AGP Executive Report

Nepal Tax Policy: Nepal has withdrawn the newly introduced 3% equity tax on private education and health sectors after public backlash, with the Cabinet waiving the fee and the levy suspended from July 17. Consumer Incentives: The government launched a VAT invoice lottery to boost tax compliance, offering daily cash prizes of Rs 133,334 and a Rs 1 million bumper winner every 15 days for eligible purchases. Capital Markets: NEPSE fell 13.95 points to close at 2,712.54, with trading volume down to Rs 5.18 billion. Banking & Enforcement: Nepal Police’s CIB arrested Shankar Lal Agrawal, a fugitive in a banking offence case, from Dillibazaar and produced him before the Patan High Court. Trade & Logistics: Biratnagar industrialists welcomed the Kolkata–Biratnagar cargo rail service, saying rail could cut transport costs by 35–40% and reduce delays and fees. Energy & Industry: Huawei launched FusionSolar 9.0 smart PV and LUTERRA grid-forming storage systems in Nepal to improve solar reliability and grid stability. Tourism Regulation: Lawmakers proposed allowing government control of hotel room rates under amendments to the Integrated Tourism Bill, drawing criticism from hoteliers. Handicrafts Push: PM Balen Shah backed plans for a Handicraft Development Board via public-private partnership to tackle sector problems and support exports and employment.

Central Banking & Liquidity: Nepal Rastra Bank will collect Rs 100 billion in deposits for 83 days via an online bidding process, with rates set through bids—aimed at managing excess liquidity. Trade & Industry Logistics: A cargo rail service has reached Biratnagar’s ICP, a boost for the Morang-Sunsari industrial corridor and a potential cost-saver versus road freight. Public Finance Execution: The Ministry of Finance issued a 47-point directive to ministries and agencies to improve budget implementation, push capital spending, tighten procurement discipline, and strengthen revenue collection. Tax Policy Backlash: PM Balendra Shah announced withdrawal of the 3% equity tax on private education and healthcare after public and stakeholder pushback. Education Regulation Debate: Nepal’s new rules for educational consultancies and foreign-affiliated colleges are being questioned—regulation may not fix deeper problems in the higher education system. Digital Trade Support: The Nepal Gemstone and Jewelry Federation launched an official website and mobile app to help gold and silver traders manage daily transactions and market information. Agriculture & Food Prices: Bird flu and H9 outbreaks have hit Nepal’s poultry sector with estimated losses of around Rs 4 billion, with production shutdowns worsening the damage. Infrastructure & Local Services: A tender has been called for repair of the Jayaram–Halesi road section to ease travel for pilgrims and support local transport and goods movement. Governance & Service Delivery: Government is reviewing Nepal’s public holiday policy, citing that too many closures are slowing citizen-facing services. Media Oversight: Nepal Television’s satellite bandwidth procurement irregularities report has been sent to the PMO and CIAA for further investigation and action.

Education & Health Tax Reversal: Nepal has withdrawn the 3% equity tax on private education and healthcare after public backlash, with PM Balendra Shah saying it would otherwise add an extra burden on citizens. Capital Markets: NEPSE rose for a sixth straight session, up 7.25 points to 2,726.49, with turnover climbing to Rs 6.67 billion. Digital Governance Push: The government unveiled sweeping digital reforms to make public services fully digital, faceless and time-bound, including passports, citizenship and driving licenses. Energy Trade & Infrastructure: IPPAN met India’s ambassador to discuss expanding cross-border electricity trade; meanwhile, MCC Nepal reported completion of 46 transmission towers on the New Butwal–India border line. Jobs & Migration: South Korea sought 7,200 Nepali workers under the EPS for 2026, with applications open July 27–Aug 2. Aviation Connectivity: Himalaya Airlines launched direct Kathmandu–Shenzhen flights, adding a new Nepal–China air corridor. Governance & Accountability: CIAA filed a money laundering case against former CAAN DG Pradeep Adhikari over an alleged Rs 17.1 million bribe. Tax Compliance Incentive: A new consumer lottery will reward people who demand tax invoices, with daily cash prizes and monthly top awards up to Rs 1 million.

