KATHMANDU: Nepal News presents today’s snapshot of Nepal’s economic activities. Get quick updates on major market movements, policy shifts, and financial developments shaping the economy of Nepal. Here are the key economic highlights for today:

Share Market Drops Below 2,600 with Rs 4 Billion Turnover

The Nepal Stock Exchange (NEPSE) index dropped below the 2,600 mark on Sunday, falling 12.50 points to close at 2,594 points. Despite the fall, the daily turnover increased to Rs 4 billion, up from Rs 3.49 billion on the previous trading day. The decline was broad-based, with 197 companies losing value while 56 gained. All sub-indices saw fluctuations less than 1%, with the banking group remaining stable. Swastik Laghubitta and SY Panel were notable gainers, with their share prices increasing by 10%.

NRB to Withdraw Rs 35 Billion in Deposits to Manage Excess Liquidity

The Nepal Rastra Bank (NRB) will withdraw Rs 35 billion in deposits over a 10-day period, starting Sunday, using its deposit collection instrument (DCI) through competitive bidding. This measure is being taken to manage the persistent state of excess liquidity in the financial system, where total deposits have surpassed Rs 7.5 trillion. Only licensed ‘A,’ ‘B,’ and ‘C’ class banks and financial institutions are eligible to participate in the DCI bidding, where the interest rate will be determined through the competitive process. The principal and interest for this DCI will be repaid on December 24. The bank is authorized to use this structural open market operation for managing long-term excess liquidity for up to six months.

Uncollected Tax Arrears Soar to Rs 94.95 Billion, Excluding Disputed Amount

The total uncollected tax arrears, including interest, additional fees, and late charges, have swelled to Rs 94.95 billion by the end of the fiscal year 2024/25. This figure does not include the massive disputed amount of Rs 180.1 billion, which is currently under administrative review with the Inland Revenue Department (IRD) or is pending in judicial bodies. The IRD reported a low collection rate on its targets for the previous fiscal year: only 38.29% of the Rs 22.76 billion income tax arrears target was met, and 63.28% of the Rs 16.33 billion VAT arrears target was collected.

Foreign Loan Policy Fixed: Contract Currency Must Match Loan to Prevent up to 6% Loss

The Ministry of Finance has implemented a new foreign aid mobilization policy requiring procurement contracts (for contractors and consultants) under foreign loans to be executed in the same currency as the financial agreement with the development partner. This change aims to mitigate significant losses caused by fluctuations in the exchange rate, particularly against the US dollar, which has sometimes effectively turned a 1% concessional loan into a 6% interest rate upon repayment. Previously, loans taken in currencies like the Japanese yen or Chinese RMB were often contracted and paid out in US dollars, creating expensive discrepancies. The new policy allows contracts to be set in either the loan currency or the Nepali currency.

Ministry Sends Model Law to Local Units for Budget Reform

The Ministry of Federal Affairs and General Administration has developed and sent a model law on economic procedures and financial accountability to all 753 local levels, requiring them to justify policies, programs, and budgets based on clear outcomes and priorities. This new arrangement mandates that budgets for new capital expenditure projects must be proposed based on an approved feasibility study report with technical and financial justification. This move aims to prevent ad hoc budget formulation, which has previously led to implementation challenges and budget confusion. The change is intended to bind local levels to economic discipline, address issues raised by the Office of the Auditor General, and make the budget process more inclusive by involving ward committees and diverse community representatives.

Rs 39.93 Billion Savings Trapped as Problematic Cooperatives Committee Fails

The government body established to resolve the massive cooperative scam is itself in disarray. The Problematic Cooperative Management Committee, under the Ministry of Land Management, Cooperatives, and Poverty Alleviation, has been unable to effectively proceed with returning the Rs 39.935 billion in trapped savings belonging to 62,760 depositors. The committee, which has declared 27 cooperatives as problematic, saw its officials stop coming to the office following a siege by cooperative victims on November 20 and 21. Although some depositors with savings under Rs 100,000 have received refunds, the majority of savings accounts remain frozen, leaving thousands of people distressed.

2 km Wildlife-Friendly Flyover Worth Rs 14 Billion on East-West Highway

The Department of Roads is set to construct a two-kilometer wildlife-friendly tourist flyover in two locations along the Narayanghat-Hetauda-Pathlaiya road section, part of the East-West Highway, using a concessional loan from the Asian Development Bank (ADB). The first flyovers in Madhesh Province will be built in the Tikauli forest area of Chitwan and Amlekhgunj in Bara. The project is estimated to cost nearly Rs 14 billion and is designed for vehicles to run above while allowing wildlife to safely pass below, aiming to stop the daily wildlife deaths from vehicle collisions. The department plans to request the ADB to convert the high cost of the flyovers into a grant.

