KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economy is exhibiting a mix of short-term optimism and deep structural strain: the equity market rallied 4.52% on renewed political confidence, supported by surging hydropower profits and rising commodity prices such as gold and eggs, yet the financial system remains burdened by excess liquidity, low investment appetite, and risky practices like widespread loan write-offs that mask bad debts.
As the Nepal Rastra Bank prepares its quarterly monetary policy review, it faces pressure to address liquidity distortions, revive credit demand, and expand financial access amid fallout from recent protests and ongoing political uncertainty. Meanwhile, regulatory and governance challenges persist—from telecom procurement controversies and underutilized port assets to stalled infrastructure projects such as the Kankai Bridge—highlighting institutional inefficiencies that constrain economic resilience.
At the sectoral level, mixed dynamics emerge: insurance lapses are rising despite fewer policy surrenders, farmers and local producers—from sugarcane growers to chhurpi suppliers and traditional crop farmers—are pushing for better market conditions, and new projects like the Pokhara aviation fuel depot signal gradual infrastructure modernization.
Collectively, the developments underscore a fragile but active economy where market gains coexist with systemic vulnerabilities and governance gaps.
NEPSE climbs 4.52% as election optimism boosts investor sentiment
The Nepal Stock Exchange (NEPSE) rose by 115.74 points (4.52%) last week, fueled by stronger investor confidence driven by expectations that scheduled elections will proceed without delay. The benchmark index opened at 2,560.29 and closed at 2,676.03, posting gains throughout all five trading sessions. All 13 sectoral indices ended higher, with manufacturing and processing leading at +7.24%, followed by the banking sector at +5.24%. Life insurance companies saw the biggest point increase. Total turnover surged 59.22% to Rs 32.50 billion, while market capitalization expanded by Rs 195 billion to reach Rs 4.493 trillion. Although NRN Infrastructure recorded the highest turnover, its shares dropped 21.21%. Meanwhile, Sagar Distillery and Jhapa Energy each soared by 61.01%.
Nepal Rastra Bank readies first quarterly monetary policy review amid liquidity issues
The Nepal Rastra Bank (NRB) is preparing its first quarterly monetary policy review for the current fiscal year, scheduled for release by December 1. The banking sector remains strained by surplus liquidity, weakened investment sentiment, and the economic fallout of recent Gen-Z protests, which have hindered loan repayments and reduced interest income. The central bank is assessing potential adjustments to interest rates and the Cash Reserve Ratio (CRR), both key factors in shaping liquidity and credit flow. Governor Dr. Bishwanath Paudel is also considering simplified investment programs for businesses, support measures for blacklisted borrowers, and initiatives to expand financial access for marginalized groups. These proposals are expected to feature prominently in the upcoming review.
Excess liquidity continues in Nepal’s banking sector amid blacklisted firms and political uncertainty
Nepal’s banking institutions are still grappling with surplus liquidity, as more than 150,000 blacklisted enterprises remain inactive following recent Gen-Z demonstrations. Reduced trade and business activity have led to elevated idle funds across banks, insurance companies, citizen investment funds, and deposit and credit protection agencies. The Deposit and Credit Guarantee Fund aims to invest Rs 415 million, but institutional deposits are currently earning only up to 2.75% interest. With falling interest rates and lingering political instability, viable investment avenues remain scarce. To manage the liquidity glut, the central bank plans to withdraw Rs 3 billion for 42 days through routine absorption measures, with rates to be set through competitive bidding.
Nepal’s banks use loan write-offs to conceal bad assets, costing the state billions
Commercial banks in Nepal have increasingly relied on loan write-offs to sweep bad loans off their books, creating an appearance of stronger financial health while minimizing tax obligations. In FY 2080/81, 20 banks collectively wrote off Rs 18.5 billion, including major lenders such as NIMB, Nabil, and NIC Asia. Despite persistent non-performing loans, the practice inflates reported profits through “provision write-backs.” Though regulations require banks to continue recovery efforts, many reduce follow-up once loans are written off. This approach eases pressure on the Capital Adequacy Ratio, helps avoid dividend restrictions, and lowers tax liabilities—raising concerns about moral hazard. Experts caution that these concealed risks could undermine long-term financial stability and threaten depositor safety.
Government inquiry into Nepal Telecom’s Huawei-linked billing contract reaches anti-corruption agency
A government probe into Nepal Telecom’s billing system contract—allegedly shaped by influence from the previous administration—has been submitted to the CIAA. The investigation, led by former secretary Maniram Gelal, flagged issues including opaque procurement procedures, legal violations, and a monopolistic advantage granted to Huawei. The report cautioned that giving Huawei control over all three major telecom systems could deteriorate service quality, raise long-term costs, and introduce data security vulnerabilities. It also found that the tender process accepted outdated, lower-spec equipment that favored Huawei while bypassing transparency and proper vendor evaluation. The CIAA has initiated an expedited review to determine potential legal and procedural breaches.
