KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s current economic picture reflects a mix of short-term optimism and underlying structural vulnerabilities. While the sharp rise in the NEPSE index and high market turnover signal renewed investor confidence and liquidity in the financial system, broader macroeconomic indicators remain less encouraging.
A widening trade deficit nearing Rs 1.1 trillion, continued reliance on petroleum imports, and underperformance in customs revenue highlight persistent external imbalances and weak domestic production capacity. At the same time, falling gold prices suggest global market corrections influencing local trends.
On the fiscal side, proposed equalization grants aim to address regional disparities, but governance challenges—seen in delayed infrastructure projects and revenue inefficiencies—persist. Sectorally, distress among farmers due to price crashes and losses in brick industries from unseasonal rain underline climate and market risks.
Overall, the data points to an economy experiencing pockets of growth and activity, but still grappling with structural constraints, external dependence, and implementation gaps.
NEPSE rises by 54.51 points as turnover hits Rs 23.59 billion
The Nepal Stock Exchange (NEPSE) index surged by 54.51 points on Sunday, closing at 2,931.55—a gain of 1.89 percent. The Sensitive Index also climbed by 2.24 percent to 505.31. A total of 364 companies were traded through more than 204,000 transactions, with turnover reaching Rs 23.59 billion. Most sectors ended in positive territory, except for a marginal decline in the trading sector. Notable gains were seen in microfinance, hotels and tourism, commercial banks, and development banks. Six companies hit the 10 percent positive circuit, while NIC Asia Balanced Fund recorded the highest loss of 5.71 percent.
Nepal’s trade deficit nears Rs 1.1 trillion in current fiscal year
Nepal’s trade deficit has widened to around Rs 1.1 trillion in the first eight months of FY 2025/26, according to the Department of Customs. Total foreign trade stood at Rs 1.44 trillion, with imports amounting to Rs 1.289 trillion and exports at just over Rs 1.11 billion. Imports grew by 12.54 percent, while exports rose by 29.83 percent compared to the same period last year. India remains Nepal’s largest trade partner, with a deficit of Rs 567.39 billion. Trade with China also showed a significant gap of Rs 264.3 billion. Meanwhile, Nepal recorded modest trade surpluses with countries such as Romania, Norway, and Iceland.
Nepal’s petroleum imports increase in first eight months of FY 2025/26 despite LPG decline
Nepal recorded a modest rise in both the volume and value of petroleum imports during the first eight months of the current fiscal year 2025/26. Data from the Department of Customs shows total imports reached nearly Rs 210 billion, up from Rs 206.37 billion during the same period last year—marking a 1.76 percent increase. While most petroleum products saw slight growth, imports of liquefied petroleum gas (LPG) declined. Diesel remained the most imported product, with its value rising 3.95 percent to Rs 82.10 billion. In volume terms, diesel imports grew 2.80 percent to 896,448 kiloliters. Petrol imports also increased by 2.49 percent, reaching Rs 43.9 billion.
Gold price drops sharply by Rs 12,500 per tola
Gold prices in Nepal fell significantly on Sunday, dropping by Rs 12,500 per tola to Rs 282,000. The price had stood at Rs 294,500 per tola on Friday. Silver also declined by Rs 355 per tola, trading at Rs 4,540.
NNRFC recommends Rs 151 billion fiscal equalization grant for provinces and local levels
The National Natural Resources and Finance Commission (NNRFC) has proposed allocating Rs 151.7 billion in fiscal equalization grants for the upcoming fiscal year, with Rs 61.5 billion earmarked for provinces and Rs 90.2 billion for local governments. The grants are structured into minimum, formula-based, and performance-based categories. Each province will receive a minimum grant of Rs 15.37 billion, accounting for 25 percent of the total, determined equally based on population and area.
Nepalgunj customs misses revenue target with only 52 percent collection
The Nepalgunj Customs Office has managed to collect just over half of its annual revenue target in the first eight months of the fiscal year 2025/26. Out of the Rs 24.54 billion target, only Rs 12.75 billion—51.97 percent—has been collected so far. This leaves nearly 48 percent to be recovered in the remaining four months, posing a significant challenge. Monthly performance has consistently fallen short, with collections ranging between 69 percent and 88 percent of targets. Despite expectations that the integrated check post at Jamunaha would boost trade and revenue, the anticipated gains have not materialized.
Unseasonal rain causes heavy losses to brick industries in Madhes
Brick industries across Madhes Province have suffered significant financial losses due to unseasonal rain and storms. Raw bricks left to dry in the open were damaged, particularly in districts like Saptari, where around 45 kilns are in operation. Each raw brick costs Rs 4.38 to produce, and losses are estimated to run into millions. Entrepreneurs have called for policy changes, suggesting kilns be closed from mid-November and allowed to resume firing from mid-March to avoid weather-related disruptions.
Kalika municipality fines contractor Rs 11.6 million for project delay
Kalika Municipality has imposed a fine of Rs 11.6 million on a construction company for failing to complete an administrative building within the agreed deadline. The contract, awarded in February 2020 with a two-year completion target, was extended four times before the final deadline expired in November 2024. Despite repeated extensions, the project remained incomplete. The contractor challenged the decision in the Hetauda bench of the High Court, but the case was dismissed, upholding the municipality’s action.
Kavre farmers struggle as potato prices crash despite high production
Potato farmers in Kavrepalanchok are facing financial distress due to a sharp decline in market prices, even as production has increased this season. Farmers in areas such as Panchkhal, Mandandeupur, Nala, and Panauti are harvesting large quantities, but demand has weakened and traders are not visiting farms. Prices have dropped to Rs 7–10 per kilogram, far below the production cost of Rs 18–20. Last year, potatoes sold for Rs 28–35 per kilogram. With cultivation spanning around 70,000 ropanis in Panchkhal alone, farmers fear heavy losses.
Market cap of top Indian firms declines by Rs 1 trillion, HDFC Bank hit hardest
The combined market capitalization of five of India’s top 10 most valued companies declined by Rs 1 trillion last week, with HDFC Bank experiencing the largest drop. Benchmark indices remained largely flat, reflecting cautious investor sentiment. While firms like Reliance Industries and Bharti Airtel posted gains, others including ICICI Bank, TCS, and Hindustan Unilever saw declines.
Bakrahaghat cremation project remains incomplete after three years
The construction of Bakrahaghat cremation site in Urlabari-4, Morang, has remained unfinished even three years after work began. Originally planned for completion within five months, the project has faced repeated delays despite land donations from locals and multiple budget allocations. Although a contract worth Rs 6.3 million was awarded in July 2023 with a December deadline, the project remains incomplete even after more than two years, forcing locals to continue using riverbanks for cremation.
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