Nepal News Evening Economic Brief – April 29, 2025

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.

NEPSE Slips Over 15 Points Amid Broad-Based Sector Losses: The Nepal Stock Exchange (NEPSE) index recorded a double-digit decline on Tuesday, reflecting widespread losses across almost all sectors. The benchmark NEPSE index fell by 15.08 points, closing at 2,631.98, marking a 0.57% drop from the previous session. Most trading groups ended in the red, with only the Mutual Fund sub-index managing a marginal gain of 0.07%.

The biggest sectoral drag came from the Finance group, which dipped 1.22%, followed by Development Banks at 0.90%, and the Investment group, which lost 0.83%. Other decliners included Banking (0.57%), Life Insurance (0.54%), Microfinance (0.78%), Manufacturing & Processing (0.34%), Non-life Insurance (0.32%), Hotels & Tourism (0.20%), Trading (0.51%), and the Others category (0.75%).

Loan Against Shares Grows Even as Credit in Other Sectors Shrinks: While credit expansion in other sectors is shrinking, lending against shares remains encouraging. Compared to the end of the previous fiscal year, total credit growth until the end of Falgun of the current fiscal year has only been 6 percent. However, credit against shares has grown by 31.5 percent, according to Nepal Rastra Bank data.

Generally, loans against shares are mobilized within the market itself. However, despite the rise in share-based lending, the stock market has not grown. On the 31st of Shrawan, the NEPSE index had reached 3,000 points, with share-secured loans at Rs 91.44 billion. By the end of Falgun, share-secured loans had risen to Rs 118.5 billion, but the NEPSE index had fallen to 2,736 points.

Procurement Rules Amended Again to Ease Project Deadline Extensions for Contractors: The government has again amended the Public Procurement Regulations to make it easier to extend project deadlines for contractors. This is the 14th amendment in just 14 months. The amendment is intended to facilitate even projects with minimal progress. Now, the project deadlines will be extended based on the nature of the work.

If work cannot be completed within the initially agreed deadline, the contractor must explain the reasons for the delay, according to the regulations. For expired contracts or contracts where extension requests have not yet been approved, the suppliers, contractors, consultants, or service providers must disclose the specific work elements delayed and the causes. An application for deadline extension must be submitted to the relevant public entity within 30 days of the regulations being published in the gazette.

House of Representatives Passes Customs Bill: The House of Representatives on Tuesday passed the Customs Bill, 2081 (2024 AD), moving one step closer to its formal enactment. Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel tabled the motion to approve the bill, which was endorsed without amendment.

The bill now heads to the National Assembly for further deliberation. Upon approval by the upper house, it will return to the House of Representatives for final endorsement and then be sent to the President for authentication. Once ratified, it will come into force as an Act of Parliament.

NEA Prepares White Paper on Current Challenges: Hitendra Dev Shakya, Executive Director of Nepal Electricity Authority (NEA), has prepared a white paper analyzing the current situation and challenges. He had planned to make the white paper public on Tuesday. However, according to Shakya’s secretariat, the program has been postponed until further notice.

The white paper shows NEA’s accumulated profit at Rs 46.47 billion. Former Executive Director Kulman Ghising had earlier noted that until the fiscal year 2072/73, NEA had an accumulated loss of about Rs 35 billion. Ghising had claimed that since 2073/74, the authority had turned profitable and recovered its losses, reaching nearly Rs 47 billion in accumulated profit by fiscal year 2080/81 (2023/24).

Government Shortens Chemical Fertilizer Procurement Process: The government has amended the Public Procurement Regulations to shorten the timeline for purchasing chemical fertilizers.

By revising sub-rule 5 of Rule 31(j), it has allowed procurement with just a 7-day notice period.

According to the amendment, “In the case of chemical fertilizer purchases, the location, date, and time for opening financial proposals must be specified, and a minimum notice period of 7 days must be given for national or international bids.”

Moreover, the regulations specify that bids related to chemical fertilizer will remain valid for 30 days from the date of opening the technical proposals submitted by the bidders.

Private Sector Suggests Key Budget Priorities to Nepalese Congress: As the government enters the final stages of drafting the budget for the upcoming fiscal year 2082/83, representative institutions from the private sector have presented suggestions to the ruling Nepali Congress regarding budget inclusions. The Industry Department of the Nepali Congress held a budget interaction program in the capital on Monday, where they discussed the importance of policy stability, boosting industrial confidence, and other key recommendations.

During the program, Chandra Prasad Dhakal, the President of FNNCI, recommended focusing on the expansion of an open economy with social justice and structural changes for new economic reforms. He also emphasized the inclusion of private sector promotion, good governance, revenue mobilization, and efficiency in public spending in the upcoming budget.

NRB to Invest Rs 3.84 billion in Fixed Deposits of Banks and Financial Institutions: Nepal Rastra Bank has announced plans to invest Rs 3.84 billion in fixed deposits of commercial banks, development banks, and finance companies. The amount will come from the Pension Fund and the Provident Fund. The bank will invest Rs 3.07 billion in commercial banks, Rs 576.5 million in development banks, and Rs 192.1 million in finance companies.

