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:

NEPSE Drops by 12.36 Points on Thursday; Turnover Rises to Rs 3.89 Billion

The Nepal Stock Exchange (NEPSE) index experienced a double-digit decline on Thursday, the fourth trading day of the week, even as overall transaction volumes registered an increase. The benchmark index shed 12.36 points (0.44%) to close at 2,742.11 points, reversing the gains from Wednesday when the market had bounced back by 30.08 points. This downturn follows previous drops earlier in the week, where the index fell by 6.51 points on Tuesday and 1.03 points on Monday. Along with the main index, the Sensitive Index slipped by 1.57 points (0.33%) to settle at 469.48 points, while the Float Index and Sensitive Float Index fell by 0.46% and 0.35% respectively.

SC Shuts Door on Promoters Contesting BFI Board Elections via Public Quota

The Supreme Court has ruled that shareholders holding both promoter and public shares in banks and financial institutions (BFIs) cannot contest board elections under the public category. A division bench of Justices Kumar Regmi and Bal Krishna Dhakal dismissed a writ petition filed by Citizens Bank International shareholder Ratneshwar Prasad Sharma, upholding the central bank’s regulatory authority. Sharma had moved the apex court after the bank’s election committee disqualified his candidacy for a public director seat because he also owned promoter shares. The legal dispute had stalled the bank’s scheduled board elections last November following an initial interim stay order.

Federal Government Moves to Reduce Fiscal Equalization Grants

The federal government has moved ahead with instructions to cut fiscal equalization grants to subnational governments. The Ministry of Finance, through the Office of the Financial Comptroller General, has sent fresh directives to Treasury and Accounts offices instructing that only 21.02 percent of the 25 percent allocation for the fourth quarterly installment be transferred to lower tiers of government. This comes despite earlier objections from the National Natural Resources and Fiscal Commission, which had urged the government not to reduce the grants already set in the budget passed by Parliament. For the current fiscal year, the federal government had announced a total of Rs 149.628 billion in fiscal equalization grants to be transferred to subnational governments.

Only 293 New Projects Included in Nepal’s Project Bank for Next Fiscal Year

Only 293 new projects have been included in Nepal’s Project Bank for the upcoming fiscal year, compared to just 126 projects last year. New projects must meet eight mandatory criteria before being entered into the bank. These include an environmental impact assessment, total cost estimate, detailed project report, land acquisition status, procurement plan, implementation plan, results framework, and evaluation plan. Apart from the new projects, the Project Bank also contains 87 ongoing projects and around 5,000 projects listed for study purposes. Last year, about 4,200 projects were included under the study category.

Finance Secretary Says Upcoming Budget Will Focus on Attracting Private Investment

Finance Secretary Ghanshyam Upadhyaya has said the upcoming fiscal budget will be designed to attract private sector investment. Speaking at a meeting of the House of Representatives’ Finance Committee on Thursday, he said productivity growth cannot be achieved through government spending alone and stressed that the budget would act as a “catalyst” for private investment. According to him, every unit of government spending should help “crowd in” private investment and contribute to production growth and job creation.

Finance Ministry Guarantees Rs 54.5 Billion for 21 Infrastructure Projects

 The Ministry of Finance has approved an uRsecedented resource assurance worth Rs 54.5 billion to complete 21 major multi-year infrastructure projects across the country. In a ministerial-level decision chaired by Finance Minister Dr. Swarnim Wagle, the government fulfilled nearly the entire budget requested by these projects, a significant departure from past practices where only about 10 percent of such funding requests were cleared. Following this guarantee, line ministries must initiate the procurement process and publish contract tenders within the next two months, before the fiscal year ends in mid-July.

Experts Urge Government to Cut VAT and Reform Tax System to Revive Economy

Experts participating in discussions on the upcoming budget at the House Finance Committee have urged the government to reduce the Value Added Tax (VAT) rate from 13 percent, raise the personal income tax exemption threshold, and introduce structural reforms in taxation and debt management to stimulate the economy. They argued that market demand has weakened, the cost of living for the middle class has increased, and the business environment has become less industry-friendly, making reforms to the tax structure and fiscal federalism essential in the upcoming budget.

