KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s record-setting electric vehicle (EV) imports, reaching Rs 31.55 billion in FY 2024/25, underscore a transformative shift in consumer preferences, trade dynamics, and government policy.
The sharp year-on-year growth in EV imports, including a surge in public transport units, reflects rising demand for cleaner mobility, driven by favorable tax incentives and anticipation of policy changes. With China as the primary supplier and customs revenues from EVs totaling Rs 19.57 billion, the data highlights both a strong market appetite and the fiscal impact of the EV boom.
However, this trend also raises broader questions about Nepal’s energy infrastructure readiness, fiscal sustainability given ongoing tax exemptions (noted in the recent audit), and the need for integrated planning to align transport electrification with renewable energy development and trade policy.
Electric vehicle imports hit Rs 31.55 billion in FY 2024/25, setting new record
Nepal imported 13,492 electric vehicles (EVs) worth Rs 31.55 billion in the first 11 months of FY 2024/25, up more than 2,000 units from the previous year. Customs collections from EV imports totaled Rs 19.57 billion. A record 3,633 EVs were brought in between mid-May and mid-June alone, as importers rushed ahead of budget changes. China remained the leading supplier. Public transport saw significant growth as well, with 3,132 EVs worth Rs 9.48 billion imported. Total imports of vehicles and parts stood at Rs 101 billion. Officials attribute the increase to rising demand and supportive policies.
Exports jump by 77.77% in FY 2024/25, driven by processed oil shipments
Nepal’s exports surged by a record 77.77% in the first 11 months of FY 2024/25, reaching Rs 247.57 billion. The growth follows two years of decline and is attributed mainly to processed soybean oil (Rs 93.5 billion) and sunflower oil (Rs 11.3 billion), largely exported to India.
Traditional products like large cardamom, tea, and carpets also saw gains. The export rebound reflects increased processing of imported raw materials, though Nepal continues to run large trade deficits with countries like India, China, and the U.S. Experts urge strengthening domestic production to sustain momentum.
NEPSE index drops, but Pure Energy shares soar by 31.75%
The NEPSE index declined by 26.47 points this week, ending at 2628.91 from 2655.38. Despite the dip, several stocks showed strong gains. Pure Energy Limited saw its share price jump 31.75% to NPR 1086.52. Panchakanya Mai Hydropower rose 19.87%, Union Hydropower gained 18.91%, and Butwal Power increased by 13.46%. These individual stock surges stood out in an otherwise down week for the overall market.
Commercial banks plan to reduce branches amid rise in digital banking
Nepal’s commercial banks, once focused on expanding their physical presence, now plan to close around 400 branches due to the rapid adoption of digital banking. Out of 5,056 existing branches, these closures are expected to save over NPR 2 billion annually. Nepal Rastra Bank data shows over 57 million mobile banking transactions totaling NPR 45.69 billion in the current fiscal year.
Other digital platforms, including e-wallets and internet banking, are also gaining popularity. Banks are now prioritizing service efficiency over network size and are seeking regulatory approval to adjust branch operations accordingly.
Audit finds Rs 79.87 billion in irregular tax exemptions, calls for probe
Nepal’s Auditor General has identified arbitrary and technically non-compliant tax exemptions amounting to Rs 79.87 billion in FY 2081/82. These waivers, granted by various customs offices, significantly undermined revenue targets.
Notable cases include Rs 3.77 billion in exemptions for electric vehicles, Rs 852.8 million for equipment for the Nepal Electricity Authority, and Rs 709 million for replacement machinery. The audit recommends a thorough investigation and recovery, but enforcement and accountability remain weak, continuing a pattern seen in prior years.
Nepali funds in Swiss banks decline but remain high amid concerns over illicit flows
Nepali-linked deposits in Swiss banks fell to 387.04 million Swiss francs (Rs 65.69 billion) in 2024, down from a 2022 high of 482.54 million francs (Rs 81.92 billion), according to the Swiss National Bank. Despite the decline, deposits remain significantly above pre-pandemic levels. Experts suspect capital flight, trade-based money laundering, and political connections as contributing factors.
While some of the funds may belong to NRNs with legitimate income, Swiss banking secrecy makes verification difficult. A shift toward jurisdictions like Singapore and Dubai is also noted, amid criticisms that Nepal lacks strong enforcement to curb illicit financial outflows.
Loan disbursement picks up in Jestha, led by construction sector
Loan issuance by commercial banks rose in Jestha (mid-May to mid-June), with NPR 3.6 billion in new disbursements, lifting total credit from NPR 4.911 trillion to NPR 4.947 trillion. Private sector loans grew by 7.3%, led by a 12.3% rise in lending to the construction sector. Between Ashad 2081 and Jestha 2082, banks disbursed NPR 3.77 trillion in loans. While the pace remains moderate, the increase is seen as a positive sign for economic recovery and financial sector stability.
