KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal is facing significant fiscal and economic challenges, with the government reporting a Rs 101 billion deficit in the first eight months of the fiscal year, exacerbated by sluggish revenue collection and rising expenditures.
This deficit highlights the government’s struggle to balance income and expenses, with concerns raised over low development spending and underutilization of foreign grants.
At the same time, Nepal has seen a rise in foreign investment commitments, particularly in the service and tourism sectors, signaling potential for economic growth despite fiscal constraints.
However, other issues such as a reduction in India’s electricity supply, a halted rhino census due to funding cuts, and disputes over fertilizer storage add to the nation’s economic pressure.
Meanwhile, the government is pushing forward with infrastructural projects like the Muglin-Pokhara road and the 106 MW hydropower initiative, while also focusing on poverty alleviation and self-reliance through entrepreneurship and skill development.
Amidst these challenges, the government is also working toward regulatory changes, such as the implementation of Basel III compliance by Nepal Rastra Bank and the preparation for international dialogues like the Sagarmatha Sambaad.
Gold price hits record high on Friday
Gold prices in Nepal hit a new high of Rs 174,500 per tola, rising by Rs 4,000 in a single day on Friday. Silver was traded at Rs 2,050 per tola. The surge in gold prices is attributed to the rising value of the US dollar and global political factors.
Govt expenditure exceeds revenue
In the second quarter of the fiscal year, government spending surpassed income, with Rs 839.36 billion in expenditure against Rs 738.82 billion in revenue, creating a Rs 153.47 billion deficit.
Development spending remains sluggish, with just 23.37% of the capital budget utilized. Revenue collection stands at 50.2% of the annual target, while foreign grant mobilization is at a weak 17.51% of the forecasted amount.
Despite high spending, slow progress in development investment raises concerns about fiscal management.
Nepal attracts over Rs 44.66 billion in foreign investment commitments
Nepal has secured over Rs 44.66 billion in foreign investment commitments in the first eight months of the fiscal year, covering 427 industries.
These investments are expected to generate 11,475 jobs. In Falgun alone, Rs 17.79 billion was approved for 40 industries.
The service sector attracted the most significant commitments, with Rs 22.36 billion for 54 industries, followed by the tourism sector at Rs 17.90 billion for 180 industries.
Other sectors such as manufacturing, IT, agriculture, energy, and infrastructure also received investments.
Govt struggles with Rs 101 billion fiscal deficit in eight months
The government is grappling with a Rs 101 billion deficit for the first eight months of the current fiscal year, as it struggles to balance income and expenditure. Revenue totaled Rs 738 billion, while expenses amounted to Rs 839 billion.
The government’s income sources include Rs 720 billion from taxes, Rs 9.16 billion in grants, and Rs 9.31 billion from other support. Spending consisted of Rs 584 billion in recurrent costs, Rs 82 billion in capital expenditure, and Rs 172 billion in financial management. With revenue at only 50.75% of the target, achieving fiscal goals remains a challenge.
Rhino census suspended due to U.S. aid cut
Due to a lack of funding after USAID paused its support, Nepal’s regular rhino census, conducted every five years, has been suspended.
Without a government budget for monitoring, parks will estimate rhino populations manually. The last census in 2021 recorded 752 rhinos. Officials plan a partial census using available park resources despite financial limitations.
India reduces daily power supply to Nepal
From Sunday, India will supply electricity to Nepal for just 12 hours daily, from 6 AM to 6 PM.
This reduction from the previous 20-hour supply is expected to increase load shedding in industrial areas. The change follows an existing agreement for power supply only during solar hours.
Nepal plans to manage the situation using alternative sources like Kulekhani hydropower, although peak-hour load shedding may worsen.
Credit investment in Nepal reaches Rs 3.03 trillion
Credit investment in Nepal is increasing, with banks disbursing Rs 20 billion in Falgun, bringing total credit to Rs 3.03 trillion. The rise is driven by increased imports, stock market growth, and higher working capital loans.
Banks now have Rs 700 billion available for investment, though their focus remains on loan recovery. By the end of Falgun, total deposits stood at Rs 6.74 trillion, with an average lending rate of 8.55%.
PM Oli urges NPC to focus on poverty alleviation and economic growth
Prime Minister KP Sharma Oli has instructed the National Planning Commission (NPC) to focus on poverty alleviation by boosting production, productivity, and entrepreneurship.
In a meeting with NPC officials, he called for investments in skill development and employment as infrastructure projects near completion. Oli emphasized the importance of self-reliance for economic growth and urged effective monitoring of national-pride projects.
PM Oli pushes for efficient preparations for Sagarmatha Sambaad
Prime Minister KP Sharma Oli has urged authorities to streamline preparations for the Sagarmatha Sambaad (Sagarmatha Dialogue) scheduled for May 16 in Kathmandu.
The event, focusing on climate change, mountains, and humanity’s future, will be attended by global leaders, including from India and China. The dialogue is part of the International Year of Glacier Preservation 2025.
Muglin-Pokhara Road Project achieves significant milestone
The Muglin-Pokhara Road Project has completed 73.11 km of blacktopping in the eastern section. The project is 78.95% physically and 59.25% financially complete.
The Rs 6.21 billion contract was awarded to China Communication Construction, with funding from the Asian Development Bank (ADB). The 315-meter-long Madi Bridge is 65.07% complete.
NRB moves closer to full basel III compliance with new liquidity framework
Nepal Rastra Bank (NRB) is advancing toward fully implementing Basel III, introducing a new liquidity framework for commercial banks.
The framework, which ensures banks maintain sufficient liquidity, requires banks to hold High-Quality Liquid Assets (HQLA) to cover 30 days of cash outflows.
Banks must align long-term lending with long-term funding sources. Full implementation is set for 2085 BS, with progressive compliance targets.
1,300 tons of fertilizer stuck at Tatopani Customs
1,300 tonnes of chemical fertilizer has been stranded at Tatopani Customs for eight months due to a pricing dispute between the Agricultural Inputs Company Limited (AICL) and importers.
The fertilizer is deteriorating in storage, and farmers face shortages. A High Court ruling ordered both parties to resolve the issue, but no agreement has been reached.
Bhagirathi Bhattarai Gyawali takes oath as ERC member
Bhagirathi Bhattarai Gyawali has taken the oath as a member of the Electricity Regulatory Commission (ERC). Minister Deepak Khadka emphasized Nepal’s goal of generating 28,500 MW of electricity by 2035 and urged swift decisions on tariffs and transmission fees.
Bidding begins for 106 MW Jagdulla Hydropower Project
Four companies have bid for the 106 MW Jagdulla Hydropower Project, which is estimated to cost NPR 23 billion.
The project aims to generate 623 GWh annually and includes a 23m-high, 93m-long dam and a 6.1km tunnel. The project’s financing involves investments from local banks, and public investors will hold a 33% stake.
Energy Ministry criticizes NEA for misleading information on power tariff agreement with India
The Energy Ministry has criticized the Nepal Electricity Authority (NEA) for spreading false information regarding the power tariff deal with India.
The ministry refuted claims that a 1.5% increase in power exchange rates had been agreed upon after consultations with the Energy Minister and Secretary. The ministry accuses the NEA of procedural violations during the recent Nepal-India Power Exchange Committee meeting.
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