FATF/APG Team Urges Nepal to Speed Up Reforms to Exit Grey List

Nepal’s efforts to strengthen its anti-money laundering framework have received mixed feedback after an international assessment team reviewed ongoing reforms linked to its grey list exit plan. According to officials, the Asia-Pacific Group (APG) under the Financial Action Task Force (FATF) has completed its field visits in Nepal and returned after holding extensive discussions with concerned authorities. The team examined Nepal’s progress in key areas such as financial crime investigation, prosecution, and recovery of illicit assets, along with broader regulatory enforcement measures related to financial crimes. However, the team did not make any formal comment on whether Nepal would remain on or be removed from the grey list.

Nepal’s Tax System Still Puts Heavy Burden on Limited Formal Sector

Although Nepal’s social security system has expanded, it still does not fully cover the private and informal sector. The tax base remains small, and the burden is concentrated in a limited formal sector. Experts say this has created a perception that “honest taxpayers are being penalized.” According to the Inland Revenue Department, in fiscal year 2024/25, around 11,000 taxpayers paid tax at a rate of 30 percent or more, generating around Rs 10 billion in revenue. Experts say that despite high tax payments, limited state benefits discourage compliance and increase the risk of tax evasion.

Government Says Magnesium Glycinate Supplements Not Approved for Sale in Nepal

The government has clarified that no dietary supplement products containing magnesium glycinate have been approved for sale or distribution in Nepal. Issuing a public notice, the Department of Food Technology and Quality Control said it had taken serious note of misleading advertisements related to magnesium glycinate circulating on social media platforms. According to the department, the Food Hygiene and Quality Act 2024 and the Dietary Supplement Food Regulation Procedure 2015 require all food, health, nutritional, dietary supplement, nutraceutical, or probiotic products to be registered with the department before they can be sold or distributed in the market.

Government Begins Appointment Process for Electricity Regulatory Commission Leadership

The government has initiated the appointment process for the vacant chairperson and four members of the Electricity Regulatory Commission. A recommendation committee formed by the Ministry of Energy, Water Resources and Irrigation issued a public notice on Thursday inviting applications for the vacant positions. Interested candidates can apply by June 4 during office hours. The commission will consist of one chairperson and four members, including at least one woman.

Long-Term Solution Needed as Nepal Tea Exports Face Indian Restrictions

Stakeholders have said that a long-term solution is necessary for tea exports. Since May 1, India has tightened restrictions on Nepali tea exports, halting shipments. Although Indian authorities have now informed that exports have been temporarily eased, stakeholders believe this is not a long-term solution. Due to India’s restrictions, tea exports were halted for 19 days. Exports have now resumed after relaxation from the Indian side, but producers believe the impact will be felt throughout the year.

Government and Private Sector Expanding Data Centers Under Digital Nepal Initiative

Both government and private sectors are investing in data centers in Nepal. The government is also moving forward with a policy of shifting services online under the “Digital Nepal” campaign. Data management is being handled through the National Information Technology Center, and plans are underway to expand a government cloud system. The Government of Nepal operates an integrated data management center inside Singha Durbar. This data center handles domain registration of government agencies, website hosting, IT infrastructure support required for electronic services, operation and management of Singha Durbar network infrastructure, and government data backup.

Large Volume of Fertilizer Imports Likely to Remain Unfulfilled Under Contracts

Under agreements for fertilizer procurement from the current fiscal year budget, out of 185,000 metric tons contracted for purchase, 112,650 metric tons from the Agriculture Materials Company (50,000 metric tons of urea and 62,650 metric tons of DAP) are unlikely to arrive. Similarly, 29,900 metric tons contracted under source assurance from the upcoming fiscal year budget through the Agriculture Materials Company are also unlikely to arrive. In addition, 42,450 metric tons of urea under Salt Trading Corporation are also in a state where they are unlikely to arrive.

