KATHMANDU: Welcome to Nepal News’ Evening Economic Brief—your go-to source on key financial updates in Nepal. Stay informed with concise insights on market trends, economic indicators, and policy shifts. Here are today’s top economic news highlights:

Finance Minister Paudel Claims 29 Legal Amendments Have Boosted Economic Optimism:

Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel has said that the amendment of 29 laws related to the private sector has generated new optimism in Nepal’s economy. Speaking during a discussion on the upcoming fiscal year 2082/83’s budget and revenue policy with industrialists and businesspeople in Rupandehi, Paudel stated that these legal reforms have helped uplift the morale of the private sector.

“After the formation of the current government, we amended 29 laws at once through an ordinance to address private sector issues. This initiative has infused enthusiasm across the broader economic sector,” Paudel said. He emphasized that the government is working with a commitment to listen to the private sector and create a business-friendly environment. The legal amendments, he said, are part of that broader effort. According to the finance minister, these changes have led to positive shifts in the economy and increased confidence among private sector actors.

Nepal’s Economy in 2081 BS: Modest Recovery Amid Structural Challenges:

Nepal’s economy in 2081 BS showcased cautious recovery but remained mired in deep-rooted challenges. While the external sector remained stable, internal economic hurdles, especially in public finance, persisted. Credit disbursement lagged despite ample liquidity and lower interest rates, reflecting weak investor confidence. Nepal’s debut sovereign credit rating of ‘BB-’ with a stable outlook signaled progress in accessing international financial markets, yet the country’s return to the FATF grey list underscored ongoing governance and regulatory issues.

Public debt rose to Rs 2.676 trillion, representing 46.91% of GDP, exacerbated by exchange rate fluctuations. The Nepal Investment Summit failed to yield substantial commitments due to bureaucratic inefficiencies. Inflation eased to 3.75%, and remittances grew by 9.4% to Rs 1.051 trillion, bolstering foreign reserves. However, capital expenditure and credit expansion fell short of targets, limiting economic momentum. Other highlights included record-high gold prices driven by global tensions and the establishment of a National Cooperative Regulatory Authority to tackle financial mismanagement. Globally, geopolitical conflicts and trade disputes added economic volatility, while advancements in fintech and AI reshaped financial systems. Despite incremental progress, Nepal’s economy faces urgent structural reform needs to sustain growth and investor confidence.

Nepali New Year 2082 Revives Domestic Tourism, Fills Hotels Nationwide:

The Nepali New Year 2082 has reinvigorated domestic tourism, with popular destinations across the country reporting high visitor numbers. Spring weather, school holidays, and annual leave for government employees have encouraged travel, boosting hotel occupancy to near capacity in places like Nagarkot, Pokhara, and Sauraha.

Trekking routes and religious sites are bustling, while tourism campaigns like Visit Nagarkot Year 2082 aim to sustain momentum. Despite optimism, challenges in air connectivity and infrastructure remain critical for long-term growth.

NEPSE Index Rises 31.5% in 2081, But High-Risk Stocks Raise Concerns:

In the Nepali calendar year 2081, the overall NEPSE index surged by 31.5%. The market, which stood at 2,023 points at the start of the year, climbed to 2,662 points on the first trading day of 2082. At one point—on the 31st of Shrawan 2081—the index even reached the 3,000 mark. However, it still fell short of the all-time high of 3,198 points recorded on Bhadra 2, 2078. While the long-term trend of the market appears bullish, short-term fluctuations and corrections have been more frequent.

Despite the overall index rising by 31%, some individual stocks soared by as much as 300% over the past year. However, many of these stocks belong to companies with weak financial foundations. Market analysts have cautioned that such steep rises, unsupported by strong fundamentals, come with significantly higher investment risks.

Government Revenue Falls Short by Rs 176 billion in First Nine Months of Fiscal Year:

The government’s revenue collection performance remains sluggish, with a significant shortfall compared to the target set for the current fiscal year. In the first nine months, actual revenue collection has fallen short by Rs 176 billion. From Shrawan to Chaitra (nine months), the government had set a revenue target of Rs 1.016 trillion. However, only Rs 840.91 billion has been collected during this period.

To meet the annual revenue target, a 38% increase over last year’s collection would be required. But as of now, the growth rate is only 9%. Although some months in this fiscal year recorded revenue growth of up to 20%, the latest data from Chaitra shows a significant slowdown once again. This widening gap between target and actual collection highlights the government’s continued struggle to mobilize internal resources effectively.

