KATHMANDU: Economic Digest presents a brief yet comprehensive roundup of major business developments in Nepal, delivered in clear and accessible summaries.
Nepal’s economic landscape presents a mixed but cautiously positive outlook, characterized by policy-driven reforms and investment initiatives alongside persistent implementation and trade challenges. Financial markets remained largely stable, with the NEPSE posting a modest gain despite more declining stocks than advancing ones, while the sharp drop in gold and silver prices may ease inflationary pressures and improve consumer purchasing power.
Structural reforms gained momentum through Nepal Rastra Bank’s launch of a regulatory sandbox for fintech innovation, the resumption of power purchase agreements for small hydropower projects, and the passage of the Finance Bill 2026, all of which signal efforts to stimulate private investment, modernize the economy, and strengthen long-term growth prospects.
Development financing also received a boost from the Asian Development Bank’s USD 115 million water and sanitation loan and South Korea’s Rs 1.81 billion agricultural grant, reinforcing investments in infrastructure, public services, and food security. However, significant challenges remain, including the tea industry’s escalating protest over export restrictions, weak public expenditure performance in Madhesh Province, industrial payment disputes leading to utility disconnections, and governance concerns over subsidy effectiveness.
At the local level, municipalities are increasingly pursuing targeted development strategies in waste management, transportation, sports infrastructure, tax reform, and social welfare, reflecting a broader push toward decentralized development. Overall, the developments suggest that while Nepal is advancing reforms and attracting investment to support economic transformation, the success of these initiatives will depend on effective implementation, improved governance, and the resolution of trade and institutional bottlenecks.
NEPSE rises 1.63 points; turnover reaches Rs 4.53 billion
The Nepal Stock Exchange (NEPSE) index gained 1.63 points on Friday, closing at 2,702.11, while the Sensitive Index increased by 0.31 points to settle at 463.98. Trading activity involved 10.92 million shares from 353 listed companies, generating transactions worth Rs 4.53 billion. Share prices of 116 companies advanced, 140 declined, and 17 remained unchanged.
The highest turnover was recorded by Global IME Bank Debenture 2030/31, followed by Global IME Bank Debenture 2027/28, Sopan Pharmaceuticals, Ankhu Khola Hydropower, and United Modi Hydropower. Among the top performers were Apollo Hydropower, Sopan Pharmaceuticals, Support Microfinance, Reliance Finance, and Gurans Laghubitta, while Bungal Hydro, Aatmanirbhar Laghubitta, Citizens Bank Debenture, Siddhartha Investment Growth Scheme, and Salpa Bikas Bank posted the largest declines.
Gold and silver prices fall sharply
Gold prices dropped significantly on Friday, declining by Rs 10,500 per tola (11.66 grams) in a single day. According to the Federation of Nepal Gold and Silver Dealers’ Association, gold was traded at Rs 286,700 per tola, down from Rs 297,200 per tola on Thursday. Silver prices also registered a notable decline, falling by Rs 305 per tola. As a result, silver was traded at Rs 4,640 per tola on Friday, compared to its previous closing price of Rs 4,945 per tola.
Ministry resumes PPA signing for small hydropower projects
The Ministry of Energy, Water Resources, and Irrigation has resumed commercial Power Purchase Agreement (PPA) signings for hydroelectric projects with capacities below 10 megawatts. The policy change is aimed at stimulating domestic investment in clean energy and safeguarding private developers through “Take or Pay” purchase arrangements.
National utility records indicate that 23 operational projects under one megawatt currently produce a combined 17.65 megawatts, while 59 pending generation surveys represent an additional 50 megawatts of potential capacity. The ministry has also arranged for private storage-type hydropower projects to issue 40 percent of their shares through Initial Public Offerings (IPOs) within their first year of operation, backed by 50-year operating licenses.
House approves Finance Bill 2026
The House of Representatives on Thursday endorsed the proposal to move forward with the Finance Bill, 2026, presented by Finance Minister Swarnim Wagle. Responding to lawmakers during deliberations, Dr. Wagle stated that tax revenues collected by the government are deposited into a consolidated fund and allocated according to national priorities, making separate funds unnecessary.
He highlighted that individuals earning up to Rs 1 million annually are exempt from income tax and emphasized that tax policies are designed to foster sustainable economic growth. The minister added that the budget seeks to balance economic liberalization with social justice while promoting good governance, formalization of the economy, and modernization of the power sector. He also clarified that welfare programs aimed at poor and marginalized groups have not been reduced.
NRB launches regulatory sandbox for fintech testing
Nepal Rastra Bank (NRB) has launched its first Regulatory Sandbox, enabling banks, payment service providers, remittance companies, and fintech startups to pilot innovative financial products under regulatory oversight before full deployment. Effective from May 14, 2026, the framework allows real-world testing of services such as digital lending, mobile payment systems, digital KYC, cybersecurity solutions, and embedded finance products. Pilot projects may operate for up to six months, with the possibility of a six-month extension.
