KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic landscape reflects cautious optimism following the national budget announcement, with the stock market showing modest gains and specific sectors like tourism and investment responding positively.
However, structural issues persist—credit concentration remains high, and liquidity management by the central bank suggests deeper systemic imbalances. Government efforts to stimulate growth are evident in large-scale allocations to provinces and insurance subsidies, yet policy inconsistencies, such as the abrupt revision of liquor duties and contentious hydropower PPA changes, risk undermining investor confidence.
Infrastructure bottlenecks, like delays in energy transmission, and the plight of farmers unable to sell crops at support prices, further highlight the gap between policy intent and on-ground realities. Meanwhile, rising prices in commodities such as gold and chilies signal inflationary undercurrents amid uneven sectoral performance.
Stock market gains 1.60 points after budget announcement
The stock market rose by 1.60 points following the budget announcement, bringing the NEPSE index to 2694 points. Trading activity also saw an uptick, with total turnover reaching NPR 922 crore—up from NPR 858 crore the day before.
Share prices increased for 115 companies, while 133 saw declines. Investors showed strong interest in two specific sectors: hotel and tourism, which rose by 2.39%, and investment, which increased by 2.28%. These gains are largely attributed to the reassurances outlined in the new budget.
Gold and silver prices increase in local market
Gold and silver prices rose on Monday, according to the Federation of Nepal Gold and Silver Dealers’ Association. The price of hallmark gold reached NPR 189,800 per tola, up from NPR 188,800 the previous day. Silver was priced at NPR 1,990 per tola, a slight decrease from NPR 1,995 on Sunday.
NRB pulls Rs 70 billion from the banking system
Nepal Rastra Bank withdrew Rs 70 billion from the banking sector in a single day on Monday, continuing its effort to absorb excess liquidity from the market. Previously, the central bank had taken out Rs 80 billion in one day.
It has announced a 20-day auction that banks and financial institutions can participate in. The auction, set for 3 PM on Monday, allows bids starting at Rs 100 million and increasing in increments of Rs 50 million.
Credit distribution is becoming concentrated, says Governor Paudel
Governor Dr. Biswo Nath Paudel expressed concern about growing credit concentration among a small group of borrowers. Speaking at Monday’s Finance Committee meeting on the amendment to the Bank and Financial Institutions Act (BAFIA), he stated that the proposed bill aims to clarify loan eligibility.
He noted, “This bill seeks to clearly identify who should be able to access loans from banks.” Among 1.94 million borrowers, just 0.1% account for 3.9% of total loan volume.
World Bank approves $257 million loan for Nepal’s electricity and irrigation
The World Bank has approved a loan of $257 million (over Rs 35 billion) to support two projects focused on improving electricity and irrigation services in Nepal.
Approved on May 29 by the World Bank’s Executive Board, these projects aim to enhance the distribution of electricity and improve irrigation infrastructure to support agricultural productivity.
Govt provides Rs 1.5 billion in agriculture and livestock insurance subsidies
The government distributed Rs 1.61 billion in premium subsidies for agricultural and livestock insurance during FY 2080/81 (2023/24). According to the Agriculture and Livestock Development Ministry’s insurance subsidy guidelines, insurance premiums collected totaled Rs 2.02 billion. Of that, Rs 337.9 million was directed to crop insurance and Rs 1.27 billion to livestock and fisheries insurance, as reported in the Economic Survey 2080/81.
Govt forms dialogue team to address transport entrepreneurs’ concerns
In response to transport entrepreneurs halting public services and launching protests, the government has formed a joint dialogue committee. The team includes members from both the government and the transport sector, coordinated by the Ministry of Physical Infrastructure and Transport.
It consists of seven government officials and four representatives from transport businesses. The decision followed Monday’s discussions between Home Minister Ramesh Lekhak and transport leaders.
Govt allocates Rs 417 billion to provinces and local levels
For the upcoming fiscal year, the government has earmarked Rs 417 billion for provinces and local governments. The allocation includes equalization, conditional, special, and complementary (capital) grants. Of the total, Rs 97.56 billion will go to provinces, while Rs 320.26 billion is set for local bodies. Among local units, metropolitan cities are to receive Rs 11.74 billion, sub-metropolitan cities Rs 11.38 billion, municipalities Rs 143.10 billion, and rural municipalities Rs 154 billion.
New PPA policy halts 17,000 MW hydropower projects, says IPPAN
The new budget for FY 2082/83 (2025/26) proposes switching power purchase agreements (PPAs) for run-of-river hydropower projects from a “Take or Pay” to a “Take and Pay” model. The Independent Power Producers’ Association Nepal (IPPAN) has criticized this change, warning that it threatens the development of 17,000 MW worth of hydropower projects. IPPAN argues that banks are hesitant to fund PPAs under the new model, putting the energy sector at risk.