The fixed deposit will be held for a 366-day period, from May 17, 2025, to May 17, 2026. Banks and financial institutions interested in participating must submit their interest rate proposals by Tuesday, as per the notice issued by Nepal Rastra Bank.

Government Approves Amendments to Civil Aviation and Air Service Authority Bills: The government has approved amendments to the Civil Aviation Authority Bill and the Air Service Authority Bill in the House of Representatives. The amendments aim to separate the regulatory and service-providing roles within Nepal’s aviation sector.

The bills were approved during meetings of the House on Sunday and Monday. The MPs will now be given 72 hours to propose amendments to the bills. These amendments come after the government’s second attempt to introduce the bills, following their prior registration in February 2023.

The bills were previously introduced in the upper house of Parliament in 2020 but were rendered inactive after the dissolution of the House.

Ministry of Industry, Commerce, and Supplies to Prepare Budget of Rs 8.25 billion for the Coming Fiscal Year: The Ministry of Industry, Commerce, and Supplies is preparing a budget and program within the ceiling of Rs 8.25 billion for the upcoming fiscal year. The National Planning Commission has set this ceiling for the ministry. Humkala Pandey, the Under Secretary of the Ministry’s Plan Monitoring and Evaluation Section, confirmed that the process of budget preparation is underway.

Pandey stated, “While the budget ceiling for the upcoming fiscal year is not particularly large, we are preparing a balanced budget with a continuation of existing programs and a few new initiatives.”

Hire Purchase Companies Now Allowed to Lend Only Up to 60% for All Types of Vehicle Purchases: Hire purchase companies can now provide loans for only up to 60% of the value of both fuel-powered and electric vehicles—whether private or public. This provision, initially enforced through the mid-term review of the monetary policy issued by Nepal Rastra Bank (NRB) on Falgun 13, has already been implemented for banks and financial institutions within a week of its announcement.

However, two months after the review, NRB has now extended the same provision to hire purchase lending companies as well. Through the fifth amendment to the “Policy and Procedural Arrangements for Approving Hire Purchase Loan Companies, 2070 BS,” NRB has enforced this rule. The directive states: “When providing loans for vehicle purchases, hire purchase companies must ensure that the loan-to-value ratio does not exceed 60%.” This rule will apply to all types of electric vehicles for all purposes and private vehicles for personal use.

Capital Expenditure of Sudurpaschim Provincial Government Extremely Low in First 8 Months: The Sudurpaschim Province government has recorded a very low capital expenditure during the first eight months of the current fiscal year. The total budget expenditure has remained limited to only 30% so far. Despite presenting the budget for fiscal year 2081/82 (2024/25), the provincial government has only managed to spend 30% of the allocated budget in the past eight months.

The government had prioritized programs related to agriculture, health, tourism, infrastructure development, education, and self-employment in its budget allocation. Out of the total allocated budget of NPR 31.66 billion, only NPR 9.41 billion has been spent during this period, according to Basudev Joshi, the head of the Provincial Treasury Control Office. The Ministry of Physical Infrastructure Development has spent the most, while the Ministry of Internal Affairs and Law has spent the least.

Pharmaceutical Industry Worth One Billion Rupees to Open in Morang: A new pharmaceutical industry with a total investment of Rs 1 billion is set to open in Budhiganga-2 of Morang district. The company behind the venture, Alexa Life Science Pvt. Ltd., aims to establish a high-quality, internationally standardized pharmaceutical production facility. According to the company’s chairman, Dinesh Kumar Swarnkar, Rs 750 million has already been invested in the project, and the construction will be completed with an additional investment of Rs 250 million.

In its first phase, the industry will produce saline water, considered an essential medical product. In the second phase, it plans to manufacture SVP (Small Volume Parenterals) glass ampoules ranging from 1ml to 20ml injections. The third phase will focus on producing eye and ear drops.

Pathibhara Cable Car Company Calls for Dialogue Amidst Protests: The Pathibhara Devi Cable Car Company, which is constructing a cable car system in Taplejung, has called for dialogue with protesting local parties. In a press release issued on Monday, the company emphasized its commitment to respecting local demands and concerns. It also expressed readiness to assist in promoting the region’s religious, cultural, and social heritage.

Last week, local organizations held a press conference in Kathmandu, urging dialogue to address concerns and create a positive environment for the project’s development. The company has expressed its willingness to engage in constructive discussions with all stakeholders.

Lumbini’s Modern Electric Vehicles Rusting Away Due to Misuse and Legal Issues: The modern electric vehicles brought in by the Lumbini Development Trust to improve tourist services have deteriorated due to legal complications and unauthorized use, causing losses to state property.

On Baishakh 13, an electric van with registration number Lu1Jha 696 met with an accident inside the Lumbini village area, damaging its front section.