Minister Ghising Warns to Cancel Contract if Rs 95.6 Million Bridge Work Not Started in 1 Month

Physical Infrastructure and Transport Minister Kulman Ghising issued a stern warning that the contract for the long-delayed Ghumaune Motorable Bridge connecting Tanahun and Chitwan will be terminated if construction does not resume within one month. The project, linking Aanbukhaireni Rural Municipality-5 and Bharatpur Metropolitan City-29 across the Trishuli River, was originally contracted in the fiscal year 2013/14 with Mrit Sanjeevani Construction Company for Rs 95.6 million. Despite a deadline in April 2022, only about 50% of the work is complete. When finished, the 105-meter bridge will shorten the travel distance for residents of Gandaki Province to Narayangad by 23 kilometers.

Government Removes FDI Limit on Automatic Route to Streamline Investment Approval

The government is set to eliminate the upper limit on foreign direct investment (FDI) approved through the Automatic Route, making all foreign investment, regardless of size, eligible for online approval within days. This move, stemming from the mid-April 2024 Investment Summit, aims to abolish the existing cumbersome approval process. Previously, the Automatic Route was capped at Rs 500 million. The new regulation, soon to be published in the Nepal Gazette, is based on the Foreign Investment and Technology Transfer Act 2019 and is intended to position Nepal as a better investment destination, aligning with the current year’s budget goals for economic reform.

Birgunj Metropolitan Clears B.P. Area for Rs 700 Million Park Project

The Birgunj Metropolitan City has cleared the B.P. Udyan area near Ghantaghar Chowk, which was encroached upon by over 250 temporary vendors selling fruits, vegetables, and clothes. Mayor Rajesh Man Singh stated that the action, taken with the presence of police forces, aims to make the main city more organized. The Metropolitan City plans to advance a project to construct a beautiful and green park at the location, which is estimated to cost around Rs 700 million. Vendors displaced by the clearing have been provided with necessary structures on the Railway Road in Chhapakaiya.

Achham and Bajura Road Projects See Rs 184.9 Million Cost Variation Due to Delays

Four major road projects in Achham and Bajura districts, with an initial contract cost of Rs 987.6 million, have seen their cost balloon to over Rs 1.18 billion, an increase of Rs 184.9 million due to severe delays. Despite multiple extensions, construction companies like Bajraguru Construction and Anak Jayadevi JV have completed only 43% to 78% of the work on road sections like Jayagadh-Majhethana-Ramaroshan and Sera-Aatichaur-Thamlek since contracts were signed between the fiscal years 2018/19 and 2020/21. Chief Minister Kamal Bahadur Shah of Sudurpaschim Province has since committed to closely monitoring and completing 12 such long-delayed projects by mid-July, 2026.

Morang Rice Production Falls by 2,084 Metric Tons

Morang district, one of Nepal’s leading areas for rice production, saw a decrease of 2,084 metric tons in its rice output this year compared to last year. The total production was 336,919.41 metric tons, down from 339,003.45 metric tons last year. According to Deepa Dev, chief of the Agriculture Knowledge Center, Morang, the decline is attributed to unseasonal rain in the second week of Kartik, which damaged the ready-to-harvest crop. The yield per hectare also dropped from 4.88 metric tons last year to 4.85 metric tons this year. Farmers are also concerned about the drop in market price to between Rs 1,200 and Rs 1,300 per man, compared to Rs 1,700 to Rs 1,800 last year.

Jumla’s Endangered Lulu Cow Population Drops from 13,000 to 3,700

The population of the native Dwarf Lulu cow in Upper Mustang has drastically declined, dropping from approximately 13,000 a decade ago to just 3,700 today. Locals, like Migama Gurung and Puncho Gurung of Chhoser, Lo Manthang, are giving up on farming the cows, which traditionally provide milk, manure, and plowing power. This decline is attributed to increasing attraction to foreign employment, tourism, and farming higher-yielding Holstein-Jersey cows. The Agriculture and Livestock Development Office is implementing conservation programs with an allocation of Rs 1 million for Lulu cow conservation and Rs 1.2 million for local breed improvement in the current fiscal year but has struggled to stabilize the population.

Cottage and Small Industries Registrations Plunge from 2,929 to 737 in Morang

The economic slowdown and instability are causing small and micro-industries in Morang to shut down, severely impacting self-employment. Data from the Cottage and Small Industries Office, Morang, shows a massive decline in new industry registration, plummeting from 2,929 in the fiscal year 2020/21 to just 737 in the fiscal year 2024/25. No new micro-industries have been registered since the fiscal year 2019/20. Furthermore, 1,095 small, cottage, and micro-industries have formally closed in the last four years, with 448 closing in the last fiscal year alone. High bank interest rates, competition from cheaper Indian goods, and youth migration are cited as the main reasons for the industrial decline.

Melauli Water Project Fails Despite Rs 29.9 Million Budget

Approximately 425 households in Melauli Municipality-9, Bishalpur, are facing severe water scarcity after a drinking water plan continuously failed to be implemented, despite receiving Rs 29.9 million in budget over the past five years. The funds came repeatedly from both the federal and provincial governments, but every year the budget has either been frozen or spent only on DPR (Detailed Project Report). For instance, Rs 20 million arrived from the federal government in the fiscal year 2021/22 but was used only for DPR. The municipality has now sent a letter to the Drinking Water and Sanitation Division Office, Baitadi, requesting immediate implementation of the project to end the daily hardship faced by villagers.

