Quick Economic Update: Latest Business News from Nepal

Nepal’s economic landscape encompasses a variety of facets that highlight both positive and concerning trends regarding finance and governance within the country. While the banking sector has seen increased profits and the tax base is expanding, issues such as growing non-performing loans, limited capital expenditure, and significant revenue gaps at federal and provincial levels underscore inefficiencies in public finance management.

Concerns arise over long-term fiscal sustainability due to extensive electoral spending amidst minimal development investments, further emphasizing the need for disciplined financial planning. Large infrastructure ventures like the Kathmandu-Terai Fast Track project demonstrate steady advancements, albeit with some remaining work to be done to reach completion.

External forces, such as stricter US migration policies and dwindling skilled migrant workers, exacerbate existing challenges like market manipulation, climate-induced agricultural and industrial setbacks, and escalating commodity price variability. These factors contribute to an economic atmosphere that is active but imbalanced, supported by consumption, remittances, and a resilient banking sector, albeit plagued by governance deficiencies, implementation issues, and heightened vulnerabilities to policy, environmental, and external shifts.

Shifting gears to the realm of trading, gold prices in the domestic market saw a notable decline, with gold fetching Rs 318,800 per tola, down from Rs 339,300 previously. The international market mirrored this trend with gold trading at USD 5,537 per ounce and silver at USD 117 per ounce.

The Ministry of Finance greenlit Rs 19.15 billion for the upcoming parliamentary elections, with Rs 6.36 billion already in circulation. Government spending for the current fiscal year stood at 46.06% of the budgeted amount, with recurrent expenses holding steady at 40.82% and capital spending lagging at 11.66%.

Lumbini Province’s financial landscape exhibited a concerning revenue-expenditure gap, as internal income figures fell far short of expenditure levels, accentuating the need for improved revenue generation mechanisms. Commercial banks in Nepal collectively amassed net profits of Rs 30.59 billion during the second quarter of fiscal year 2025/26, showcasing overall growth, though some individual banks experienced profit declines.

The United States’ recent policy revisions, spearheaded by the Trump administration, have influenced Nepali migrants by eliminating subsidies for healthcare, housing, education, and family assistance. Additionally, a Visa Bond requirement ranging from USD 5,000 to USD 15,000 has been introduced for B1/B2 visa applicants.

Progress on the Kathmandu-Terai Fast Track project continues steadily, with construction reaching 45.16% of physical completion. The endeavor, spearheaded by the Nepal Army, has seen significant tunnel breakthroughs in designated areas, with further advances anticipated in the coming months. Major infrastructure developments hold promise for economic growth and connectivity in the region.