discipline, rising liabilities, and large unpaid dues to the government, while the cooperative sector faces a deepening crisis of public trust due to governance failures and political interference. Infrastructure development also remains uneven, with major road and irrigation projects delayed despite ambitious government targets.
At the same time, Nepal’s dependence on foreign airlines, imported coal, overseas employment opportunities, and external capital underscores the economy’s continued reliance on external actors. Overall, the data suggest that although Nepal has maintained short-term financial stability, deeper reforms in governance, public spending efficiency, infrastructure execution, and private sector confidence are essential for sustaining long-term economic growth.
Federal budget spending remains low relative to GDP
During the past decade, Nepal’s allocated federal budget averaged 33.7 percent of GDP each year, while actual spending averaged only 26.8 percent. The budget-to-GDP ratio reached its highest point at 39.4 percent in fiscal year 2019/20 before falling to 30.5 percent in fiscal year 2024/25. According to the Ministry of Finance, the average annual growth rate of the budget during this period was 12.3 percent, whereas the average growth rate in the five fiscal years following the COVID-19 pandemic stood at only 4.1 percent.
Gold price drops by Rs 5,500 per tola
Gold prices declined sharply by Rs 5,500 per tola (11.66 grams) on Thursday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the price of fine gold was set at Rs 285,000 per tola, down from Rs 290,500 per tola on Wednesday. Silver prices also fell by Rs 215 per tola, with the new rate fixed at Rs 4,865 per tola.
Foreign exchange reserves reach Rs 3.41 trillion
Nepal’s foreign exchange reserves have remained relatively robust, reaching Rs 3.41 trillion, sufficient to cover imports for 18.5 months. However, credit growth continues to lag behind expectations. Although bank deposits rose by 15.1 percent, lending expanded by only 6.7 percent. Despite excess liquidity in the banking sector, the conversion of funds into investment has remained limited. The tourism industry has shown signs of recovery, with 1.162 million tourists visiting Nepal in 2025. The average duration of stay increased to 16.34 days, but average daily spending declined from USD 40.8 to USD 33.08, reflecting lower returns despite a rise in visitor arrivals.
Public enterprises owe government nearly Rs 165 billion
Public enterprises still owe close to Rs 165 billion to the Government of Nepal, according to a recent report. In fiscal year 2024/25, the government expected to receive Rs 164.96 billion from public enterprises under different revenue headings. Of the total amount, Rs 11.36 billion was projected from income tax and Rs 52.33 billion from VAT, while the remaining amount consisted of interest payments, royalties, customs duties, and other charges. Public enterprises currently have 38,285 approved positions, with 30,352 employees in active service. Sector-wise, utility-related enterprises employ the largest workforce, while the social sector has the fewest employees.
Nepal’s per capita disposable income rises to USD 2,044
Nepal’s per capita gross national disposable income is projected to increase to USD 2,044 in the current fiscal year, compared to USD 1,914 in the previous year. Despite sluggish economic activity and modest growth, analysts attribute improvements in several economic indicators to rising remittance inflows and growth in service exports. Per capita GDP at current prices is also expected to increase by 5.5 percent, reaching Rs 217,946 this fiscal year.
Public enterprises’ assets rise to Rs 3.2 trillion
The total assets of Nepal’s public enterprises grew by 9.5 percent this year, reaching Rs 3.20 trillion, while total operating income increased by 0.7 percent to Rs 672.40 billion. However, the share of public enterprises in the federal government’s total income tax revenue declined from 5.17 percent to 3.82 percent. Of the 38,285 approved positions in public enterprises, only 30,352 are currently filled. Unfunded liabilities, including pension obligations for retired staff, increased by 10.10 percent to Rs 66.40 billion.
IPPAN urges government to restart stalled hydropower projects
The Independent Power Producers’ Association Nepal (IPPAN) has requested Minister for Agriculture, Forests and Environment Gita Chaudhary to support the resumption of construction on five hydropower projects suspended under directives issued by Langtang National Park. An IPPAN delegation led by President Ganesh Karki met the minister on Wednesday to seek a favorable environment for restarting nationally prioritized hydropower projects. In a memorandum submitted to the ministry, Karki stated that many hydropower projects located within national park areas hold strong potential, but delays and restrictions imposed even after approval of Environmental Impact Assessment reports have discouraged private sector investment.
Govt inquiry report reveals deepening crisis in Nepal’s cooperative sector
A recently published report by the “Inquiry Commission on Malpractices in Cooperatives, 2026” states that public confidence in Nepal’s cooperative sector has sharply deteriorated due to widespread financial misconduct, misuse of depositors’ funds, and weak regulatory supervision. Although cooperatives are considered a key pillar of Nepal’s three-pillar economy, the sector has fallen into crisis because registrations and expansions were approved without adequate standards, alongside political interference and poor coordination among oversight agencies.
Foreign airlines continue to dominate Nepal’s international aviation sector
Only three Nepali airlines currently operate international flights: the national carrier Nepal Airlines Corporation, private carrier Himalaya Airlines, and Buddha Air. Buddha Air has not yet acquired larger aircraft and currently operates ATR 72 flights from Kathmandu to Varanasi and Kolkata. The limited competitiveness of Nepali carriers in international aviation has enabled foreign airlines to maintain dominance in Nepal’s aviation market. Foreign carriers also benefit from VAT exemptions, concessions on spare parts, and lower fuel costs in their home countries.
Tourist spending continues to decline despite longer stays
Although tourists are spending more time in Nepal, their average daily expenditure continues to fall. Average daily spending per tourist dropped from USD 40.84 in 2024 to USD 33.08 in 2025, representing a decline of nearly USD 7.76, or about 19 percent, within a year. Data since 2020 indicate a consistent downward trend in tourist spending. Average daily expenditure was USD 65 in 2020, USD 48 in 2021, USD 40.5 in 2022, USD 41 in 2023, USD 40.84 in 2024, and USD 33.08 in 2025.