Life insurance policy surrenders fall 8.79% as lapses rise in Nepal
Life insurance policy surrender volumes in Nepal have declined by 8.79% in the current fiscal year, with Rs 3.4885 billion surrendered by Ashoj, compared to Rs 3.8246 billion in the same period last year, according to Nepal Beema Pradhikaran. The total number of surrendered policies fell 18% from 28,057 to 22,999. However, lapsed or unrenewed policies increased 4.89% in value to Rs 36.7867 billion and 1.86% in number to 1.220 million. While the drop in surrenders suggests improvements from regulatory initiatives and public education, the rise in lapsed policies poses sustainability challenges for insurers, especially amid lingering political and financial instability.
Smart Telecom victims appeal to Minister Kharel to address tower and unpaid dues problems
Individuals affected by Smart Telecom have urged Minister for Communication and IT Jagadish Kharel to help resolve long-standing issues involving tower maintenance, overdue rental payments, and unpaid electricity bills. During a meeting on Friday, they reported enduring financial losses since the company halted operations three years ago, leaving infrastructure unmanaged and obligations unsettled. Minister Kharel assured them that no party would be treated unfairly and expressed his intention to coordinate with regulators to find a resolution. Coordinator Krishna Bahadur Thapa noted that many employees lost their jobs, and investors in Smart Telecom’s SIM cards and smart cards incurred major losses after the company’s license automatically expired on April 6, 2023.
Gold prices rise by Rs 8,900 per tola amid global reserve shifts and strong Indian demand
Gold prices in Nepal jumped by Rs 8,900 per tola last week, climbing to Rs 250,600 from the previous week’s Rs 241,700, according to FENEGOSIDA. Price movements were volatile: Sunday saw an increase of Rs 2,900, followed by a Rs 1,900 drop on Monday, then gains of Rs 5,200 on Tuesday and Rs 900 on Wednesday. Prices dipped by Rs 400 on Thursday before rising again by Rs 2,200 on Friday. FENEGOSIDA attributed the overall rise to global efforts to diversify reserves away from the US dollar, limited investment avenues, and heightened demand from India. Silver also edged up by Rs 245 to reach Rs 3,345 per tola.
Nepal’s hydropower firms record nearly 93% profit growth in first quarter of FY 2082/83
Nepal’s hydropower companies reported a significant profit surge in the first quarter of FY 2082/83, with 92 NEPSE-listed firms earning a combined Rs 5.065 billion—a 92.92% jump from Rs 2.625 billion last year. Only 13 companies posted losses, compared to 17 previously. Upper Tamakoshi topped the list with Rs 167.46 million in profit, up 164.99%. Other major performers included Sahas Urja (Rs 49.48 million, +23.66%), Mountain Energy (Rs 42.34 million, +38.67%), and Radhi Bidyut (Rs 27.85 million, +811.63%). On the downside, Rasuwa Gadhi Hydro recorded the largest loss at Rs 65.33 million, followed by Menchhyam and Upper Lohare Khola Hydropower.
Egg prices raised to ensure fair compensation for producers in Nepal
The Nepal Layers Poultry Farmers’ Association has increased egg prices to guarantee fair returns for producers, introducing new minimum support prices effective immediately. According to Association President Binod Pokharel, a crate of extra-large eggs now costs Rs 560, large Rs 545, medium Rs 530, and small Rs 325—each up by Rs 40 from prior rates. The revision accounts for rising production expenses and aims to deter unauthorized egg imports from India. With egg consumption typically rising during winter, the updated prices are expected to help farmers cover their costs. Prices had reached Rs 560 per crate last July before easing downward.
Rising chhurpi exports provide major relief to Dairy Development Corporation
Government-owned Dairy Development Corporation (DDC) has received significant support from surging exports of chhurpi dog chew from Koshi Province. Manram Himalayan Handicraft Pvt. Ltd., a leading exporter, now purchases 25,000 kg of chhena every month from DDC’s Biratnagar Milk Supply Scheme, helping manage surplus and lower processing expenses. The company, which started by exporting just 4 kg to the US in 2007, now exports between 100,000 and 125,000 kg of chhurpi monthly. The booming industry has helped eliminate “milk holidays” in the east and increased farmer incomes. However, stringent EU requirements and concerns over foot-and-mouth disease continue to block entry into European markets.
