KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The recent economic indicators from Nepal highlight a broadly positive outlook marked by a strong stock market rally, rising foreign currency reserves, and historic remittance inflows driving overall financial stability.
The NEPSE index gained 25 points with all sectors showing growth, reflecting investor confidence alongside increased market turnover. Foreign currency reserves have surpassed Rs 2.5 trillion, supported by record remittance inflows of Rs 165 billion in a month, which also contributed to a growing balance of payments surplus.
Inflation continues its steady decline, providing further economic relief. Infrastructure development remains active, especially in hydropower, with major projects underway to boost energy capacity and local employment.
Despite these gains, challenges such as a widening trade deficit and incomplete land classification by many local units persist. The government continues fiscal support through grants to local governments and encourages foreign investment, notably in real estate, signaling efforts to sustain growth momentum.
Meanwhile, policy alignment between fiscal and monetary authorities is emphasized to maintain macroeconomic stability. Overall, Nepal’s economy shows resilience and promising progress amid ongoing structural and administrative reforms.
NEPSE gains 25 points; all sectors rise
Nepal Stock Exchange (NEPSE) showed a bullish trend on Tuesday, with all sector indices closing positively. The NEPSE index increased by 25.07 points from the previous trading day, ending at 2,678 points. Market activity also rose notably, with total turnover climbing to Rs 10.16 billion from Rs 8.68 billion in the prior session. The finance sector led the gains, jumping 5.12 percent, followed by non-life insurance (1.26%), hotel and tourism (1.28%), and life insurance (1.08%).
Other sectors that saw growth include banking (0.93%), development banks (0.71%), hydropower (0.46%), investment (0.68%), microfinance (0.61%), manufacturing and processing (0.25%), and trading (1.07%). The “others” category recorded the second-highest increase at 1.51 percent.
Nepal’s foreign currency reserves cross rs 2.5 trillion
Nepal’s foreign currency reserves have surpassed Rs 2.5 trillion. As per NRB data, by the end of Baisakh, total reserves reached Rs 2.51295 trillion, up from Rs 2.42684 trillion at the close of Chaitra. The increase in remittance inflows has been a major contributor to strengthening the foreign reserves.
Gold prices fall slightly while silver rises
Gold prices in Nepal dipped slightly on Tuesday. The Federation of Nepal Gold and Silver Dealers’ Association reported that hallmark gold was Rs 190,600 per tola on Monday but dropped to Rs 190,000 on Tuesday. Meanwhile, silver prices increased from Rs 2,150 per tola on Monday to Rs 2,165 on Tuesday.
Inflation rate continues to decline, drops to 2.77% in Baisakh
Nepal’s inflation rate kept declining, reaching 2.77% in Baisakh 2082 BS. In the previous month (Chaitra), year-on-year consumer inflation was 3.39%, compared to 4.40% in the same month last year. This downward trend has been ongoing for several months. According to Nepal Rastra Bank, inflation was 1.52% in the food and beverage category and 3.45% in the non-food and services group during the review period. These were notably lower than the rates of 6.41% and 3.09%, respectively, recorded in the same period last year.
Historic surge in remittance inflows: rs 165 billion in a month
Nepal has set a new record for remittance inflows. In the month of Baisakh alone, remittances totaled Rs 165 billion, according to Nepal Rastra Bank. This exceeds the previous record from last year. By the end of Chaitra, total remittance inflows had reached Rs 1.191 trillion, which increased to Rs 1.356 trillion by the end of Baisakh. This represents a 16.9% rise compared to the same period in the last fiscal year.
Finance Minister Paudel denies rift between fiscal and monetary policies
Finance Minister Bishnu Prasad Paudel rejected claims of any disagreement between fiscal and monetary policies. Speaking at a Kathmandu event, he said those expecting conflicts between the Finance Ministry and Nepal Rastra Bank, or between himself and the NRB governor, will be disappointed. He expressed concern that such rumors are being publicly discussed and stressed that the government system does not entertain any misunderstandings between these institutions.
Minister Bhandari reaffirms nepal’s commitment to decent work agenda
Labor, Employment and Social Security Minister Sharatsingh Bhandari reaffirmed Nepal’s strong commitment to the Decent Work Agenda. Speaking at the plenary session of the International Labor Conference 2025, held by the International Labour Organization (ILO) in Geneva, Switzerland, Minister Bhandari stated that Nepal is preparing its workforce for domestic and foreign employment by collaborating with the private sector, civil society, and development partners.
Balance of payments surplus continues to grow
Nepal’s balance of payments (BoP) remains in surplus, with foreign currency inflows exceeding outflows. NRB reports that the BoP surplus for the first 10 months of fiscal year 2081/82 reached Rs 438.52 billion, compared to Rs 392.64 billion during the same period last year. In U.S. dollar terms, the current BoP surplus stands at USD 3.23 billion, up from USD 2.94 billion the previous year.
