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

Constitution Must Guide Budget Execution: Finance Minister Paudel:

Deputy Prime Minister and Finance Minister Bishnu Paudel emphasized that budget execution must remain within constitutional limits. Speaking at an event in Kathmandu, he stated that the constitution is the guiding document for budget formulation and implementation. Although the federal government prepares the national budget, most programs are implemented by provincial and local governments. Paudel noted that when local consumer groups wait for federal action, plans often remain unfulfilled. He stressed the need for each level of government to fulfill its constitutional responsibilities. Addressing confusion over jurisdiction, he cited the clear division of powers listed in the constitution and the task expansion report. Paudel also pointed out the imbalance between capital expenditure and revenue, explaining that while mandatory expenses can’t be cut, efforts are made to reduce discretionary spending to maintain fiscal balance.

Demat Accounts Surge Over Fivefold in Seven Years:

In just seven years, the number of demat account holders in Nepal has increased more than fivefold, rising from 1.29 million in 2075 BS to 6.83 million as of Baisakh 24, 2081 BS. According to CDS and Clearing Limited, this marks a 427.26% growth, driven by advancements in technology in both primary and secondary markets. Bagmati Province leads with over 2.48 million demat accounts, a 3.58-fold rise. However, Sudurpaschim Province saw the highest growth rate, with demat accounts jumping 12.69 times—from 33,425 to 421,000. Karnali Province trails with 177,000 accounts. The expanding reach of digital platforms and increased public interest in the stock market have contributed significantly to this rapid rise in investor participation.

Construction Sector Leads Nepal’s Bad Loan Surge Despite NRB Concessions:

Non-performing loans (NPLs) in Nepal’s construction sector remain the highest among all industries, hitting 7.28% in FY 2023/24, despite Nepal Rastra Bank’s repeated loan restructuring measures. The sector has been severely impacted by the economic slowdown, pandemic aftershocks, and payment delays in publicly funded projects. Although NRB has allowed restructuring of loans—most recently easing rules for state-backed construction projects—NPLs continue to rise. The average NPL across banks reached 4.92% by mid-January 2024. Construction loans span both residential and infrastructure projects, and poor recovery continues to threaten financial stability despite regulatory support.

Experts Emphasize Need for Budget Efficiency and Implementation in FY 2082/83:

Stakeholders have emphasized the importance of improving budget allocation efficiency and implementation in the upcoming fiscal year’s budget. At a pre-budget discussion organized by the Nepal Economic Journalists Society (SEJON), former Chief Secretary Dr. Baikuntha Aryal highlighted issues in the budgeting cycle, including budgeting, allocation, implementation, and monitoring. Dr. Aryal pointed out that, over the past 50 years, the average budget expenditure has been just 86.97% of the allocated amount, indicating a consistent underutilization. He stressed the need for reforms to improve the effectiveness of budget implementation.

Government Proposes Film Bill Requiring Licensing for Digital Platforms:

The government has submitted the Film Bill 2024 to Parliament, mandating that films released on digital platforms like YouTube, Netflix, and local OTT apps must obtain a license from the Film Development Board. The bill includes a fine of up to NPR 1 million for unauthorized screenings. It also introduces regulations for real-time box office tracking, cinema hall standards, and construction permits. However, industry stakeholders have raised concerns, including the proposed shift from a Film Censor Board to a Film Certification Board with more government representatives and fewer experts. They also oppose post-approval bans on certified films.

Government Moves to Appoint New Nepal Rastra Bank Governor Amid Economic Challenges:

The government has initiated the process to appoint a new Governor for Nepal Rastra Bank, forming a three-member recommendation committee led by Finance Minister Bishnu Prasad Paudel. The committee, tasked with selecting a deputy governor and recommending three candidates for the position, will address pressing challenges, including managing the growing issue of non-performing loans (NPLs) and improving the investment climate. The new governor will need to stabilize the banking sector, manage liquidity, and foster investments to boost economic growth. With NPLs rising and investment demand low, tackling these issues will be crucial for maintaining financial stability and restoring investor confidence.

Microfinance Profits Rise by 22.87%, But 22 Firms Exceed 5% Bad Loan Ratio:

Of the 50 listed microfinance institutions in Nepal, 36 have published their third-quarter reports for FY 2081/82, showing a 22.87% rise in profits compared to last year. Total profit reached Rs. 2.46 billion, up from Rs. 2.02 billion. While only two institutions reported losses, 22 out of 36 surpassed the Nepal Rastra Bank’s 5% threshold for non-performing loans (NPL), raising concerns. Profit growth was supported by loan restructuring policies and interest income adjustments. Despite the NPL concerns, most firms posted positive earnings per share (EPS), with Mithila Microfinance leading at Rs. 36.22, followed by Support and Swabhiman Microfinance.