Earlier, on Chaitra 23, 2080, locals reported unauthorized use of the same van, which was being operated without any Trust officials or employees inside. Rajan Basnet, an employee of the Trust’s Information Section, confirmed that the van had previously met with an accident on Shrawan 19, 2080 due to unauthorized use. Technical evaluations indicate that repairing the van would cost around Rs 2.8 million.

Deposit Share in Fixed-Term Accounts Declining: The proportion of deposits in fixed-term accounts at banks and financial institutions has been continuously declining, according to recent statistics. As of the month of Falgun 2081, banks and financial institutions have collected a total of NPR 6.768 trillion in deposits. Of this, 57.15% is in the form of fixed deposits, amounting to approximately NPR 3.869 trillion. In Shrawan 2080, the share of fixed deposits was 61.3%, but by Falgun 2081, it had decreased to 51.7%.

During this period, the share of fixed deposits has decreased by 9.6 percentage points. This decline is attributed to banks lowering the interest rates on fixed-term deposits. In recent months, banks have been reducing interest rates on fixed deposits to cut costs. The interest rate on fixed deposits at many banks is now lower than that on regular savings accounts. Several banks have also lowered the interest rates on short-term fixed deposits, effective from Baisakh 1.

Government Provides Extension for Contractors Failing to Complete Infrastructure Projects on Time: The government has provided an extension for contractors who have delayed the completion of infrastructure projects under their responsibility. This extension is being offered through an amendment to the Public Procurement Regulations for the 14th time. The amended regulations allow contractors to apply for an extension of the project timeline if the project is incomplete within the stipulated time frame, but the contract term has ended or an extension cannot be granted.

Contractors must submit their request for an extension within 30 days of the new regulations coming into effect. The extension will be based on the remaining time required to complete the work, as per the revised regulations. The provision for an extension is expected to provide relief to contractors who have not been paid for the work completed. Ravi Singh, President of the Federation of Nepalese Construction Entrepreneurs, stated that they expect more than NPR 10 billion in payments from government bodies due to the contract term extensions.

Damages Claimed for Destruction during Royalist Protest: During a royalist demonstration on 15th Chait, destruction and arson led to claims of damages amounting to around NPR 470 million. The damage occurred to government and private vehicles, buildings, and other physical infrastructure. A police report revealed that the total cost of the damages, including the destruction of 56 homes, institutions, and offices, amounts to NPR 460 million.

As of last week, insurance claims of approximately NPR 40 million have been made for the damages. However, over NPR 420 million worth of damages do not have insurance coverage. It remains uncertain who will bear the responsibility for these losses. The police reported that the destruction during the protest included 15 private homes, 37 private institutions (including two media houses, a supermarket, two hospitals, four banks, two cooperatives, 20 businesses, a school, two party offices, and three government offices), one industry, two police offices, and a traffic island.

Preparations for “Sagarmatha Dialogue 2025” on Climate Change Nearing Completion: The government has announced that preparations for the Sagarmatha Dialogue 2025, aimed at drawing international attention to the impacts of climate change in the Himalayan region, are in the final stages. The three-day event will be held in Kathmandu on the 2nd, 3rd, and 4th of Jestha). The central theme of the dialogue will be “Climate Change, the Himalayas, and the Future of Humanity.”

During the event, there will be 12 sessions covering five topics related to climate change, along with three plenary programs. Lok Bahadur Poudel Chhetri, the Joint Secretary at the Ministry of Foreign Affairs and a member of the Sagarmatha Dialogue Secretariat, shared that 300 international guests have already been invited to participate. He mentioned, “Many preparation phases have already been completed, but significant work remains. We have already extended invitations to numerous guests, and while some have accepted, the process of confirming participants continues.”

NMB Bank to Issue Nepal’s First Green Bond Worth 60 million USD: NMB Bank has announced the issuance of Nepal’s first green bond, valued at 60 million USD. This bond will be issued in partnership with international organizations such as the International Finance Corporation (IFC), British International Investment (BII), and MetLife. The primary objective of this bond is to expand investments in climate projects, which are expected to create both direct and indirect quality employment opportunities and contribute to the development of Nepal’s energy sector.

The funds raised through the bond will primarily be invested in renewable energy projects, including solar energy, electric vehicles, green buildings, and biomass projects. This initiative by NMB Bank is a significant step towards promoting sustainable development and green energy in Nepal, with the aim of reducing the impacts of climate change and contributing to the long-term economic growth of the country.

Slight Rise in Gold Price in Nepal’s Market on Tuesday: The price of gold saw a slight increase in Nepal’s market on Tuesday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the price of hallmark gold rose by Rs 500 per tola compared to the previous day.

Following the adjustment, the price of hallmark gold on Tuesday was set at Rs 188,800 per tola. On Monday, it was Rs 188,300 per tola. Similarly, silver was traded at Rs 1,970 per tola on Tuesday, the same rate as Monday.