Public enterprises still weak in financial discipline
Nepal’s public enterprises continue to face challenges in maintaining financial discipline despite some progress in auditing practices. According to a recent report, 27 public enterprises completed final audits up to fiscal year 2024/25, while 34 enterprises completed audits up to fiscal year 2023/24. Although the number of audited enterprises has increased, the report noted that compliance with financial discipline standards remains weak. Meanwhile, unfunded liabilities rose by 10.10 percent from the previous review period, reaching Rs 66.40 billion.
CIB seeks freeze on shares of 56 high-profile individuals
The Central Investigation Bureau (CIB) of Nepal Police has requested the Securities Board of Nepal to freeze shares and provide details of investments associated with 56 prominent individuals. According to the bureau, the move is part of an investigation into alleged violations of the Securities Act, 2007. In a letter dated May 25, the bureau stated that the investigation is linked to a case filed by the Securities Board of Nepal, in which the Government of Nepal is the plaintiff.
China maintains dominance in foreign direct investment in Nepal
China has continued to lead foreign direct investment (FDI) approvals in Nepal, accounting for 48 percent of total approved investments as of mid-March 2026. China also ranks highest in terms of project numbers, representing 45.5 percent of approved projects. Of the 7,951 approved foreign investment projects, 3,617 Chinese-backed projects worth Rs 300.39 billion have received approval. India remains the second-largest investor, with commitments totaling Rs 112.20 billion across 945 projects, accounting for 17.9 percent of total approved FDI.
More than 71 percent of local roads still unpaved
More than 71 percent of Nepal’s provincial and local roads remain unpaved despite extensive road expansion efforts. According to the Economic Survey for the current fiscal year released by the Ministry of Finance on Wednesday, 48,665 kilometers out of the total 68,100 kilometers of provincial and local roads were still unpaved as of mid-March. The report shows that Nepal has 33,847 kilometers of provincial roads and 34,253 kilometers of local roads, but only 5,096 kilometers have been blacktopped.
CAAN inaugurates new parallel taxiway system at Tribhuvan International Airport
The Civil Aviation Authority of Nepal (CAAN) has officially inaugurated the newly constructed Parallel Taxiway “P” along with associated taxiways “S” and “T” at Tribhuvan International Airport in Kathmandu, according to an official press release issued on May 28, 2026. The inauguration ceremony was jointly conducted by Mukunda Niraula, Secretary at the Ministry of Culture, Tourism and Civil Aviation, and Mukesh Dangol, Director General of CAAN. Representatives from the ministry, CAAN, airport offices, airlines, and project stakeholders attended the event.
Govt targets completion of six national pride irrigation projects within three years
The government has proposed a budget plan to complete six ongoing national pride irrigation projects within the next three years. Nepal currently has 27 national pride projects under implementation. The six irrigation projects identified for completion are Sikta, Babai, Rani Jamara Kulariya, Sunkoshi Marin Diversion, Mahakali Irrigation, and the Bheri Babai Diversion Multipurpose Project. On average, these projects have achieved around 56 percent physical progress. According to the Department of Irrigation, Babai Irrigation has reached 77.34 percent completion, Mahakali Irrigation 26.6 percent, Sikta Irrigation 44.75 percent, Rani Jamara Kulariya 74.76 percent, Bheri Babai 69 percent, and Sunkoshi Marin Diversion 36.83 percent.
Israel seeks 2,300 Nepali caregiver assistant workers
Israel has invited applications from 2,300 Nepali workers for employment as assistant caregivers in long-term care centers. The recruitment drive has been announced under the labor agreement between Nepal and Israel. According to the department, in the third phase of recruitment, 60 percent of selected candidates will be women and the remaining 40 percent will be men.
Muglin–Pokhara road project faces further delays
Construction work on the western section of the Muglin–Pokhara road expansion project along the Prithvi Highway has slowed considerably. Although the road upgrading project began five years ago, it remains unfinished despite multiple deadline extensions. The western section covers a 38.71-kilometer stretch between Jamune in Tanahun and Setipul in Pokhara. The deadline was extended for the third time in January until June 29, but recent progress indicates that completion within the revised schedule is still uncertain.
Discussions held to ease import of Indian coal into Nepal
Talks between an Indian coal company and the Birgunj Chamber of Commerce and Industry have intensified regarding the facilitation of coal imports into Nepal. Discussions focused on facilities provided by India’s state-owned coal company and the challenges faced by Nepali importers. In the past, Nepal imported coal for cement, iron, and brick industries from countries such as the United States, Australia, Africa, Bhutan, and India. At present, imports are mainly sourced through India’s government-owned coal supplier, although Nepali businesses are not permitted to import directly.
Department orders recall of ‘Tez’ mustard oil over quality concerns
The Department of Food Technology and Quality Control has directed the immediate recall of ‘Tez’ brand mustard oil produced by Siddhartha Oil Industries in Rupandehi after laboratory tests found the product to be substandard. According to the department, samples collected during market monitoring failed to meet mandatory government quality standards. The defects were identified in mustard oil produced using imported mustard seeds by Siddhartha Oil Industries.
Karnali government violates its own policy on budget transfers
The Karnali Province government has repeatedly committed to discouraging last-minute budget transfers at the end of the fiscal year, but official records show that the practice continues. Section 20 of the Karnali Province Financial Procedures and Fiscal Responsibility Act, 2024 permits ministries to reallocate up to 10 percent of funds under the Appropriation Act. Last year, the provincial government transferred Rs 1.53 billion in budget allocations, including nearly Rs 100 million during the final month of the fiscal year.
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