Participants can receive temporary exemptions from certain regulatory requirements while remaining subject to strict standards on data protection, anti-money laundering measures, and consumer safeguards. According to NRB, the initiative is intended to promote fintech innovation, enhance financial inclusion, and support the secure growth of Nepal’s digital finance ecosystem.
Tea industry protest expands to 99 major factories
A total of 99 tea processing factories across Nepal have suspended operations in support of the Suryodaya Orthodox Tea Producers Association’s protest against export restrictions. The movement began on June 15 with 53 factories and expanded on Thursday to include 30 facilities in Ilam and Jhapa, along with 16 factories in Panchthar, Bhojpur, and Kaski. Industry representatives submitted a formal appeal to Prime Minister Balen Shah, urging immediate diplomatic efforts to address border-related disruptions. Currently, more than 200,000 kilograms of processed tea remain stuck in warehouses near the Indian border, while over 700,000 kilograms are stranded within domestic processing facilities.
ADB approves USD 115 million loan for Nepal
The Asian Development Bank (ADB) has approved a concessional loan of USD 115 million to strengthen water supply and sanitation services in municipalities across Nepal. According to the ADB, more than 850,000 people in 13 districts will benefit from the Integrated Water Supply and Sewerage Management Project. The initiative is expected to improve access to safe drinking water while enhancing sewerage and wastewater management systems.
ADB Country Director for Nepal Arnaud Cauchois noted that rapid urbanization is placing increasing pressure on urban infrastructure, leaving many communities without adequate drinking water and essential health services. He expressed confidence that the project will significantly improve access to clean water and sanitation facilities.
Agriculture ministry forms taskforce to review decade of subsidies
The Ministry of Agriculture, Forestry, and Climate Change has established a five-member taskforce to examine agricultural and livestock subsidies distributed over the last ten years. Led by Joint Secretary Badri Prasad Dahal, the committee has been given six months to investigate grants issued since the 2015/16 fiscal year. The review follows public concerns that government support programs have not effectively reached small-scale farmers because of weak monitoring mechanisms. The taskforce is required to conduct comparative assessments, identify gaps, and submit progress reports to the ministry twice each month to enhance transparency and accountability.
South Korea commits Rs 1.81 billion for Terai rice production
The Government of South Korea, through the Korean International Cooperation Agency (KOICA), has signed a six-year agreement to provide grants worth Rs 1.81 billion to support climate-resilient rice farming in the Terai region. Running from 2026 to 2031, the project will be implemented in Banke, Bardiya, Dang, Kapilvastu, Kailali, and Kanchanpur districts. The agreement was signed by KOICA Country Director Mooheon Kong and Joint Secretary Hari Bahadur KC. Technical support will be provided by the Nepal Agricultural Research Council and the International Rice Research Institute to strengthen food security and agricultural productivity.
Madhesh spends only 13% of capital budget
The Madhesh Province government has reported significant delays in capital expenditure, utilizing only 13.76 percent of its allocated capital budget with one month remaining in the fiscal year. Data covering the period from mid-July 2025 to mid-May 2026 show that the provincial treasury spent just Rs 9.98 billion out of a total budget of Rs 46.983 billion. Recurrent expenditure reached 36.22 percent, while overall budget utilization stood at 21.24 percent. Government agencies faced implementation difficulties following damage to institutions during political protests on September 8 and 9, 2025, as well as changes in leadership.
Lalitpur focuses on long-term waste management solutions
Lalitpur Metropolitan City Mayor Chiri Babu Maharjan unveiled the city’s strategic roadmap, placing solid waste management and improvements to public transportation among its top priorities. As chair of the Kathmandu Valley Mayors’ Forum, Maharjan has initiated discussions with federal and provincial governments to develop sustainable waste disposal systems for the long term. To address growing transportation needs, the city is coordinating regional mobility projects that include dedicated cycling lanes and potential urban monorail systems. The metropolitan office is also exploring alternatives to reduce reliance on the Melamchi water supply system, with plans underway to channel 130 million liters of drinking water per day from the Sisneri River.
Sudurpashchim allocates funds for sports infrastructure in Kanchanpur
The Sudurpashchim Province government has earmarked funding for the expansion of sports infrastructure in Kanchanpur during the upcoming fiscal year. Planned investments include Rs 10 million for the construction of a mini stadium in Dhodhara Chandani-2 and Rs 3 million for a futsal facility in Ward No. 8. Additional allocations include Rs 5.3 million for the Kanchanpur Football Association building, Rs 2.2 million for a karate training hall, and Rs 1.9 million for an indoor cricket facility. These projects will complement Rs 30 million in funding provided by the federal government.
