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.

Audit Finds Rs 79.87 Billion in Irregular Tax Exemptions, Urges Investigation:
The Office of the Auditor General has revealed that Nepal failed to meet its revenue targets largely due to arbitrary tax and customs exemptions granted by various customs offices. In FY 2081/82 alone, tax waivers worth Rs 79.87 billion were provided, often in violation of technical standards and legal provisions. Notable irregularities include Rs 3.77 billion waived on electric vehicles, Rs 85.28 crore on equipment for Nepal Electricity Authority, and Rs 70.9 crore on replacement machinery. The report calls for a detailed investigation and recovery. However, like in previous years, accountability and enforcement remain weak, posing risks to state finances.

Nepal’s Commercial Banks Plan Branch Cuts Amid Digital Banking Surge:
Commercial banks in Nepal, which once competed to expand branch networks as a symbol of prestige, are now preparing to reduce branches due to the rapid growth of digital banking and changing customer behavior. Currently, 5,056 bank branches operate nationwide, but banks plan to cut around 400 branches to save over NPR 2 billion annually in operational costs. Nepal Rastra Bank data shows a significant rise in digital transactions, especially via mobile banking, which saw over 57 million transactions worth NPR 45.69 billion in 10 months of the current fiscal year—a large increase from last year. Other digital channels like e-wallets, debit/credit cards, and internet banking also show growing adoption. Banks argue branch cuts will balance cost efficiency with service quality as they seek regulatory approval for such moves in upcoming monetary policies. The focus now shifts to optimizing branch quality and accessibility after achieving widespread local coverage.

Nepali Funds in Swiss Banks Decline After 2022 Peak but Remain High, Experts Cite Illicit Flows and Capital Flight:
According to the Swiss National Bank’s “Annual Banking Statistics 2024,” Nepali-linked deposits in Swiss banks fell to 387.04 million Swiss francs (approx. Rs 65.69 billion) in 2024 from a peak of 482.54 million francs (Rs 81.92 billion) in 2022. Despite the decline, the amount remains substantially above pre-pandemic levels. Nepal ranks ahead of several South Asian neighbors in Swiss deposits, with funds believed to be largely held by wealthy and politically connected individuals. Analysts suspect trade-based money laundering and capital flight contribute significantly, especially through over-invoicing in imports. However, some funds may belong to lawfully earned NRN assets. The secrecy of Swiss banking obscures the true sources, and recent trends show a shift toward other offshore jurisdictions like Singapore and Dubai. Critics say Nepal lacks stringent enforcement against illicit outflows, allowing billions to leave unchecked.

NEA Drops IPO Plan, Moves Ahead with Rs 20 Billion Bond to Tackle Cash Crunch:
The Nepal Electricity Authority (NEA) has scrapped its Rs 60 billion IPO plan, citing lengthy legal procedures for government-owned entities. Instead, it will issue Rs 20 billion in private-placement green or power bonds. NEA, which earned a Rs 14.46 billion profit last fiscal year and holds assets worth Rs 644 billion, faces rising liabilities and a cash flow crisis. The bond move follows reduced government funding and delays in revenue collection. Despite a strong ‘AA+’ credit rating, NEA cites an urgent need for capital to complete key hydropower and transmission projects, while ruling out public bond offerings for now.

Nepal’s Exports Surge by Record 77.77% in FY 2024/25, Driven by Processed Oil Products:
Nepal’s export sector has seen a historic rebound, with a 77.77% increase in the first 11 months of FY 2024/25—the highest in five years—after two consecutive years of negative growth. Exports reached Rs 247.57 billion, led by soybean oil (Rs 93.5 billion) and sunflower oil (Rs 11.3 billion), mostly to India. Traditional goods like large cardamom, carpets, and tea also contributed. This turnaround reflects improved value addition through processing imported raw materials. However, Nepal still faces large trade deficits, especially with India, China, and the U.S., despite expanding exports to 164 countries. Experts stress the need to sustain domestic production.

Loan Growth Shows Improvement in Jestha, Construction Sector Leads:
Loan disbursement in Nepal showed signs of recovery in Jestha (mid-May to mid-June) of the current fiscal year. Despite a slowdown in recent months, commercial banks disbursed NPR 3.6 billion in loans during Jestha, raising total loans from NPR 4.911 trillion in Baishakh to NPR 4.947 trillion. Private sector loans increased by 7.3%, with the construction sector contributing the most at 12.3% growth. Since Ashad 2081 to Jestha 2082, banks have disbursed NPR 3.77 trillion in loans compared to previous years. Although growth remains modest, experts view the uptick as a positive signal for the banking system and economic recovery.

NEPSE Index Drops 26.47 Points, Pure Energy Leads with 31.75% Share Price Surge:
This week, the NEPSE index declined by 26.47 points, closing at 2628.91 from last week’s 2655.38. Among notable stock movements, Pure Energy Limited’s share price surged 31.75%, rising from NPR 824.70 to NPR 1086.52 per share, marking an increase of NPR 261.82. Panchakanya Mai Hydropower Limited followed with a 19.87% rise, closing at NPR 370.50 from NPR 309.08, a gain of NPR 61.42 per share. Union Hydropower Limited’s shares increased by 18.91%, moving from NPR 368.02 to NPR 437.63, up NPR 69.61 per share. Additionally, Butwal Power Company Limited’s share price rose by 13.46%, closing at NPR 867.81 from NPR 764.88, an increase of NPR 102.93 per share. Despite the index decline, these companies showed strong individual growth.

