KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic and policy landscape is witnessing a dynamic mix of reform, investment, and structural challenges. While capital market performance faltered—with the NEPSE index falling over 15 points amid sector-wide losses—lending against shares surged despite weak overall credit growth, indicating speculative trends in an unstable market.
Simultaneously, government efforts to streamline procurement and budgeting processes, such as easing contract extensions and shortening fertilizer tender deadlines, reflect a push for administrative efficiency.
Legislative progress continued with the passage of the Customs and aviation bills, while the central bank moved to stabilize liquidity through fixed deposits and tighter regulations on vehicle financing.
Amid low provincial capital spending and protests over infrastructure projects, private sector voices are urging policy continuity and investment-friendly reforms.
Meanwhile, initiatives like Nepal’s first green bond and the upcoming Sagarmatha Dialogue show growing momentum toward climate-resilient development, even as governance lapses—such as in Lumbini’s EV program—highlight lingering institutional weaknesses.
Nepse falls over 15 points amid widespread sector losses
The Nepal Stock Exchange (NEPSE) index saw a significant drop on Tuesday, shedding 15.08 points to close at 2,631.98 — a decline of 0.57% from the previous trading session.
Losses were broad-based, with nearly all sector indices ending in negative territory. Only the Mutual Fund sub-index posted a slight gain of 0.07%.
The Finance sector led the decline, falling 1.22%, followed by Development Banks with a 0.90% drop, and the Investment group, which fell 0.83%.
Other sectors also recorded losses: Banking (0.57%), Life Insurance (0.54%), Microfinance (0.78%), Manufacturing & Processing (0.34%), Non-life Insurance (0.32%), Hotels & Tourism (0.20%), Trading (0.51%), and the Others category (0.75%).
House of Representatives endorses Customs Bill
The House of Representatives on Tuesday passed the Customs Bill, 2081 (2024), moving it closer to becoming law. Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel presented the bill, which was approved without any changes.
The bill now advances to the National Assembly for review. If endorsed, it will return to the lower house for final passage before being sent to the President for authentication. Upon ratification, the bill will be enacted into law.
Gold price rises slightly in domestic market
The price of hallmark gold in Nepal increased by Rs 500 per tola on Tuesday, reaching Rs 188,800 per tola.
The rate was Rs 188,300 the previous day, according to the Federation of Nepal Gold and Silver Dealers’ Association. Silver prices remained unchanged at Rs 1,970 per tola.
Public procurement rules amended again to ease deadline extensions for contractors
The government has once again amended the Public Procurement Regulations, marking the 14th amendment in 14 months. The latest change is aimed at simplifying the process of extending project deadlines, even for contracts with minimal progress.
Under the new rules, contractors must provide a justification if a project cannot be completed within the original deadline.
For expired contracts or those awaiting extension approval, contractors and service providers are required to specify the delayed components and reasons.
An application for deadline extension must be submitted to the relevant authority within 30 days of the amended regulation’s publication in the gazette.
NEA drafts white paper on operational challenges and achievements
Nepal Electricity Authority (NEA) Executive Director Hitendra Dev Shakya has prepared a white paper outlining the organization’s current challenges and financial status.
Although the document was scheduled for release on Tuesday, the launch has been postponed indefinitely, according to his secretariat.
The white paper highlights NEA’s cumulative profit of Rs 46.47 billion. Previously, under Executive Director Kulman Ghising, NEA had recovered from a loss of approximately Rs 35 billion in fiscal year 2072/73 to profitability by 2073/74, with accumulated earnings nearing Rs 47 billion by fiscal year 2080/81 (2023/24).
Lending against shares rises despite slowing credit growth in other sectors
While credit growth across most sectors has stagnated, loans against shares have surged significantly. Nepal Rastra Bank reports that overall credit grew by just 6% through the end of Falgun this fiscal year, while share-backed lending jumped by 31.5%.
Typically, loans secured by shares circulate within the capital market itself. However, despite this increase in lending, the stock market has not seen corresponding growth.
On Shrawan 31, the NEPSE index stood at 3,000 points, with share-based loans totaling Rs 91.44 billion. By the end of Falgun, such loans had climbed to Rs 118.5 billion, even as the index dropped to 2,736 points.
Private sector shares budget priorities with Nepali Congress
As budget preparations for fiscal year 2082/83 near completion, private sector representatives have presented key recommendations to the ruling Nepali Congress.
In a meeting organized by the party’s Industry Department, stakeholders stressed the need for policy stability, industrial confidence, and structural reform.
Federation of Nepalese Chambers of Commerce and Industry (FNCCI) President Chandra Prasad Dhakal urged the government to promote an open economy rooted in social justice.
He also advocated for the inclusion of private sector promotion, better governance, efficient public spending, and stronger revenue mobilization in the new budget.
Nepal Rastra Bank to invest Rs 3.84 billion in fixed deposits
Nepal Rastra Bank has announced that it will invest Rs 3.84 billion in fixed deposits across commercial banks, development banks, and finance companies. The funds will be sourced from the Pension and Provident Funds.
Of the total, Rs 3.07 billion will go to commercial banks, Rs 576.5 million to development banks, and Rs 192.1 million to finance companies. These deposits will be locked for 366 days from May 17, 2025, to May 17, 2026. Interested institutions must submit interest rate proposals by Tuesday.
