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:

NRB Faces Growing Liquidity Burden, Deposits Outpace Lending

The Nepal Rastra Bank (NRB) and banks are facing mounting pressure from surplus liquidity as deposits continue to rise while credit demand remains weak. NRB data show total deposits have reached Rs 8.017 trillion, compared to loans of Rs 5.915 trillion, bringing the average credit-to-deposit ratio down to 73.10 percent, well below the regulatory ceiling. Bankers say sluggish economic activity, weak real estate and stock markets, and limited investment opportunities have left large amounts of money idle. To absorb excess liquidity, the NRB has been paying interest to banks, with related costs expected to exceed last year’s Rs 10 billion. Experts warn that without major infrastructure projects and alternative investment instruments, credit demand will remain subdued, constraining economic growth.

Nepal and India Evaluate Cross-Border Broad-Gauge Rail Interconnections

The 10th Project Steering Committee and the 8th Joint Working Group concluded a two-day bilateral diplomatic summit in Kathmandu to accelerate cross-border railway infrastructure networks between Nepal and India. Technical delegations from both nations reviewed engineering progress charts for the ongoing Jayanagar-Bijalpura-Bardibas and Jogbani-Biratnagar broad-gauge rail corridors funded through direct Government of India grant resources. The joint transport panel finalized initial operational workflows for a new passenger rail system on the Janakpur-Ayodhya line while evaluating the final location survey reports for the planned Raxaul-Kathmandu broad-gauge link to expand future technical logistics.

New Directives Set Minimum Support Prices Before Planting Cycles

The Ministry of Agriculture, Forest, and Environment issued the Minimum Support Price and Minimum Purchase Price Determination Directives 2026 to legalize the implementation of mandatory price floors before seasonal crop planting cycles begin. Approved via a ministerial decision on April 29, 2025, and officially logged at the Ministry of Law, Justice, and Parliamentary Affairs, the structural reform package locked the 2026/27 summer paddy support levels at Rs 3,660 per quintal for coarse rice and Rs 3,860 per quintal for medium variants. The ministry is also advancing a cabinet proposal due before March 14, 2027, to implement a historic first floor price for spring maize.

World Bank Approves $57 Million to Fight Air Pollution

The World Bank finalized a landmark clean air framework by approving a USD 52 million concessional loan alongside a USD 5 million grant to activate the Rs 8.71 billion Nepal Clean Air and Prosperity Project (NCAP) for the 2026/27 fiscal year. Managed by the Department of Environment and the Department of Industry, the five-year green transition strategy will target the reduction of toxic PM-2.5 fine particulate matter, which currently hovers eight to nine times above international baselines across the Kathmandu Valley and the Terai belt. The funding framework will directly convert fossil-fuel boilers across 300 factories by issuing a 20 percent capital expenditure subsidy for electric furnaces, a 10 percent subsidy for biomass conversions, and coordinating 15-year long-term credit facilities to mobilize USD 30 million in concessional capital alongside USD 18 million in private investment. This environmental deployment will scale up national air quality monitoring networks by upgrading 4 reference stations into advanced air data supersites, targeting an annual reduction of 500 metric tons of PM-2.5 emissions and 110,000 tons of greenhouse gases to benefit 400 industries, 60,000 workers, and 18 million citizens across Nepal.

Government Targets 5,335 MW Power Capacity

The government has set a target of raising the country’s installed electricity capacity to 5,335 MW in the next fiscal year by adding 1,040 MW of hydropower generation. Under the annual development program, the Ministry of Energy, Water Resources and Irrigation plans to accelerate ongoing hydropower projects, expand transmission infrastructure, and support private-sector investment. The government aims to extend 66 kV transmission lines to 7,808 circuit kilometers and 33 kV lines to 8,429 circuit kilometers. The program also targets per capita electricity consumption of 511 kWh, an additional 43 MW from micro-hydro projects, 99 MW from solar energy, and irrigation expansion to 15,776 hectares. Officials say completion of 12 major transmission line projects will strengthen power distribution, industrial growth, and regional development.