Conflicting Parliamentary Committee Directives Put Securities Board in a Tight Spot:
The Securities Board of Nepal (SEBON), which has recently taken an aggressive stance to reform, strengthen, and expand Nepal’s capital market, is now caught in a bind due to conflicting pressures from parliamentary committees. Amid growing concerns over financially weak companies issuing primary shares and burdening the public, SEBON has sought to introduce tighter controls to ensure transparency and market stability. However, two parliamentary committees—each influenced by vested interest groups—have issued contradictory directives on the same matter, undermining SEBON’s regulatory authority and creating confusion within the capital market reform process.

Nepal’s Foreign Trade Surges, Signaling Economic Revival Amid Rising Imports and Exports:
Nepal’s economy shows signs of recovery, with trade data from the first 11 months of FY 2024/25 indicating significant growth. Imports rose by 13% to Rs 1,644.8 billion, while exports surged nearly 78% to Rs 247.57 billion. The total trade volume jumped to over Rs 1,891 billion, up from Rs 1,593 billion last year. Officials link rising imports to increased investment and consumption, while export gains are partly driven by re-exports. Traditional exports like carpets and cardamom also remain strong. Improved customs procedures and border controls have aided trade growth. However, stakeholders stress the need to sustain exports to narrow the persistent trade deficit.

Nepal’s EV Imports Surge to Rs 31.55 Billion in FY 2024/25, Marking Record Growth:
Nepal imported 13,492 electric vehicles (EVs) worth Rs 31.55 billion in the first 11 months of FY 2024/25, up by over 2,000 units from the previous year. Customs revenue from EV imports reached Rs 19.57 billion. A record 3,633 EVs were imported in one month alone (mid-May to mid-June), as importers rushed ahead of the budget. China remained the leading source. Public transport EVs also saw sharp growth, with 3,132 units worth Rs 9.48 billion imported. Total vehicle and parts imports hit Rs 101 billion. Officials attribute the surge to rising demand and supportive government policies.

Nepal Insurance Authority to Introduce Annual Insurance Policy from Next Fiscal Year:
Nepal Insurance Authority Chair Sharad Ojha announced plans to introduce a comprehensive ‘Annual Insurance Policy’ for the entire insurance sector starting next fiscal year. The policy aims to promote legal reforms, improve service delivery, and enhance the sector’s credibility. The draft of the policy, discussed in a recent meeting with life, non-life, microinsurance, and reinsurance companies, will guide budgeting, implementation, and evaluation. Insurance companies have been asked to submit feedback by mid-July. Additionally, a report on insuring government properties and infrastructure is underway and will soon be presented to the government. The policy is expected to strengthen and expand insurance services nationwide.

Supreme Court Orders Removal of Tax on Sanitary Pads, Marking Victory for Menstrual Equity:
After nearly four years of legal proceedings, Nepal’s Supreme Court has ruled to remove taxes on sanitary pads, declaring them essential goods. The verdict came in response to a 2021 writ petition filed by law students Shreena Nepal and Abhyuday Bhetwal. The decision is expected to reduce prices by 18%, easing access to menstrual products and promoting local production. Currently, imported pads are taxed at 18%. Women’s rights activists hailed the ruling as a major step toward menstrual equity. Nepal now joins countries like India, Scotland, and Colombia in eliminating taxes on menstrual hygiene products to combat period poverty.

Nepal-Bangladesh Tourism Meet Highlights Shared Heritage and Boosts Bilateral Travel Ties:
The Embassy of Nepal in Bangladesh and Nepal Tourism Board jointly hosted the ‘Nepal-Bangladesh Tourism Meet’ in Dhaka, promoting Nepal as the “Land of Lifetime Experiences.” Ambassador Ghanshyam Bhandari emphasized Nepal’s growing popularity among Bangladeshi travelers and called for stronger B2B tourism ties. NTB’s Rohini Prasad Khanal showcased Nepal’s diverse tourism offerings, while Bangladeshi officials urged the creation of joint tourism packages. The event featured B2B networking, cultural performances, and a raffle draw with travel prizes. Over 150 participants, including officials, travel agents, and hoteliers from both nations, attended the event aimed at deepening bilateral tourism cooperation.

Kaligandaki Corridor Remains Closed Due to Ongoing Landslides, One-Way Traffic Resumes on Ridi-Bamitaksar Section:
The Kaligandaki Corridor remains completely closed for a second day due to persistent dry landslides in Harmichaur-Arbeni, Kaligandaki Rural Municipality-1. The landslides have severely disrupted road traffic, prompting authorities to advise travelers to use alternative routes for safety, according to Ganga Bahadur Saru of the District Police Office. Meanwhile, the Ridi-Bamitaksar road section, which was also blocked, has resumed one-way traffic. Police confirmed that partial clearance of the landslide in Sisnebhir, Chandrakot Rural Municipality-7, has allowed limited vehicle movement. Authorities are monitoring the situation as landslides continue to pose risks in the region.

Nepal-France Bilateral Consultation Highlights Stronger Ties, Future Cooperation:
The fifth Nepal-France Bilateral Consultation Mechanism (BCM) meeting was held in Kathmandu on 19 June, reinforcing growing ties between the two nations. Marking the 75th anniversary of the first Annapurna ascent, the meeting reviewed ongoing collaboration and explored new areas of cooperation. Delegates discussed economic partnership, science, technology, education, climate action, and cultural exchange. Both sides expressed interest in enhancing collaboration in renewable energy and disaster risk reduction. The Nepali team was led by Joint Secretary Ganesh Prasad Dhakal, while the French delegation was headed by Benoît Guidée. The sixth BCM meeting will be held in Paris at a later date.