KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s latest economic developments reflect a complex mix of policy adjustments, external vulnerabilities, and structural challenges shaping the country’s outlook. Measures by Nepal Rastra Bank to extend loan trading, expand priority sector lending, and introduce digital toll payments indicate efforts to boost liquidity, improve financial discipline, and channel credit into productive sectors.
However, these domestic interventions are being offset by external shocks, including geopolitical tensions disrupting foreign employment, rising import costs due to global conflicts, and declining remittance-linked labour mobility. The looming graduation from LDC status, as flagged by the International Labour Organization, further exposes risks of export losses and job contraction, even as tourism is seen as a potential buffer.
Meanwhile, falling deposit rates, weak customs revenue, and declining FDI signal softening economic confidence, despite localized positives such as the World Bank-backed Lumbini project and the growing rudraksha trade. Overall, the economy appears to be navigating a fragile transition phase where policy intent is strong but outcomes remain constrained by external pressures and structural inefficiencies.
NRB extends loan trading window for infrastructure banks
Nepal Rastra Bank has extended the timeframe for Infrastructure Development Banks to trade loans by three years, allowing such transactions until mid-July 2028. Previously limited to the first four years of operation, banks can now continue loan purchases, repurchases and takeovers within set limits. The revised directive permits trading of infrastructure loans above Rs 300 million, provided it does not exceed one-third of the previous quarter’s lending portfolio. Transactions will not be allowed during the final month of the fiscal year to maintain financial discipline.
Gold and silver prices decline in domestic market
Gold and silver prices fell in the domestic market on Wednesday, with gold dropping by Rs 2,200 per tola and silver also recording a significant decline.
Govt resumes re-entry labour permits for seven countries
The Ministry of Labour, Employment and Social Security has reinstated re-entry labour permits for Nepali workers employed in seven countries, including Saudi Arabia, the UAE, Qatar, Oman, Yemen, Jordan and Turkey. Acting on recommendations from the Ministry of Foreign Affairs, the decision allows workers currently on leave in Nepal to return to their jobs. However, permits remain suspended for six countries, including Israel, Iraq and Lebanon, due to ongoing regional tensions. The move comes in response to growing pressure from migrant workers whose permits expired following the March 1 suspension.
Nepal faces economic risks as LDC graduation nears
Nepal is set to graduate from Least Developed Country status in November 2026, but a report by the International Labour Organization warns of significant economic risks. The country could lose nearly USD 988 million and around 132,000 jobs over five years due to the end of trade concessions. Manufacturing sectors such as carpets and textiles may see exports decline sharply. While GDP is projected to reach Rs 29 billion by 2030, the report suggests tourism investment could offset losses by creating over 100,000 jobs.
NRB expands priority lending to tourism, IT and export sectors
Nepal Rastra Bank has revised its priority sector lending policy to include tourism, information technology and industries based on domestic raw materials. Under the updated guidelines, commercial banks must allocate 10 percent of total lending to agriculture by mid-January 2027 and 20 percent to the newly defined priority sectors. Development banks and finance companies are required to maintain 20 percent and 15 percent lending, respectively. The central bank aims to channel excess liquidity into productive sectors while allowing flexibility for institutions meeting agriculture targets.
Conflict disrupts foreign employment, permits drop sharply
Ongoing tensions involving the US, Israel and Iran have significantly impacted Nepal’s foreign employment sector. Labour permits have been suspended for 12 major destinations, leading to a sharp decline in approvals. Only 52,944 permits were issued in March so far, compared to a monthly average of 73,000. Major destinations such as the UAE, Qatar and Saudi Arabia have seen notable drops due to rising insecurity in the Gulf region.
Global conflicts push up prices of essential goods
Supply chain disruptions caused by conflicts in West Asia and the Russia-Ukraine war have led to rising prices in Nepal. Shipping costs have increased by nearly USD 2,000 per container, affecting both construction materials and daily essentials. Prices of iron rods, cement, cooking oil and plastic raw materials have all increased, with business leaders warning of further inflation if global instability persists.
