Nefport 56 - Investment Special

KEY ECONOMIC INDICATORS

Issue 56: April 2024

Publisher: Nepal Economic Forum

Website: www.nepaleconomicforum.org

P.O Box 7025, Krishna Galli, Lalitpur – 3

Nepal Phone: +977 1 554-8400

Email: info@nepaleconomicforum.org

Contributors:

Adhish Kumar Gorkhali

Anushka Shrestha

Bibhuti Kharel

Chandani Thapa

Mahotsav Pradhan

Nasala Prajapati

Prakriti Shree Adhikari

Regina Khanal

Sagar Jung Karki

Sanjit Tuladhar

Sudiksha Tuladhar

Sukeerti Shreshtha

Peer Reviewers:

Arya Awale

Raju Dhan Tuladhar

Rojesh Bhakta Shrestha

Sujeev Shakya

Special Section – Authors: NEF Team

Rojesh Bhakta Shrestha, Lead Consultant, Beed Management

Sujeev Shakya, Chair, Nepal Economic Forum

Design & Layout:

Thuprai Solutions support@thuprai.com

Coordinator:

Sukeerti Shrestha and Chandani Thapa

Cover Design: NEF Team

Editor: Suyasha Shakya This issue of Nefport takes into account news updates from 1 December to 29 February.

The USD conversion rate for this issue is NPR 132.69 to a dollar, the quarterly average for this issue. Reproduction is authorized provided the source is acknowledged.

The views and opinions expressed in the article/publication are those of the author(s) and do not necessarily reflect the official opinion of Nepal Economic Forum. Neither the organization nor any person acting on their behalf may be held responsible for the use which may be made of the information contained therein.

Executive Board Members:

Alpa B. Shakya

Shayasta Tuladhar

Sudip Bhaju

Sujeev Shakya

Advisory Board:

Kul Chandra Gautam

Mahendra Krishna Shrestha

Prativa Pandey

Shraddha Gautam

Sneh Rajbhandari

Senior Distinguished Fellows:

Bibhakar Shakya

Giuseppe Savino

Suman Basnet

Senior Fellows:

Amish Raj Mulmi

Apekshya Shah

Ashraya Dixit

Bibek Raj Kandel

Diva Shrestha

Mark Perrin

Editorial

Nepal is at the cusp of transformation. There is no alternative but to push for reforms to drive economic growth. The political and economic liberalization of the early 1990s ushered in a new a shift in economic outlook. These reforms fostered an environment conducive to growth, evidenced by impressive growth rates at the time. However, to realize its potential of becoming a USD 100 billion (NPR 13.27 trillion) economy, Nepal must embark on another wave of reforms. This necessitates bold vision, a readiness to explore new horizons, and decisive action to revamp business practices away from a commission-driven mindset towards one focused on innovation and growth. Nefport 56 marks a step in that direction.

Looking at the review period (December 1, 2023, to February 29, 2024), Nepal's macroeconomic indicators painted a promising picture. This included a decrease in the inflation rate and a projected economic growth rate of 5% in 2024. Foreign Direct Investment experienced a remarkable surge of 512.16% to NPR 4.53 billion (USD 34.13 million) in mid-January 2024 compared to the same period in 2023. Furthermore, propelled by a surge in remittances totaling USD 3.6 billion (NPR 477.96 billion), foreign exchange reserves reached a historic high of NPR 1.81 trillion (USD 13.64 billion) and contributed to a surplus in the balance of payments. Meanwhile, the mid-term assessment of the budget for FY 2023/24 AD (2080/81 BS) resulted in a reduction of the budget size by NPR 200 billion (USD 1.51 billion). Further, noteworthy announcements were made on foreign aid, such as the World Bank's Green Resilient and Inclusive Development (GRID) project, the UK-Nepal development portfolio, and the International Finance Corporation's gender financing.

On the political front, Nepal experienced ongoing political turmoil that culminated in the unexpected dissolution of the former ruling coalition comprising the Nepali Congress and Communist Party of Nepal (Maoist Centre). Prime Minister Pushpa Kamal Dahal subsequently formed a new coalition with four other parties, including former rival Communist Party of Nepal – United Marxist Leninist (CPNUML), and conducted another cabinet reshuffle. Additionally, this quarter witnessed several highprofile visits coupled with Nepal's concerted efforts to maintain diplomatic equilibrium. While there is a growing realization that the politics in Nepal is uncertain, the narrative is also shifting towards finding opportunities in the fact of such uncertainty and geopolitical stress.