Stock Market Watch: NEPSE jumped 7.25 points to close at 2,726.49 on Tuesday; 14.9 million shares of 343 companies traded for Rs 1.57 billion, with Everest Colour Limited the top gainer (+14.98%) and Nabil Debenture 2089 the top loser (-7.44%). Tax Compliance Push: The government launched the Taxpayer Incentive Gift Programme Operation Procedure, 2083, offering daily cash prizes and up to Rs 1 million bumper rewards to shoppers who demand valid bills (including via e-payment) on purchases above Rs 100. Health & Education Fee Reversal: PM Balendra Shah said the 3% equity fee on private education and health will not be implemented for now after concerns about extra costs for ordinary people. Hydropower Pipeline: DoED issued survey licenses for 99 hydropower projects (3,211 MW) and survey permits for solar and transmission lines; it also granted generation licenses to 29 hydropower projects (1,857 MW). Energy & Water Governance: The energy minister urged legal regulation to conserve water amid rising pollution, while the government also stressed support for Nepal’s readymade garment industry using domestic raw materials. Trade & Logistics: Biratnagar’s ICP received its first-ever direct cargo train from Kolkata with containerised industrial raw materials (canola grain for Swastik Oil Industries), marking a new rail route for third-country goods. Road Disruptions: Floods and landslides left seven highways fully blocked and 12 partially operational, with authorities mobilising heavy equipment and advising travel only after updated road info. Tourism Numbers: Nepal’s tourism stayed strong in June with 25,195 international arrivals; Indians led (17,814) and average stay reached 5.76 days. Fertiliser Supply: DAP deliveries continued for paddy season, with 250 metric tons arriving at Biratnagar and more rakes expected from India.

Budget Execution Push: Finance Minister Dr Swarnim Wagle directed ministries to move fast on implementing the 2083/84 budget, while the Finance Ministry issued detailed frugality and financial-discipline guidelines for all federal, provincial and local agencies. Capital Market Focus: PM Balendra Shah met stakeholders to tackle capital market and securities-sector problems, with calls for reforms in share issuance, margin credit rules and market balance. NEPSE Moves: Nepal Stock Exchange jumped 41.70 points to close at 2,719.24 on Monday, with turnover hitting Rs 1.57 billion. Trade Connectivity: Nepal expanded rail cargo from India’s Kolkata to Biratnagar, with trains bringing containers of imported goods and cutting time and logistics costs for eastern industries. Hydropower RCOD Rules: NEA introduced a four-tier system to classify hydropower projects seeking RCOD extensions, aiming to improve transparency and timely delivery. Consumer Protection Crackdown: Department of Commerce issued directives to curb illegal trade, including unlabeled and adulterated goods sold both offline and online. Tourism Law Update: Lawmakers proposed major amendments to Nepal’s Tourism Bill, including a dedicated casino regulatory body and tighter compliance requirements. Digital Payments Regional Signal: India’s UPI hit record FY26 volumes and users, with cross-border expansion to 12 countries—relevant for Nepal’s fintech ambitions.

Public Credibility Under Pressure: Nepal’s new government faces mounting street protests from teachers, doctors, farmers, civil servants and businesses, as people judge it on speed of delivery rather than inherited problems. Transport Regulation: DoTM has asked all seven provinces to validate driving-licence medical certificates from Nepal Medical Council-registered doctors to cut crowds and curb syndicates; it also requested NMC details of such doctors. Stock Market Bounce: NEPSE rose 41.70 points (1.55%) to a one-month high near 2,719, with daily turnover hitting Rs 5.51 billion. Nepal-India Trade Boost: The Kolkata–Biratnagar cargo train has begun officially under the transit arrangement, aiming to reduce transit costs and streamline customs flow. Hydropower Project Extensions: NEA is preparing RCOD deadline extensions by classifying projects into four groups based on progress and PPA obligations. Healthcare Cost Shock: A 3% Health Equity Fee on private hospital treatment has fully kicked in, drawing backlash over higher bills. Disaster Watch: NDRRMA reports 62 disaster incidents in 24 hours, with 2 deaths and 15 injuries, plus blocked roads and estimated losses. Madhesh Growth Push: Madhesh Province plans an investment summit and programs to expand production, industry and tourism to raise GDP contribution. Energy Prices Abroad: Crude oil jumped about 3% on US-Iran tensions, pushing Brent above $90. Digital Payments Trend: India’s UPI user base and transaction growth continue to be highlighted as a model for cross-border digital payments.