Bardibas introduces incentive for women marrying after legal age
Bardibas Municipality in Mahottari has unveiled a social welfare program that offers Rs 51,000 to women who marry after reaching the legal marriage age of 20. Announced during the municipality’s 18th municipal assembly, the initiative aims to discourage child marriage and raise awareness about legal age requirements across all 14 wards. Although 13 wards have been officially declared child-marriage-free zones, the practice continues in some marginalized communities, including the Musahar community. To further discourage child marriage, municipal authorities have decided that both brides and grooms from the Musahar community will be eligible for the cash incentive.
Power disconnections continue in Hetauda Industrial Area
Industrial Districts Management Limited has intensified its enforcement campaign by disconnecting electricity services to factories operating in the Hetauda Industrial Area that have failed to clear outstanding payments. Power supply was cut to 50 factories on Thursday, with further disconnections carried out today. The action targets 131 industrial units, both small and large, that have accumulated unpaid land lease obligations. Authorities restored electricity to 12 factories after they settled their dues, but officials stated that disconnections will continue until all overdue lease payments are recovered.
KMC reduces rental tax rates and offers taxpayer incentives
Acting Mayor Sunita Dangol presented Kathmandu Metropolitan City’s new budget, introducing revised tax measures and a 10 percent discount for compliant taxpayers. Under the updated policy, residential rental tax for landlords earning more than Rs 240,000 annually has been reduced from 10 percent to 7 percent, while those earning below that threshold will pay a 5 percent rate. The metropolitan authority also announced a waiver of late-payment penalties for property owners who clear outstanding tax obligations before the close of the current fiscal year, aiming to broaden the city’s revenue base.
Pokhara industrial tenants settle arrears after electricity cuts
The Pokhara Industrial Estate Management Office disconnected electricity to 21 factories as part of efforts to recover Rs 41.1 million in unpaid land lease fees. Following the move, industrial operators paid approximately Rs 36 million in outstanding dues, allowing 13 factories to have their power supply restored immediately. The dispute emerged after annual lease rates increased from Rs 8,300 per ropani to Rs 18,500 per ropani. Affected businesses have criticized the power cuts, arguing that the lease-rate dispute is still under consideration by the Supreme Court, with a hearing scheduled until July 23.
Pokhara presents Rs 7.15 billion annual budget
Deputy Mayor Manju Devi Gurung has presented a budget of Rs 7.15 billion for Pokhara Metropolitan City for the upcoming fiscal year. The budget allocates 45 percent of resources to recurrent expenditure and 55 percent to development and capital projects. Funding sources include Rs 2.61 billion in federal conditional grants, Rs 493.7 million in federal equalization grants, and Rs 2.487 billion from internal revenue collection. Provincial transfers account for Rs 91.5 million, while Rs 724 million has been allocated directly to community-level development projects across municipal wards.
New substation improves electricity supply in Kanchanpur
The Nepal Electricity Authority has completed and commissioned a 33/11 KV, 6/8 MVA substation in Punarbas Municipality, Kanchanpur. The new facility is expected to eliminate longstanding low-voltage issues and frequent power interruptions, benefiting approximately 18,000 consumers in the area. The project faced delays after a private contractor failed to complete key electro-mechanical installation works, leading to contract termination. Subsequently, the Belauri Distribution Center assumed responsibility for the project and utilized spare transformers and equipment from other utility facilities to complete the remaining work and bring the substation into operation.
United Ajod Insurance announces dividend proposal
United Ajod Insurance’s Board of Directors has approved a dividend proposal based on profits earned during the previous fiscal year. During a board meeting held on Thursday, the company announced plans to distribute bonus shares equivalent to 4.28 percent of its paid-up capital. In addition, a cash dividend of 0.22 percent has been proposed to cover shareholders’ tax liabilities related to the dividend distribution. The proposal is subject to approval by the Nepal Insurance Authority and will subsequently be presented for endorsement at the company’s upcoming annual general meeting.
Traffic violations generate Rs 2.2 million in one day
The Kathmandu Valley Traffic Police Office fined 2,556 motorists for traffic-related offenses within a 24-hour period, generating over Rs 2.2 million in government revenue. Enforcement efforts targeted a wide range of violations, including 106 cases of drunk driving, 154 cases involving unauthorized ride-sharing services, 107 traffic signal violations, and 183 speeding offenses. Authorities also penalized 97 drivers for lane violations, 109 for using horns in restricted areas, 98 for parking on sidewalks, and 30 for operating vehicles deemed mechanically unfit. The operation is part of broader initiatives to improve road safety and traffic management across the Kathmandu Valley.
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