Government shortens fertilizer procurement process
In a move to speed up fertilizer imports, the government has revised its Public Procurement Regulations, reducing the notice period for chemical fertilizer tenders to just seven days.
According to the revised sub-rule 5 of Rule 31(j), national or international bids must specify the location, date, and time for opening financial proposals and allow a minimum of seven days for submissions.
Furthermore, bid validity for chemical fertilizer contracts has been set at 30 days from the date of opening technical proposals.
Ministry of industry to prepare Rs 8.25 billion budget for next fiscal year
The Ministry of Industry, Commerce, and Supplies is drafting its budget within a limit of Rs 8.25 billion, as allocated by the National Planning Commission.
According to Humkala Pandey, undersecretary of the ministry’s Plan Monitoring and Evaluation Section, the budget will maintain continuity of current programs while introducing a few new initiatives, balancing limited resources with ongoing development priorities.
House endorses aviation bills separating regulatory, service roles
The House of Representatives has passed amendments to the Civil Aviation Authority Bill and the Air Service Authority Bill, aiming to delineate regulatory and operational responsibilities in the aviation sector.
The bills were approved in separate sessions on Sunday and Monday. Lawmakers now have 72 hours to propose further amendments. These legislative efforts follow previous attempts in 2020 and 2023 that were disrupted due to parliamentary dissolution.
Fixed-term deposit share declines as banks cut interest rates
The share of fixed deposits in banks and financial institutions has dropped significantly. As of Falgun 2081, fixed deposits made up only 57.15% of total deposits, down from 61.3% in Shrawan.
This 9.6 percentage point decline is attributed to falling interest rates on term deposits, making them less attractive than regular savings accounts. Some banks have already reduced rates further starting from Baisakh 1.
Sudurpaschim Province records low capital spending
Sudurpaschim Province has spent only 30% of its allocated annual budget in the first eight months of the current fiscal year 2081/82.
Despite prioritizing agriculture, health, tourism, infrastructure, education, and self-employment, spending remains low. Out of Rs 31.66 billion allocated, only Rs 9.41 billion has been used, according to Provincial Treasury Control Office head Basudev Joshi.
The Ministry of Physical Infrastructure Development spent the most; the Ministry of Internal Affairs and Law spent the least.
Pharmaceutical factory worth Rs 1 billion to open in Morang
Alexa Life Science Pvt. Ltd. is setting up a pharmaceutical plant worth Rs 1 billion in Budhiganga-2, Morang. Rs 750 million has already been invested, and the remaining Rs 250 million will complete the project.
Initially, the company will produce saline water. Later phases will include injectable SVPs and eye/ear drops. The plant aims to meet international standards for pharmaceutical production.
Cable car company calls for talks amid Taplejung protests
Pathibhara Devi Cable Car Company has appealed for dialogue with locals protesting its project in Taplejung. In a press release, the company expressed willingness to address concerns and work together to promote local culture and heritage.
Last week, local groups held a press meet in Kathmandu, urging negotiations. The company has signaled its readiness for constructive engagement.
Hire purchase companies restricted to 60% lending on vehicle purchases
Hire purchase companies are now allowed to finance only up to 60% of the total cost of all vehicle types, including electric and fuel-powered, both for personal and public use.
Nepal Rastra Bank implemented this regulation two months after applying it to banks and financial institutions. It comes through the fifth amendment to the 2070 BS policy on hire purchase loan companies.
Preparations for Sagarmatha Dialogue 2025 near completion
Final preparations are underway for the Sagarmatha Dialogue 2025, a three-day event focused on climate change impacts in the Himalayas.
Scheduled for Jestha 2–4 in Kathmandu, the summit will include 12 sessions and three plenary events.
Joint Secretary Lok Bahadur Poudel Chhetri said about 300 international guests have been invited. The theme is “Climate change, the Himalayas, and the future of humanity.”
Contractors granted project deadline extensions under amended rules
The government has amended procurement rules for the 14th time to allow deadline extensions for contractors failing to complete infrastructure projects on time.
Under the new provisions, contractors must apply for deadline extensions within 30 days of the regulation’s publication.
The amendment is expected to benefit contractors awaiting overdue payments, estimated at over Rs 10 billion, according to the Federation of Nepalese Construction Entrepreneurs.
Lumbini’s electric vans rusting due to misuse, legal delays
Electric vehicles acquired by the Lumbini Development Trust for tourism have fallen into disrepair, largely due to misuse and unresolved legal issues.
One electric van recently crashed, while reports of unauthorized use date back months. According to officials, repairing one van alone would cost Rs 2.8 million. The issue highlights gaps in management and oversight.
Royalist protest causes nearly Rs 470 million in damage
A royalist protest on Chaitra 15 led to widespread destruction, with total damage estimated at around Rs 470 million. Government and private property, including vehicles and buildings, were vandalized or set on fire.
Only Rs 40 million worth of property was insured, leaving more than Rs 420 million in uncovered losses. Damaged assets include 56 homes and offices, several banks, media houses, and government institutions.
NMB Bank to issue Nepal’s first $60 million green bond
NMB Bank will launch Nepal’s first green bond, valued at $60 million, in partnership with international institutions including IFC, BII, and MetLife.
The bond aims to finance renewable energy, electric transport, green buildings, and biomass projects.
The initiative is part of Nepal’s broader effort to support sustainable development and green energy.
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