Auditor General Report Raises Concerns Over Weak Financial Discipline in Local Levels

The 63rd annual report of the Office of the Auditor General has again raised questions over financial transparency and accountability in metropolitan and sub-metropolitan cities. According to the report for fiscal year 2024/25, submitted last week by Auditor General Toyam Raya to President Ramchandra Paudel, financial discipline in major cities has again been found weak. Due to documents being destroyed during the Gen Z movement on September 8 and 9, 2025, two metropolitan cities along with 31 local governments did not conduct audits. According to the report, Bharatpur Metropolitan City and Birgunj Metropolitan City did not complete audits, stating that documents were destroyed during the protest.

Sudurpashchim to Launch Project Bank System from Fiscal Year 2026/27

The Sudurpashchim Province government has announced that it will implement a project bank system starting from fiscal year 2026/27. The government will bring the system into operation by running a project bank management information system (software). The Provincial Policy and Planning Commission said the software is being introduced to prevent duplication of projects, enable online entry, make the system paperless, and provide cloud-based storage facilities. Major provincial projects will be included in the project bank and the same projects will be incorporated into budget allocation in upcoming fiscal years.

Bagmati and Gandaki Provinces Project Higher Growth Than National GDP Estimate

The overall national GDP growth estimate is expected to be lower than the economic growth of two provinces. According to the National Statistics Office, in the provincial GDP estimate for fiscal year 2025/26, Bagmati and Gandaki provinces are expected to record higher growth than the national estimate of 3.85 percent. At constant prices, Bagmati Province is projected to record the highest annual growth rate of 5.40 percent, while Gandaki Province is expected to grow by 5.01 percent.

Madhesh Records Lowest Provincial Economic Growth at 1.31 Percent

Madhesh Province is projected to record the lowest economic growth rate among all provinces in the current fiscal year 2025/26, according to new estimates. The National Statistics Office, in its provincial GDP projection released on Wednesday, estimated Madhesh Province’s economic growth at just 1.31 percent, indicating a slowdown in its economic activity. The national economic growth rate for the same fiscal year is projected at 3.85 percent, placing Madhesh significantly below the country’s average among the seven provinces. In contrast, Madhesh Province had recorded a growth rate of 4.43 percent in the previous fiscal year 2024/25.

Uber Informally Launches Ride-Sharing Service in Kathmandu Valley

American ride-hailing platform Uber has informally launched its services in Nepal. The company began a “test launch” of its ride-sharing service in the Kathmandu Valley on Wednesday. Passengers can now book rides to various destinations across the valley through the Uber app. Over the past few days, the company had intensified registration of bike riders, car owners, taxi drivers, and passengers ahead of the launch. To strengthen its operations in Nepal, Uber has entered into a strategic partnership with local ride-hailing company TaxiMandu.

‘LS Horizon 12’ Scheme Sees Strong Investor Demand, Applications Closed Early

Investor interest has surged in the ‘LS Horizon 12’ scheme managed by Laxmi Sunrise Capital Limited, leading to the early closure of its unit sale application process. Due to applications exceeding demand, the company said the subscription was closed ahead of the scheduled deadline. The closed-end collective investment scheme is promoted by Laxmi Sunrise Bank Limited and managed by Laxmi Sunrise Capital Limited. The public issuance for 12 million units opened on May 13.

Gold Price Rises to Rs 293,800 per Tola in Nepali Market

Gold and silver prices increased in the Nepali market on Thursday. According to the Nepal Gold and Silver Dealers Federation, gold is being traded at Rs 293,800 per tola (11.66 grams). On Wednesday, gold was traded at Rs 292,000 per tola, meaning the price increased by Rs 1,800 per tola on Thursday. On this day, silver is being traded at Rs 5,050 per tola.