Nepal’s Industrial Capacity Utilization Hits Eight-Year Low Amid Persistent Challenges:

Nepal’s industrial capacity utilization has plummeted to an eight-year low of 48.3% in FY 2023/24, as per the Nepal Rastra Bank, highlighting structural issues in the sector. Post-pandemic recovery remains sluggish, with industries grappling with rising input costs, weak demand, and a liquidity crunch. Sectors like refined oil and pashmina have shown growth, leveraging export opportunities and promotional campaigns.

However, persistent power outages and volatile policies hinder broader industrial recovery. Industrialists demand reliable electricity supply and policy reforms to boost production. Additionally, fluctuating capacity utilization across various sectors, including garment and construction, underscores the need for comprehensive economic strategies. New industry registrations show mixed trends, with significant disparities among provinces.

Nepal Faces Decline in Indian Investment Amid Political Instability and Policy Hurdles:

Nepal, historically a key destination for Indian foreign direct investment (FDI), has seen a sharp decline in Indian investments outside the hydropower sector. A recent Nepal-India Chamber of Commerce and Industry (NICCI) study cites political instability, policy inconsistencies, and intellectual property challenges as major deterrents for Indian investors.

Companies like Dabur Nepal and ITC have faced significant bureaucratic hurdles and legal obstacles, discouraging further investment. While India remains Nepal’s largest FDI source, interest has waned, with commitments dropping drastically in recent years. In contrast, Chinese investment has surged, highlighting Nepal’s shifting investment landscape and the urgent need for reforms to attract Indian multinationals.

Nepal Airlines Pays Installment of Over Rs 530 million for Aircraft Loans:

Nepal Airlines Corporation has made loan repayments for two narrow-body and two wide-body aircraft purchased for international flights. According to the corporation’s spokesperson Subash Dangi, Nepal Airlines borrowed the funds from the Employees Provident Fund and the Citizen Investment Trust.

The payment made includes the full installment for the two narrow-body aircraft for Chaitra 2081, and a partial payment for the two wide-body aircraft, totaling Rs 530,955,281 on the final day of Chaitra (Chaitra 31). Since the current management took over, Nepal Airlines has repaid a total of Rs 7.39 billion in loan installments up to the end of Chaitra 2081, Dangi further stated in the official release.

Three Directors of Nepal Rastra Bank Promoted to Executive Directors:

Nepal Rastra Bank has promoted three of its senior directors to the position of Executive Directors. The promoted individuals are senior directors Chet Prasad Uprety, Roshan Kumar Sigdel, and Dr. Ramsharan Kharel.

According to the Central Bank’s Human Resources Department, these officers have been elevated from Officer First Class to Officer Special Class. Currently, Uprety is assigned to the Non-Bank Financial Institutions Supervision Department, Sigdel to the Assets and Services Management Department, and Dr. Kharel to the Banks and Financial Institutions Regulation Department.

Shesh Ghale to Build Luxury Five-Star Resort in Bhaktapur:

Former NRNA President Shesh Ghale, in partnership with Amrit Ratna Shakya of Summit Hotel, is building a five-star “Swanig:” Resort in Bhaktapur’s Gundu area. Spanning 100 ropanis, the resort will feature 60 villas, promote Nepalese art and culture, and offer wellness activities like yoga and hiking.

Estimated at NPR 6 billion, construction is expected to complete in three years. The resort aims to attract high-spending tourists and become a major destination in Nepal’s tourism landscape.

20th Fewa New Year Festival Begins in Pokhara to Promote Tourism:

The 20th Fewa New Year Festival has kicked off in Pokhara, Nepal’s tourism capital, with the aim of promoting both domestic and international tourism. Organized by the Hotel Association Pokhara on the occasion of New Year 2082, the festival began on Saturday and will run for three days by closing off the main Lakeside road for celebrations.

Mayor of Pokhara Metropolitan City, Dhanraj Acharya, inaugurated the festival during a ceremony held at Ambot on the shores of Fewa Lake. Highlighting Pokhara’s uniqueness in nature, culture, and adventure, he emphasized that tourism entrepreneurs have the responsibility to help visitors experience this distinctiveness.

Budget Crunch Halts Road Upgrade Projects in Myagdi:

Six multi-year road upgrade projects in Myagdi under the Gandaki Province government have stalled due to budget shortages. Contractors ceased work after failing to receive payments, despite achieving significant progress. Projects like the Beni–Pakhapani and Darbang–Dharapani roads, with 50% completion, are impacted.