New Income Tax Rules Hit Local Staff at Foreign Embassies

The government introduced mandatory income tax regulations for local citizens employed inside foreign embassies and international bodies through Section 47 of the newly tabled Financial Bill 2026. Under the updated fiscal policy, domestic staff working within United Nations offices or international missions who do not enjoy tax immunity under the Vienna Convention must register for a Permanent Account Number (PAN) to submit missing income statements spanning fiscal years 2022/23 through 2025/26. To regularize past omissions, individuals who clear their principal tax liabilities plus an additional 1 percent fee before December 15 will receive full waivers on all accumulated interest penalties and legal fines.

Volatile Fuel and Tar Markets Stall 70% of Sudurpaschim Roads

Spiraling global market prices for bitumen, diesel, and basic construction materials halted approximately 70 percent of active road-paving contracts under the Mahendranagar Road Division Office in Sudurpaschim Province. Because initial procurement documents lacked flexible price adjustment clauses, capital expenditure targets for the 2025/26 fiscal calendar crashed, stalling the 31.06-kilometer periodic maintenance tract along the Attariya-Sahajpur road segment. The supply bottleneck completely blocked asphalt operations across nine separate road lines under the Alternative Assistant Highway Development Program in Kailali and Kanchanpur, leaving only partial emergency patching works active along the main Chisapani-Gaddachauki arterial grid.

Local Unit of Myagdi Starts Cash Subsidies for Newborn Girls

The Annapurna Rural Municipality, Myagdi District, launched the Daughter Born Incentives Program to advance gender equality, safeguard childhood health, and eliminate illegal prenatal sex-selection practices within local communities. Operating under the strict legal parameters of the Daughter Born Incentive Program Implementation Procedure 2026, municipal administrators deployed an initial budget of Rs 500,000 for the current 2025/26 fiscal window. The local governance text clarifies that parents or legal guardians of female infants born after July 17, 2025, must submit verified registration applications by June 21 to collect a flat structural cash grant of Rs 12,000 per newborn child.

Rs 97 Million Dialysis Equipment Rots Across the Country

Dialysis equipment worth tens of millions of rupees continues to rot inside hospital storerooms across Nepal due to budget deficits and severe structural constraints. Under a government coordination program, the Rotary Club of Dhulikhel supplied six medical dialysis systems worth Rs 12 million to the Sahid Smriti Hospital in Bardaghat Municipality-14 during the 2024/25 fiscal cycle. Similarly, five advanced units valued at Rs 85 million gifted to Sunwal Municipality by a Butwal-based cardiac care facility remain entirely unutilized while local kidney patients travel out of the zone to seek active therapy from the overcrowded five-machine facility at Prithvichandra District Hospital in Ramgram.

Traffic Fines Deposit Over Rs 1.7 Million in 24 Hours

The Kathmandu Valley Traffic Police Office registered a net cash deposit of more than Rs 1.7 million into the federal treasury after penalizing 2,598 motorists for road safety violations during a 24-hour regional transit sweep. Highway patrol documents show traffic units booked 199 drivers for operating under the influence of alcohol, 167 for illegal ride-sharing operations, 120 for signal light non-compliance, and 168 for driving beyond designated speed parameters. Additionally, field officers disciplined 120 drivers for lane breaches, 126 for illegal horn deployment, 156 for sidewalk parking, and 186 for driving down one-way streets.

Mohan Kumar Dangi Named President of IPPAN

Mohan Kumar Dangi automatically stepped into the executive office of president at the Independent Power Producers’ Association, Nepal (IPPAN) in compliance with Sub-section 12 of Article 15 of the organization’s revised internal constitution. The 24th Annual General Meeting finalized the regional leadership roster, electing Uttam Blon Lama unopposed as Senior Vice President following the formal withdrawal of competing candidate Balram Khatiwada. Additional uncontested leadership slots went to General Secretary Teknath Acharya, Deputy General Secretary Kabita Pokharel, and a 5-member secretary unit, while Shankar Basyal secured the treasurer post following a 267 to 82 ballot victory against Mithun Prasad Paudel.