Central Banking Reform: Nepal’s House Finance Committee met bankers and business groups to discuss the Nepal Rastra Bank Act amendment bill, with stakeholders pushing for changes that could affect digital banking, central bank digital currency, and governance structure. Digital Payments: Eastern Bank launched Visa Payment Passkey in Bangladesh, using biometric/device-based authentication to replace OTPs for online card transactions—another step toward safer e-payments in the region. Banking Regulation Debate: MPs argued over the number of NRB deputy governors and possible disqualification rules for bank CEOs/directors, warning that overly strict provisions could trigger leadership shortages. Flood Disruption in Kathmandu: Heavy monsoon rains caused waterlogging and traffic disruption; Bagmati River at Gaurighat crossed the warning level, with authorities urging residents in riverine areas to stay alert. Hydropower & Power Sector: NEA is extending Power Purchase Agreement-related RCOD deadlines for stalled hydropower projects, while electricity VAT rules are now in effect for domestic “end consumers,” keeping the policy debate alive. Energy Utility Enforcement: Nepal Electricity Authority ran an electricity leakage control drive in Banke, finding abandoned meters and targeting illegal usage to improve revenue. Infrastructure Update: Sisnekhola–Nagdhunga tunnel will open first for emergency vehicles, then expand in phases as trial operations begin. Regional Security: BIMSTEC endorsed maritime law-enforcement guiding principles and HADR guidelines at its security chiefs’ meeting in New Delhi, with Nepal among participants. Madhes Investment Push: Madhes Province plans an investment summit to boost industrial, trade and service activity and raise its GDP contribution. Local Governance: Nine local levels missed the legal budget deadline and became budgetless, highlighting weak financial discipline at the local tier.

Central Banking & Finance: Nepal’s House Finance Committee held talks with bankers and business groups on a bill to amend the Nepal Rastra Bank Act, aiming to make the monetary and financial system more robust and responsive. Electricity Policy: The government says it’s prioritizing power infrastructure to raise domestic electricity use, while hydropower project promoters get relief as NEA extends Power Purchase Agreement deadlines for projects missing RCOD. Tax & Cost of Living: Electricity VAT has kicked in—5% for households using over 50 units—after earlier assurances that prices wouldn’t rise for end users. Banking Digital Services: NMB Bank signed an MoU with DoIT to enable secure, consent-based data autofill for Nagarik App users in online banking forms. Trade & Revenue: Birgunj Customs collected Rs 243.82 billion in FY 2025/26, meeting 89.19% of its target. Agriculture Supply: DDC plans more systematic milk collection from FY 2083/84, and Lahan’s KSCL says chemical fertilizer stock is sufficient. Weather Risk: DHM warns of sudden flash-flood risk across 35 districts, including Kathmandu Valley. Local Business Climate: KMC announced tax incentives and penalty waivers for FY 2026/27 to encourage timely payments. Investment Signals: FDI commitments in FY 2025/26 fell to Rs 58 billion, down 11%.

Electricity & VAT: Households using over 50 units will pay 5% VAT only on the excess, while businesses and other non-domestic users face 13% VAT on their full electricity bill from July 17, as the Inland Revenue Department issues the Electricity Services VAT directive. Power infrastructure push: The government says it’s prioritizing electricity transmission and distribution upgrades to raise consumption, with Rs 80 billion earmarked for infrastructure expansion and modernization. NRB support for builders: Nepal Rastra Bank introduced loan rescheduling and restructuring for construction entrepreneurs, allowing banks to restructure if borrowers show they’ve received payments from public authorities. Capital markets: NEPSE ended the week up 76.76 points (2.95%) with turnover rising 20% and investors booking Rs 1.31 billion in capital gains as the new FY began. Tax-driven land rush: Nepal logged a record 10,968 land transactions on July 16 ahead of higher capital gains tax from July 17, bringing Rs 1.737 billion revenue. Transport & regulation: Transport entrepreneurs want a new road accident relief fund via extra charges on petrol/diesel and EV charging, and the government amended the Public Procurement Act to curb excessively low bids and improve infrastructure quality. Currency change: Nepal will replace the political map on one- and two-rupee coins with the Lo Gyaker (Ghar) Monastery image, with enhanced security features.