Allocated funds for this fiscal year have been exhausted, leaving a liability of NPR 13.9 crore. Lawmakers blame fragmented budget allocations for hindering major infrastructure projects, urging prioritization to prevent further delays.

High-Level Commission Proposes Sweeping Reforms to Overcome Post-COVID Crisis:

Amidst the ongoing economic fallout from the COVID-19 pandemic, Nepal’s ‘High-Level Economic Reform Recommendation Commission,’ led by former Finance Secretary Rameshwor Khanal, has submitted a detailed roadmap to revive the economy. The report proposes reforms targeting private sector growth, job creation, and long-term stability.

Key recommendations include fostering competition, reducing bureaucratic hurdles, repealing outdated laws, and improving public enterprise efficiency. The report also urges reforms in public finance and social security systems, while emphasizing global integration. As the government prepares the upcoming budget, these reforms aim to address the country’s stagnation and drive sustainable growth.

Nagdhunga Tunnel Construction Resumes Under Police Protection After 28-Day Halt:

Construction work on the Nagdhunga–Sisnekhola tunnel project has resumed under police protection after being halted for 28 days due to local obstruction. The disruption occurred during the final phase of the project when locals protested, claiming that their demands had not been met. Residents of Tutipakha in Chandragiri Municipality–2 had stopped construction activities on both the Kathmandu and Dhading sides from Chaitra 3.

The Nagdhunga Tunnel Project officials stated that despite fulfilling the previously agreed demands, locals continued to obstruct the work. Repeated attempts were made to bring the protesting locals to the negotiating table through formal letters, but they did not respond, the project claimed. Even after informing them that their new demands had been forwarded to the concerned authorities, the obstruction remained in place. As a result, with support from the District Administration Office, Kathmandu, and the involvement of security personnel, construction work was resumed from Sunday, said Sanjay Panthi, Senior Divisional Engineer of the Nagdhunga Tunnel Project.

Karnali Provincial Government Initiates Project Selection Process in Rukum West for Upcoming Fiscal Year:

The Karnali Provincial Government has begun selecting projects for Rukum West under the Project Bank. A District-level Project Proposal Selection Recommendation Committee meeting, involving people’s representatives and sectoral offices, proposed and recommended projects for the upcoming fiscal year.

Key sectors, including forests, industry, watershed management, agriculture, and animal services, have contributed to the selection of 206 projects from the Divisional Forest Office, 69 from the Industry and Consumer Welfare Protection Office, and various agricultural and livestock projects. The proposed projects will be submitted to the provincial government for approval.

Nepal’s Hydropower Sector Faces Crisis as NPR 24.5 billion in Share Issuances Remain Frozen for 20 Months:

Nepal’s hydropower sector is in turmoil as share issuances worth NPR 24.5 billion (approximately $2 billion) remain frozen for 20 months, jeopardizing the nation’s energy future. A directive from the Public Accounts Committee (PAC) has stalled approvals for Initial Public Offerings (IPOs) and rights shares, delaying critical funding for projects.

The freeze impacts 53 hydropower companies, with severe financial and legal implications. The Independent Power Producers’ Association (IPPAN) has appealed to Prime Minister KP Sharma Oli for intervention, warning that the stagnation threatens the government’s goal of generating 28,500 MW by 2035. Without swift action, the sector’s growth and Nepal’s energy security are at risk.

Unseasonal Rain Destroys Wheat Crops in Banke, Farmers Worried:

Farmers in Banke district are deeply concerned after unseasonal rain on Sunday evening damaged their wheat crops. According to Surya Lal Yadav, a farmer from Dudhua Rural Municipality–5, Kamdi, the rain and strong winds destroyed the wheat that was ready to be harvested and stored.

“The wheat was cut and just about to be processed, but the rain soaked it and caused major damage,” Yadav said. He explained that although the wheat had grown well this season, the unexpected rain and wind during the harvesting period ruined much of it. Yadav also mentioned that even the standing wheat that had not yet been harvested was severely damaged by the storm and hail. Farmers are now worried about their losses and are hoping for compensation or relief from the government.

Sagarmatha Lumbini Insurance Proposes 15% Cash Dividend Including Tax:

Sagarmatha Lumbini Insurance Company has proposed a 15% cash dividend, including tax, for its shareholders. The decision was made during the company’s board meeting held on Chaitra 28. The proposed dividend will be distributed from the profit of the previous fiscal year. Shareholders will receive the dividend only after the Insurance Board grants approval and the upcoming Annual General Meeting (AGM) endorses the proposal.