Illegal Use of Foreign Satellite Internet Services in Himalayan Region Alarms Local ISPs:

Foreign tourists are openly using internet in Nepal’s Himalayan regions via unauthorized satellite SIMs and devices, prompting complaints from local service providers. The Nepal Telecommunications Authority (NTA) has warned against the illegal use of satellite communication services, stating that companies like Starlink are operating without required licenses. NTA confirmed that only two Nepali companies—Constellation Pvt. Ltd. and i4 Technologies—hold valid GMPCS licenses. Despite past enforcement efforts, unauthorized satellite devices remain prevalent. As climbing season peaks, base camps continue to rely on foreign satellite internet services, raising regulatory and legal concerns.

Nepal Slips Further on Anti-Money Laundering as Government Inaction Keeps It on FATF ‘Grey List’:

Nepal remains on the FATF grey list for the second time due to weak action against money laundering and asset recovery. Despite enacting the Mutual Legal Assistance Act in 2013, Nepal has signed a bilateral agreement only with China. Key countries like Singapore and Malaysia await formal proposals, but the government has shown little urgency. Anti-corruption chief Prem Kumar Rai says Nepal lacks effective mechanisms to seize or repatriate illicit wealth. Without international cooperation, convicted individuals serve sentences while their assets remain abroad. The failure to secure bilateral agreements hampers Nepal’s credibility and efforts to combat financial crime and corruption.

Stricter Measures on Bounced Cheques: 45-Day Notice to Issuer, Fines and Jail Time Enforced:

Issuing a cheque without sufficient funds will now face tougher penalties under Nepal’s amended Banking Offences and Punishment Act. If a cheque is dishonoured, the recipient must notify the issuer within 45 days. If payment is not made even after notice, the bank will officially certify the dishonour. The issuer must pay the due amount with interest and a 5% penalty. Jail terms range from 1 month to 4 years depending on the amount. Complaints must be filed within one year and lawsuits within six months. The amended law is already in effect.

Poor Rainfall Hits Gucchi Mushroom Harvest, Slashes Farmers’ Income:

Farmers in remote parts of Nepal are facing major losses as gucchi mushroom yields drop sharply due to insufficient rainfall. In areas like Kharpunath, Sarkegad, and Chankheli rural municipalities, collectors who once earned up to Rs. 300,000 last year are returning with barely a handful of mushrooms. Tek Bahadur Budha collected just 100 grams this year, down from last year’s lucrative haul. Others like Dane Phadera and Basana Shahi report similar declines. With gucchi mushrooms fetching Rs. 12,000–14,000 per kilo, traders like Ram Bahadur Bhandari confirm a sharp slump in supply and trade.

City Hotel’s Loss Deepens to Rs 173.8 Million in Q3:

City Hotel Limited has reported a net loss of Rs 173.8 million in the third quarter of the current fiscal year, up from Rs 153.7 million during the same period last year. Despite a reduction in financial expenses—from Rs 254.8 million to Rs 205.7 million—the company’s operating income declined sharply by 31.45%, totaling Rs 253.8 million. Overall revenue also dropped to Rs 375.4 million from Rs 420 million last year. The company’s paid-up capital stands at Rs 1.67 billion, but its other equity is in the negative by Rs 335.9 million. City Hotel’s earnings per share (EPS) is negative Rs 10.38, while net worth per share is Rs 79.93. The continued losses reflect weakened business performance and high financial stress.

Bhairahawa SEZ Exports Goods Worth Rs. 770 Million in Nine Months:

Industries in the Bhairahawa Special Economic Zone (SEZ) exported goods worth Rs. 770 million in the first nine months of FY 2024/25, following a rise in production. Total production reached Rs. 1.33 billion by mid-April. Vistaar Global Pvt. Ltd. led exports, selling 88% of its Rs. 720 million output. Shakti Minerals and Brilliant Lighting also saw strong export ratios. In comparison, FY 2023/24 exports stood at Rs. 603.6 million. With reduced rent and a lowered export quota, industrial activity in the SEZ has grown, with four new industries currently under construction.

Spring Everest Climbing Season Officially Begins:

The 2025 spring expedition to Mt Everest has officially begun after a seven-member Sherpa team from ATK Expedition fixed ropes to the summit on Friday. A day earlier, ropes were secured on Mt Lhotse and Mt Ama Dablam. The Department of Tourism confirmed the season’s opening, with Director Leeladhar Awasthi stating that favorable weather is expected to draw the most climbers in early May. Record-holding climbers Kami Rita Sherpa, Tashi Gyalzen Sherpa, and Sanu Sherpa aim to break personal records this season. So far, 421 climbers from 44 groups have secured permits for Everest.