Nepal-India Energy: Nepal and India are reviewing new cross-border transmission lines as India signals plans to buy 10,000 MW from Nepal, potentially locking hydropower exports deeper into India’s grid. Land & Taxes: On FY’s last day, Nepal recorded a record 10,968 land transactions nationwide as buyers rushed to beat higher capital gains tax rates. FDI Update: The Department of Industry approved FDI commitments worth Rs 58 billion in FY 2025/26, with agriculture, tourism and energy among the top sectors. Capital Markets: NEPSE posted its strongest weekly gain in months, rising 76.76 points (2.95%) with turnover jumping to Rs 29.19 billion. Trade & Logistics: Nepal launched its first rail cargo service from Kolkata to Biratnagar, extending direct rail access beyond Birgunj and aiming to cut transit costs. Customs & Smuggling: Korala customs collected about Rs 9.9 billion, while authorities also warned against unlabeled/counterfeit footwear and probed irregularities in Nepal Television satellite bandwidth procurement. Infrastructure & Telecom: Nagdhunga tunnel is set for trial operation from July 27, and Nepal Telecom started online SIM replacement services. Governance & Social Issues: Bagmati Province cut ministries to eight, while freed Kamaiya families in western Nepal still report unresolved land/identity registration problems.

Capital Markets: NEPSE jumped 79.74 points on the first trading day of FY 2026/27, closing at 2,677.54 on turnover of about Rs 4.57 billion. Central Banking Reform: Finance Minister Dr. Swarnim Wagle and NRB Governor Dr. Bishwanath Poudel pushed for NRB autonomy and international-standard banking, while MPs questioned the rationale of the proposed NRB Act amendments. Governance & Public Finance: Government revenue and spending targets for FY 2025/26 fell short (83.51% and 80.55% of targets), with weak capital spending. Anti–Loan Shark Crackdown: After a nine-point deal, victims suspended their protest; government plans to criminalise loan sharking and draft a dedicated bill within three months. Trade & Logistics: A first rail cargo service began between Kolkata and Biratnagar under the Nepal–India Transit Treaty, aiming to boost third-country imports. Energy Costs: NEA started charging 5% VAT on electricity bills for households using over 50 units. Business Policy: PM Shah pledged support to promote domestic footwear exports, including curbs on smuggling and better training. Legal/Finance Case: Special Court ordered former FM Bishnu Paudel’s release on a regular court appearance schedule in a money-laundering case.

Parliament & Governance: The Federal Parliament Secretariat has urged lawmakers to submit asset details for FY 2025/26 by July 17–Sept 14, warning of legal action for non-compliance. Tourism & Hotels: Marriott is set to debut in Nepal with Ritz-Carlton Kathmandu (under construction in Thamel, ~Rs 15bn) and a Westin Kathmandu deal, as hotel investment has crossed Rs 650bn and capacity targets 4 million tourists. Anti-Corruption: A supplementary charge sheet has been filed at the Special Court in the money laundering case against former FinMin Bishnu Poudel, with Rs 209m recovery sought. Energy & Infrastructure: Nepal Rastra Bank says it has eased policy for hydropower financing; meanwhile, energy stakeholders push for faster transmission, forest-law amendments, and parallel production-transmission planning. Telecom & Inclusion: Nepal Telecom expanded 4G to remote Mugu and Bajura villages, improving internet, voice and SMS access. Public Finance & Costs: New fiscal-year taxes include a 3% health equity fee on private healthcare and higher levies on items like private school fees and electricity above 50 units. Regional Security: NSA Ajit Doval called for stronger BIMSTEC cooperation on terrorism, cyber and maritime security.

BIMSTEC Security: Ajit Doval chaired the 5th BIMSTEC National Security Advisers’ meeting in New Delhi, pushing stronger joint action on terrorism, cyber, maritime and organised crime, and endorsing maritime law-enforcement and disaster-relief guidelines. Banking & Markets: Nepal Rastra Bank said monetary policy is aligned with budget execution; it also set an 80% loan-to-value cap for large passenger EVs and postponed a working-capital loan variance rule to FY 2027/28. Commercial banks trimmed deposit rates to about 4.17% for the next month. NEPSE Wrap: The index ended FY 2025/26 up 7.50 points to 2,597.80, with turnover at Rs 4.56bn, but the year still closed down 7.05%. Energy Trade: Nepal and India agreed to raise cross-border electricity capacities, including import up to 1,530MW and export up to 1,850MW, with new transmission DPRs approved. Loan Shark Crackdown: The government formed a talks team to address victims’ demands, alongside Cabinet decisions including new Rs 1 and 2 coin designs and a Korean grant for a law information pilot system. Industry Oversight: Lawmakers criticised industrial-area monitoring as “formal,” urging surprise checks, better worker health and safety, and clearer policy reforms.