NEA scraps IPO plan, opts for Rs 20 billion bond to address liquidity issues
The Nepal Electricity Authority has abandoned its Rs 60 billion IPO plan, citing complex legal requirements for state-owned enterprises. Instead, it will raise Rs 20 billion through private placement of green or power bonds. Despite reporting Rs 14.46 billion in profit and holding assets worth Rs 644 billion, NEA is facing liquidity issues due to reduced government funding and slow revenue collection. The bond issuance aims to support critical hydropower and transmission projects, though public offerings are off the table for now.
Conflicting parliamentary orders leave securities regulator in a bind
The Securities Board of Nepal (SEBON) faces uncertainty due to conflicting directives from two parliamentary committees. While SEBON has been pushing for tighter regulations to strengthen the capital market and curb the issuance of primary shares by financially weak companies, differing committee instructions have disrupted its reform efforts. Influenced by special interest groups, these contradictory orders have created confusion and weakened SEBON’s regulatory authority, potentially stalling much-needed capital market reforms.
Nepal’s foreign trade grows sharply, signaling economic recovery
Nepal’s trade figures for the first 11 months of FY 2024/25 show strong growth, reflecting signs of economic revival. Imports rose by 13% to Rs 1,644.8 billion, while exports climbed nearly 78% to Rs 247.57 billion. The total trade volume reached over Rs 1,891 billion, compared to Rs 1,593 billion the previous year.
Rising imports are linked to increased consumption and investment, while export growth is partly due to re-exports and sustained performance in traditional goods like carpets and cardamom. Enhanced customs procedures and better border management have also supported trade expansion. Experts, however, caution that boosting exports further is crucial to address the ongoing trade deficit.
Annual insurance policy to be launched in Nepal from next fiscal year
The Nepal Insurance Authority is set to introduce an ‘Annual Insurance Policy’ from the upcoming fiscal year to guide the sector’s development. Announced by Chair Sharad Ojha, the policy aims to reform insurance laws, improve services, and boost public trust. Draft discussions have been held with companies across life, non-life, microinsurance, and reinsurance segments. Firms have until mid-July to provide feedback. A report on insuring government-owned assets and infrastructure is also in progress. The new policy is expected to drive long-term growth and standardization across the insurance industry.
Nepal and Bangladesh boost tourism ties through Dhaka meet
The ‘Nepal-Bangladesh Tourism Meet’ held in Dhaka showcased efforts to strengthen travel ties and cultural connections between the two countries. The event, co-organized by Nepal’s Embassy in Bangladesh and the Nepal Tourism Board, highlighted Nepal’s appeal as the “Land of Lifetime Experiences.”
Ambassador Ghanshyam Bhandari emphasized rising interest from Bangladeshi tourists, while NTB’s Rohini Prasad Khanal outlined Nepal’s tourism offerings. Bangladeshi officials proposed joint tourism packages. The gathering included B2B meetings, cultural performances, and travel giveaways, with over 150 participants from both nations. The event aimed to deepen bilateral cooperation in tourism.
Supreme Court strikes down tax on sanitary pads, advancing menstrual equity
Nepal’s Supreme Court has ruled to eliminate taxes on sanitary pads, classifying them as essential items. The decision follows a 2021 legal challenge by law students Shreena Nepal and Abhyuday Bhetwal. The move is expected to cut pad prices by 18%, improve access to menstrual products, and encourage local manufacturing.
Currently, imported pads are subject to an 18% tax. Women’s rights advocates hailed the verdict as a milestone for menstrual equity. With this decision, Nepal joins countries like India, Scotland, and Colombia in removing taxes on menstrual hygiene goods to combat period poverty.
Kaligandaki Corridor closed due to landslides, partial traffic resumes on alternate route
Landslides in Harmichaur-Arbeni of Kaligandaki Rural Municipality-1 have closed the Kaligandaki Corridor for a second day, halting traffic and prompting safety advisories. Ganga Bahadur Saru of the District Police Office confirmed ongoing risks and advised travelers to seek alternative routes. Meanwhile, the Ridi-Bamitaksar road section has reopened for one-way traffic following partial clearance of debris in Sisnebhir, Chandrakot Rural Municipality-7. Authorities continue to monitor the situation as the landslides pose persistent hazards in the region.
Nepal-France bilateral talks highlight growing partnership and cooperation
The fifth session of the Nepal-France Bilateral Consultation Mechanism (BCM) took place in Kathmandu on 19 June, reflecting deepening ties between the two countries. Marking the 75th anniversary of the Annapurna expedition, the talks reviewed current collaborations and explored new areas including trade, technology, climate action, education, and culture. Both sides also expressed interest in expanding cooperation in renewable energy and disaster risk management. The meeting was led by Joint Secretary Ganesh Prasad Dhakal for Nepal and Benoît Guidée for France. The next BCM session is scheduled to take place in Paris.
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