Government cash balance reaches rs 360.98 billion
By the first 10 months of FY 2081/82, the government’s cash balance hit Rs 360.98 billion. This total includes funds held by the Government of Nepal in various accounts at Nepal Rastra Bank. At the end of Asar 2081 BS, the cash reserves in these accounts stood at Rs 93.96 billion.
Average base interest rate increases slightly
With a slight uptick in loan demand among banks and financial institutions, the average base interest rate has risen. Compared to Chaitra, the base rate for Baisakh showed an increase. As of Baisakh, the average base interest rate for commercial banks was 2.29%, compared to 6.17% in Chaitra. For reference, in Chaitra 2081 BS, base rates were 6.29% for commercial banks, 8.34% for development banks, and 9.17% for finance companies.
Nepal’s trade deficit reaches Rs 1.256 trillion in 10 months
Nepal’s trade deficit for the first ten months of the current fiscal year reached Rs 1.25628 trillion, according to the latest monthly report by Nepal Rastra Bank. This is about 6.7% higher than the same period last fiscal year. Total merchandise exports increased by 72.7% during these ten months, reaching Rs 217.91 billion. By contrast, exports had fallen by 3.6% in the same period last year.
Individual labor permits for foreign employment surpass institutional ones
More Nepalis are obtaining labor permits for foreign employment individually than through manpower agencies. The Department of Foreign Employment’s report for the first 10 months of FY 2081/82 shows that 309,155 individuals secured labor permits independently, while 282,536 went via recruitment companies. Though manpower firms have traditionally managed jobs for over half of the 500,000+ Nepalis entering the labor market yearly, recent years indicate a shift toward more independent applications.
Rs 1.73 billion collected in hydropower royalties by Jestha
Up to Jestha in the current fiscal year, Rs 1.7381 billion has been collected in hydropower royalties, including pending dues from the previous year, according to the Department of Electricity Development. As per Section 11 of the Electricity Act, 2049, license holders must pay an annual royalty of Rs 100 per installed kilowatt for the first 15 years of commercial hydropower production, along with 2% of the average sales price per kilowatt-hour.
Drilling begins for DPR of Upper Mugu Karnali Hydropower Project
Drilling work has started for the Detailed Project Report (DPR) of the Upper Mugu Karnali Hydropower Project. Surendra Timilsina, a geotechnical engineer at Elevate Energy Pvt. Ltd., said the 306 MW project will provide employment opportunities to locals based on their skills and support large-scale irrigation nearby. The drilling, currently happening in Ganthe, Chhayanath Rara Municipality–12, aims to finish the DPR within three years with boreholes reaching 385 meters deep.
270 MW hydropower project to be built on Bheri river
A semi-reservoir hydropower plant with a 270 MW capacity will be constructed on the Bheri River, which flows between Nalgad Municipality in Jajarkot and Aathbiskot Municipality in Rukum West. Chinese firm Gezhouba Group will handle the Bheri-1 semi-reservoir project across wards 10–13 of Nalgad Municipality and wards 4–6 of Aathbiskot Municipality.
Only 253 local units complete land classification in 3 years
Three years after Land Use Regulations were introduced, just 253 of Nepal’s 753 local units have completed land classification. The remaining 500 municipalities must finish by the end of Ashar, or land administration activities like plotting will halt again. In Bhadra 2081, land services were suspended in 620 municipalities due to incomplete classification. The Ministry of Land Management, Cooperatives, and Poverty Alleviation confirmed only 253 municipalities have completed classification so far.
Karnali Province passes new policy and program for next fiscal year
The Karnali provincial government has introduced and approved its policy and program for the coming fiscal year. Province Chief Najir Miya presented the document on Wednesday, with formal passage occurring Sunday. Jivan Bahadur Shahi, parliamentary party leader of the ruling Nepali Congress, criticized the policy as a rehashed version of previous plans dressed in a new format. He cited the long-repeated slogan “Hamro Kuda, Hamro Chief Minister” during his speech in the provincial assembly.
Lumbini entrepreneurs invite India’s DLF to invest in real estate
Business leaders from Rupandehi have invited Delhi Land & Finance (DLF), a leading Indian real estate company, to invest in Lumbini and nearby regions. Pointing to signs of economic recovery after a slowdown, they encouraged investments in real estate. On Monday, officials from Siddhartha Chamber of Commerce and Industry, Bhairahawa, met with DLF representatives. Local entrepreneurs highlighted Lumbini as an ideal investment destination for one of India’s largest real estate firms.
Dang’s local governments to receive over rs 5 billion in grants
Ten local governments in Dang district will receive more than Rs 5 billion in grants from the federal government for fiscal year 2082/83. This is a slight increase from Rs 4.9583 billion in the current fiscal year. The inter-governmental fiscal transfer system provides four types of grants: equalization, conditional, special, and complementary. Of the total, Rs 4.4358 billion is allocated for recurrent expenses, and Rs 575.2 million is designated for capital projects.
Comment