Jumla Hosts Local Food Fair to Promote Organic Indigenous Crops

An Agricultural Biodiversity and Food Fair was organized in Jumla to promote the consumption and marketization of locally grown, organic indigenous crops. Farmers from Chandannath Municipality, Pataraasi Rural Municipality, and Tatopani Rural Municipality participated, exhibiting seeds and traditional dishes. The event, organized by Chandannath Municipality, the World Food Programme, and the Agriculture Development Office, aims to reverse the trend of selling indigenous produce cheaply and consuming market-bought, often adulterated, food. Since Jumla was declared Nepal’s first organic district in the fiscal year 2007/08, officials stressed the need for such fairs to encourage production despite challenges like decreasing cultivable land due to road expansion and youth migration.

Kailali Farmers Forced to Sell Paddy to Traders at Low Price

Farmers in Kailali are being forced to sell their coarse paddy to local traders for as low as Rs 23 per kilogram, significantly below the government-fixed purchase price of Rs 34.63 per kg. The Food Management and Trading Company stopped buying after meeting its drastically reduced quota for the region (35,000 quintals for Kailali this year, down from 55,000 last year). Farmers are worried about their stored paddy rotting and are resorting to quick sales to cover expenses. The Food Company met the national quota of 170,000 quintals quickly but is now buying rice from traders via tender, leading farmers to suspect collusion that forces them to sell low.

NT to Adopt Standalone 5G, Ending Infrastructure Partnership with Huawei

Nepal Telecom (NT) has decided to roll out its ultra-fast 5G network using the Standalone (SA) mode, an entirely independent deployment that does not rely on existing 4G infrastructure. This choice, based on an internal report, will utilize a new, cloud-native 5G Core. If this plan materializes, it would effectively end the long-standing infrastructure partnership with China’s Huawei and its contractors like ZTE, which built and currently support NT’s 3G and 4G networks. NT will now conduct an open competitive bidding process for the 5G technology, but geopolitical analysts have stressed the need to thoroughly review bidders to avoid national security risks. NT has requested 80 MHz of 5G spectrum free of cost from the regulator NTA.

NICCI and University of Nepal Partner to Bridge Academia-Industry Skills Gap

The Nepal-India Chamber of Commerce and Industry (NICCI) and the newly established University of Nepal signed a Memorandum of Understanding (MoU) on Friday to enhance practical skills, innovation, and entrepreneurship by bridging the gap between academia and industry. The partnership will focus on capacity building through joint training, workshops, and research projects across various sectors, including business, policy, technology, and energy. The MoU also aims to establish a structured internship program and explore employment pathways for students in NICCI member companies. The institution’s commitment to an industry-government-academia approach.

Construction of 18 Postal Highway Bridges Delayed Due to Budget Issues

The construction of 18 bridges on various sections of the Postal Highway under the Postal Road Project Office, Janakpurdham, has stalled, affecting local transport and economic activity. Despite the project office repeatedly sending detailed proposals for the bridges estimated to cost around Rs 30 million to the Ministry of Finance for the past three years, budget approval has not been secured. The lack of funding means that while 342.68 km of the road is already blacktopped, locals continue to face severe difficulties crossing swollen rivers during the rainy season. The office requires about Rs 1.5 billion for overall road and bridge completion in the current fiscal year but has only been allocated Rs 599 million.

Reliance Spinning Mills to Issue IPO Worth Rs 820.80 Per Share to General Public

Reliance Spinning Mills is opening its initial public offering (IPO) to the general public starting December 22. This follows a prior offering to Nepalis working abroad, who were allocated 115,596 units. The company will issue 924,768 units to the general public. Through the book-building method, the share price for the public has been set at Rs 820.80 per share. Investors can apply for a minimum of 50 units, requiring an investment of at least Rs 41,040. This marks the second time a company in Nepal has used the book-building method to determine its IPO price, the first being Shivam Cement.

HIDCL Declares 3.5% Dividend, Totalling Rs 491.1 Million in Payout

The Hydroelectricity Investment and Development Company (HIDCL) has announced a total dividend of 3.5% for its shareholders. The decision, made by the company’s Board of Directors, includes a 1.5% bonus share and a 2% cash dividend, amounting to a total payout of Rs 491.1 million. The company has set January 5, 2026, for its annual general meeting (AGM) and will close the book on December 23. Currently, the share price is around Rs 266 per unit.

Gold Hits Record High on Sunday, Breaking Two-Month Record

The price of gold reached an all-time high in the market on Sunday, breaking the previous record set two months ago. The Federation of Nepal Gold and Silver Dealers’ Association fixed the price of fine gold per tola (11.66 grams) at Rs 258,800, an increase of Rs 2,200 compared to the previous day’s closing price of Rs 256,600. The record surge is attributed partly to the delay in price adjustment during the Tihar holiday and the appreciation of the US dollar. Meanwhile, the price of silver dropped by Rs 80 to Rs 3,825 per tola, down from its all-time high of Rs 3,905.