Nepal Rastra Bank selects Chinese firm to print new Rs 1,000 banknotes
Nepal Rastra Bank has awarded a contract to China Banknote Printing and Minting Corporation to design, print, and supply 43 million new Rs 1,000 notes. The tender, announced on September 10, was awarded to the lowest bidder. The contract is valued at USD 16.985 million, roughly Rs 242.6761 crore at the prevailing exchange rate. The agreement covers the production and timely delivery of Nepal’s new high-denomination notes.
Simkot municipality starts direct purchase of traditional crops from farmers
Simkot Rural Municipality in Humla has begun buying traditional crops directly from local farmers for the first time, improving market access and supporting household incomes. Following this year’s harvest, farmers are selling beans, proso millet, foxtail millet, buckwheat, and naked barley directly to the municipality, which will provide the grains to the Food Management and Trading Company Limited under an existing agreement. Bachhu Rawat of Ward No. 5 earned Rs 80,000 by selling four quintals of beans at Rs 200 per kg. Agriculture technician Netra Bahadur Shahi reported that the municipality has already purchased 10 quintals of beans, with further collection underway.
Nepal Oil Corporation launches pre-trial operations at new aviation fuel depot in Pokhara
Nepal Oil Corporation (NOC) has initiated pre-trial operations at its new aviation fuel depot at Pokhara Regional International Airport, testing storage tanks ahead of full-scale refueling. Constructed for Rs 750 million, the facility features three 1.2-million-liter tanks with a total 3.6-million-liter capacity—far greater than the old airport’s 64,000-liter storage. Built by Nepali contractors in collaboration with Indian experts, the depot includes automated systems, fire safety mechanisms, and office and laboratory buildings. The upgraded infrastructure is expected to meet increasing domestic and international flight demand, replacing earlier fuel deliveries from the old airport. Full operations are planned within two weeks.
Nepal loses Rs 560,000 monthly due to unused leased land at Kolkata and Haldia ports
Nepal is facing monthly losses of Rs 560,000 because leased land at Kolkata and Haldia ports—secured under the Transit Treaty with India—remains underutilized. The 4,850-square-foot warehouse in Kolkata sits idle, while the 8,985-square-foot plot in Haldia is being informally used for parking instead of its intended purpose of storing coal or construction materials. Lease payments continue despite the expiry of the Kolkata contract and a monthly INR 300,000 rent for Haldia. Nepal’s Consul General in Kolkata, Jhakka Prasad Acharya, emphasized the need to either commercialize the land or amend the transit agreement. Poor management by the Nepal Transit and Warehousing Company is cited as a key cause.
Government cancels 14-year-old Kankai Bridge contract with Pappu Mahadev Khimti JV
The government has terminated the long-delayed contract for the 723-meter Kankai Bridge on the Postal Highway after 14 years of minimal progress. The agreement with Pappu Mahadev Khimti Joint Venture—signed in 2011 under a design-and-build model with a 2015 completion deadline—was extended five times but reached only 56% completion. The Rs 17.1 million performance bond will now be confiscated, and the contractor faces blacklisting under the Public Procurement Act. Local residents had repeatedly demanded action as the unfinished bridge hindered transportation and economic activity. Of the 19 planned spans, only eight have been fully completed.
Asia-Pacific faces growing cyber threats as cyber insurance adoption remains low
Only 17% of companies in the Asia-Pacific region have insured their digital assets despite rising cyber risks and rapid digitalization, according to a new report by Aon. Experts cite limited financial modelling, a lack of specialized coverage options, and weak regulatory frameworks as major barriers. Just 12.3% of firms utilize analytics to guide cyber insurance decisions. Regulatory gaps often result in companies purchasing coverage only after major cyber incidents. Specialists stress the need for tailored insurance products, stronger data protection laws, and improved risk governance. Mandatory incident reporting and reinforced regulations could enhance cyber resilience and promote wider insurance adoption across the region.
Sugarcane farmers announce protest over subsidy cuts and support price dispute
With the sugarcane crushing season nearing, farmers across Nepal are intensifying pressure on the government to reinstate subsidies and raise the minimum support price. The Sugarcane Producers’ Federation and district associations are demanding restoration of the Rs 70-per-quintal subsidy and a support price of Rs 750 per quintal. They have submitted memorandums to the Ministry of Agriculture and Livestock Development, the Prime Minister’s Office, and the Ministry of Finance. Farmers plan a symbolic one-hour road blockade in Hariwan, Sarlahi on November 30 and warn of indefinite nationwide highway blockades if their demands are ignored—potentially disrupting the upcoming crushing season.
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