NRB–PM Talks: Nepal Rastra Bank Governor Dr. Biswo Nath Poudel met Prime Minister Balendra Shah to discuss the stock market, banking and broader financial sector issues. Cross-border Payments: ADB says the Nepal–India digital payment corridor is a major untapped chance to boost trade, tourism and remittances, urging interoperability and regulatory alignment. Power Trade Boost: Nepal and India agreed to raise electricity exports to India to 1,650 MW and imports to 1,400 MW via Dhalkebar–Muzaffarpur and Dhalkebar–Sitamarhi lines, with more transmission projects in the pipeline. Insurance for Wildlife Losses: Nepal Insurance Authority will start selling Wildlife Risk Insurance from July 17, priced at Rs 1,500, to cover accidents, disability, and losses to houses, livestock and crops. Mental Health Push: Government and UN launched a 2025–2028 joint mental health support programme across Karnali, Lumbini and Madhesh. Capital Markets Roadmap: SEBON unveiled a 10-year plan aiming to grow market size to 150% of GDP by 2036, push digital trading and expand instruments. Public Sector Jobs: Govt is preparing a proposal to remove about 60,000 contract/temporary/daily-wage workers, prompting protests at Singha Durbar. Health Transplants: Shahid Dharmabhakta National Transplant Center reports only 37 liver transplants in 10 years, citing cost, space and specialist shortages.

Parliament & Policy Pressure: Lawmakers used the House of Representatives meeting to push the government on price hikes, landless squatters, governance and rule of law, while also raising the need to resolve the Nepal-India border issue. Capital Markets: NEPSE inched up 14 points to close at 2,590.29, but daily turnover fell to Rs 4.17 billion; SEBON also signaled a Capital Market Task Force and zero tolerance on illegal pre-IPO activities. LPG Supply & Consumer Protection: The Industry Committee directed the government to curb black-marketing and artificial shortages of LP gas, and NOC resumed nationwide sales of fully filled 14.2kg cylinders from Wednesday at Rs 2,060 per cylinder. Energy Trade: Nepal and India agreed to raise cross-border electricity export capacity to 1,650 MW via Dhalkebar–Muzaffarpur and Dhalkebar–Sitamarhi 400kV lines. Digital Economy & Education: The government is moving to link universities with the IT industry and expand digital skills in schools and universities. Business Climate: PM Shah urged hotel entrepreneurs to register, comply with law and join PPP models as tourism promotion ramps up. Agriculture Prices: Farmers protested low tomato prices as imports squeeze domestic producers, with Kalimati wholesale rates reported as very low. Urban Safety: Kathmandu Valley authorities ordered a time-bound plan to remove unused internet, telephone and TV cables from major locations. Wildlife Insurance: Nepal Insurance Authority will implement wildlife risk insurance from July 17 with fixed premiums and payouts for human, livestock and property losses.

LPG Supply Crackdown: Nepal’s House panel has ordered the Ministry of Industry, Commerce and Supplies to curb black-marketing and artificial shortages of cooking gas, asking for a study on pipeline expansion and tighter quality checks on cylinders. Gas Policy Shift: The Ministry has reintroduced full 14.2kg LP cylinders to ease supply disruption, while lawmakers and industry leaders warn that the earlier half-cylinder policy raised costs, safety concerns, and confusion. Public Procurement Reform: Nepal has amended the Public Procurement Act to move away from awarding contracts purely to the lowest bidder, using average pricing and standards to reduce unrealistically low bids and project delays—construction entrepreneurs welcome the change. Capital Market Moves: SEBON says short selling will be implemented soon and vows action against illegal “Pre-IPO” activities; lawmakers also demand a long-term capital market strategy and question SEBON’s regulator capacity. NEPSE Update: NEPSE jumped 14 points to close at 2,590.29 on Wednesday, with Rs 1.50 billion turnover. Remittances & Macros: NRB reports remittances up 38.2% to Rs 2.12 trillion in 11 months, with key indicators staying broadly positive. Business & Trade: Nepal targets exports at 20% of GDP in two years, but experts call it unrealistic; Israel signals interest in recruiting more Nepali workers and investing in sectors like herbs and cement.