Middle East tensions drive surge in construction material prices
Prices of cement and steel in Nepal have risen sharply in recent days due to escalating tensions in the Middle East. Cement prices have increased by Rs 10 per bag, while steel rods have jumped by Rs 10 per kilogram. Contractors warn that continued instability could further increase construction costs for both residential and commercial projects.
NRB allows prepaid cards for road toll payments
Nepal Rastra Bank has introduced provisions allowing banks to issue RFID-based prepaid cards for road toll collection. The initiative aims to reduce cash handling, improve transparency and ensure accurate revenue collection in government accounts.
Industry Department issues ultimatum over trademark violations
The Department of Industry has given a seven-day deadline to 11 Nepali firms accused of trademark infringement by multinational brands such as Coca-Cola, Zoom and Hugo Boss. Companies must submit written clarification with evidence, failing which legal action will be taken under existing laws. The move signals stricter enforcement of intellectual property rights in Nepal.
Rudraksha trade generates Rs 1 billion annually in Bhojpur
Rudraksha farming and trade in Bhojpur has emerged as a major economic activity, generating around Rs 1 billion each year. Rare beads fetch high prices, with some valued in the millions. Around 40,000 farmers are engaged in the sector, although concerns over theft and market security persist.
Customs offices fall short of revenue targets despite growth
Customs offices in Nepalgunj and Kailali reported increased revenue collection but failed to meet targets. Officials cited weak imports and low capital spending as key reasons for the shortfall, despite steady trade activity.
Three firms fined for illegal trade practices
The Department of Commerce, Supplies and Consumer Protection has fined three companies for violating consumer protection laws. Ektagram Store was fined Rs 20,000, while two other suppliers in Kathmandu were fined Rs 5,000 each. The department also issued corrective directives to 19 additional firms as part of its ongoing market monitoring efforts.
World Bank approves $85 million for Greater Lumbini project
The World Bank has approved an $85 million loan for the Greater Lumbini Area Development Project. The initiative aims to improve heritage conservation and tourism infrastructure across key Buddhist sites.
Authorities halt substandard milk sales, impose penalties
The Department of Food Technology and Quality Control has stopped the sale of milk produced by Sitaram Gokul Milks after finding fat content below the required standard. Hundreds of crates were seized, and legal action is underway. Authorities also penalized firms involved in consumer rights violations.
Local and provincial bodies propose over 2,800 projects for budget
Provincial and local governments have submitted 2,820 project proposals for the upcoming fiscal year under special and complementary grants. The proposals focus mainly on health, education and infrastructure development.
Nepal Bank launches interest waiver scheme for borrowers
Nepal Bank Limited has introduced a loan settlement scheme offering interest waivers for eligible borrowers who clear outstanding dues within specified deadlines.
Fixed deposit share declines as interest rates fall
The share of fixed deposits in Nepal’s banking system has declined as interest rates hit record lows, prompting savers to shift funds to other investment avenues.
Lumbini province reshuffles officials, approves project bank
The Lumbini Province government has reshuffled key officials and approved a directive to streamline project selection and implementation.
Windstorm destroys banana crops worth Rs 30 million
A powerful windstorm in Rautahat has destroyed banana plantations worth over Rs 30 million, leaving farmers facing heavy losses.
Road upgrading begins under Kaligandaki corridor project
Construction work has started on a key road section under the Kaligandaki Corridor, aimed at improving regional connectivity.
Cabinet assigns army to complete Bheri corridor road section
The government has tasked the Nepal Army with completing a challenging section of the Bheri Corridor road project.
Budget allocated for school infrastructure development
Funds have been allocated for the construction of new classrooms at a secondary school in Nawalparasi to improve learning facilities.
FDI commitments drop sharply amid political unrest
Foreign direct investment commitments have declined significantly, with officials attributing the fall to last year’s unrest and declining investor confidence.
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