Loans are the biggest asset in Nepal’s banking system; private sector credit reaches Rs 5.5 trillion
Credit remains the largest asset on the balance sheets of Nepal’s banks and financial institutions. As of the end of Falgun in FY 2081/82 (2024/25), total deposits stood at Rs 6.7 trillion in an economy valued at Rs 6.1 trillion. Loans to the private sector totaled Rs 5.54859 trillion.
Of this, 19.1% went to wholesale and retail trade, 19.8% to consumer loans, 16.4% to industrial production, 8.6% to services, 7.7% to agriculture, 8.1% to transport, communication, and public services, and 4.2% to construction.
Nepal Airlines sees 10 percent revenue drop in ten months
Nepal Airlines Corporation, the national carrier, recorded a 10 percent decline in revenue over the first ten months (Shrawan to Baisakh) of the current fiscal year, mainly due to inconsistent income and weak management.
Compared to the same period last year, revenue decreased by Rs 1.37 billion, pushing losses above Rs 1 billion. During FY 2081/82 (2024/25), the airline generated Rs 11.76 billion from passenger services, including ticket sales and cargo. It served 449,000 passengers over this period.
Microinsurance companies triple policies and premium income in one year
The country’s four non-life microinsurance providers have nearly tripled both their policy count and premium income over the past year. By Baisakh in FY 2081/82 (2024/25), premiums reached Rs 767.95 million—up from Rs 193.9 million last year. The number of issued policies rose from 85,545 to 308,376.
Govt shifts customs duty from quantity-based to value-based on some items
In the latest budget, the government switched customs duty for certain goods from quantity-based to value-based. Previously, imported liquor was taxed based on volume; now, duty will be calculated based on value. While quantity-based duty keeps revenue stable regardless of price, value-based duty changes with market prices, raising concerns over under-invoicing.
Liquor import duty revised a day after budget announcement
As in past years, the government altered the liquor import tax the day after presenting the budget. Finance Minister Bishnu Poudel had initially proposed a 100% value-based duty on imported spirits like rum and whisky, replacing the previous flat rate of Rs 2,000 per liter.
Citing a progressive approach—lower taxes on cheaper liquors and higher on premium ones—the value-based model was introduced. However, a day later, the rate was revised again due to a reported printing error.
CNI calls new budget balanced and focused on production
The Confederation of Nepalese Industries (CNI) described the new budget as balanced and oriented toward increasing production. In a statement on Sunday, CNI said the budget encourages private investment and supports economic dynamism. While acknowledging that many private sector suggestions were included, CNI stressed that proper execution is essential to reach the 6% growth target.
Delay in Marsyangdi transmission line risks wasting 1,600 MW of electricity
Delays in completing the 220 kV Marsyangdi Corridor transmission line could lead to wastage of up to 1,600 MW of electricity. Hydropower projects nearing completion in Lamjung and Manang may be unable to transmit their output. The Nepal Electricity Authority cited compensation disputes and local issues, especially in the Lamjung section, as causes for the delay.
Thapa named CEO of Hydroelectricity Investment and Development Company
Prajesh Bikram Thapa has been appointed CEO of Hydroelectricity Investment and Development Company Limited. The decision was made during a board meeting on Jestha 15 (May 29), with his four-year term beginning Jestha 16 (May 30), according to the company.
Petroleum imports through Birgunj total Rs 155.94 billion in 10 months
Over the first ten months of the fiscal year, petroleum imports through the Birgunj checkpoint amounted to Rs 155.94 billion. The imported products included diesel, petrol, LPG, ATF, and kerosene. Compared to the same timeframe last year, the total value fell by Rs 1.35 billion, a drop of 0.86%.
Construction begins on Dikhuwakhola bridge near Diktel
A motorable bridge is under construction over Dikhuwakhola, improving connectivity between Diktel and eastern Tarai districts. The bridge, located on the Diktel–Khanidanda–Regmitar road section, is funded by the Ministry of Physical Infrastructure of Koshi Province. Until now, the river crossing was impassable for up to six months during monsoon due to the absence of a bridge.
Farmers unable to sell Chaite paddy at minimum support price
Farmers have not been able to sell Chaite paddy at the government’s minimum support price of Rs 2,869 per quintal. Instead, the crop is fetching as little as Rs 1,625 per quintal and often remains unsold, leading to spoilage. This situation has discouraged growers, the All-Nepal Farmers Federation reported.
Akabare chili hits record price in Diktel market
Akabare chili is now selling at a record Rs 1,000 per kilogram in the Diktel market. Local traders buy the chili at Rs 700–800 per kg from village farmers and sell it at a premium. Despite the high cost, demand remains strong due to its unique flavor and medicinal properties. Indra Bahadur Shrestha, a farmer from Diktel Rupakot Majhuwagadhi–4, sells about 14–15 kg weekly.
33 kV substation under construction in Adanchuli, Humla
A new 33 kV substation is being built in Kumna, Ward No. 1 of Adanchuli Rural Municipality, Humla, as part of the Nepal Electricity Authority’s grid expansion. Two substations—one in Simkot and the other in Adanchuli—are currently under development to enhance regional electricity transmission.
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