Meanwhile, Nepal Economic Forum continued its work on the Himalayan region by hosting the inaugural flagship Himalayan Future Forum (HFF) event on February 16 and 17, 2024. We extend our gratitude to all stakeholders for their contributions to the success of HFF 2024 and welcome increased participation in the second HFF, scheduled for February 21 and 22, 2025, in Kathmandu, Nepal.

Nefport 56, the ‘Investment Special’, aligns with Nepal’s upcoming third International Investment Summit scheduled on April 28 and 29, 2024. This issue features analysis and articles authored by Rojesh Bhakta Shrestha (Lead Consultant, Beed Management), Sujeev Shakya (Chair, Nepal Economic Forum), and the internal team of Nepal Economic Forum. Additionally, we have introduced an 'Opportunities' section in the special section to integrate with the sectoral overview and provide deeper insights into investment prospects. We would like to express our appreciation for the voluntary contributions from the dedicated NEF team as well as our readers and patrons who have supported us throughout our journey.

We are working continuously on recalibrating our Nefports to make them more useful to our readers. Please feel free to write to us at info@nepaleconomicforum.org or to any of our social media handles for any further comments or feedback.

Chair, Nepal Economic Forum

Political Overview

In the previous quarters, Nepal was plagued with political conflicts within the ruling coalition and mounting public frustration. It culminated this quarter with the sudden break of the former ruling coalition between the Nepali Congress and the Communist Part of Nepal (CPN) (Maoist Centre). Prime Minister Pushpa Kamal Dahal further announced a new coalition with four other parties, including the former rival party Communist Party of Nepal – United Marxist Leninist (CPN-UML), and reshuffled his cabinet yet again. Many concerns have been raised over how the rising political instability could affect development goals and bilateral relations, although the newly appointed ministers attempt to provide assurance that this move will not have a negative impact. The past quarter also saw multiple high-level visits as well as Nepal’s continual efforts to balance diplomatic relations and navigate the geopolitical environment. FACTSHEET

EXECUTIVE UPDATES

Prime Minister Dahal Forms New Coalition and Reshuffles Cabinet

Prime Minister Pushpa Kamal Dahal, from CPN (Maoist Center) or CPN (MC), broke ties with Nepali Congress in early-March, 2024, and announced a new coalition with CPN-UML, Rastriya Swatantra Party (RSP), CPN (Unified Socialist) and Janata Samajbadi Party (JSP).7 In line with this, he reshuffled his cabinet on March 6, 2024 — the 13th

time in just 14 months since his appointment. The new cabinet has 22 members. Six of these members, including the Prime Minister, are from CPN (MC); eight from CPN-UML; four from RSP; and two from CPN (Unified Socialist) and JSP each. Table 1 lists the names, departments, and parties of the new cabinet members.8

Table 1. List of the New Council of Ministers

Deputy Prime Ministers

Narayan Kaji Shrestha

Deputy Prime Minister and Minister of Foreign Affairs CPN (MC)

Rabi Lamichhane Deputy Prime Minister and Minister of Home Affairs

Raghubir Mahaseth

Upendra Yadav

Ministers

Balaram Adhikari

Deputy Prime Minister and Minister of Physical Infrastructure and Transport

Deputy Prime Minister and Minister of Health and Population JSP

Minister of Land Management, Cooperatives and Poverty Alleviation CPN-UML

Deputy Prime Minister (2011-13; 2022-24)

Minister of Physical Infrastructure and Transportation (2022-23)

Minister of Home Affairs (2011, 2023-24)

Minister of Foreign Affairs (2011-13)

Minister of Home Affairs (2022- 23)

Deputy Prime Minister (2021)

Minister of Foreign Affairs (2021)

Minister of Physical Infrastructure and Transport (2018-19)

Minister of Water Resources (2011)

Deputy Prime Minister (2018-19)

Minister of Foreign Affairs (2008-09; 2011)

Barsha Man Pun

Bhagwati Chaudhary

Bhanu Bhakta Joshi

Biraj Bhakta Shrestha

Damodar Bhandari

Dhan Bahadur Budha

Dol Prasad Aryal

Hari Uprety

Minister of Finance CPN-UML

Minister of Women, Children and Senior Citizens

Minister of Federal Affairs and General Administration

CPN-UML

CPN (Unified Socialist)

Minister of Energy, Water Resources and Irrigation (2018-22)

Minister of Finance (2011-13)

Minister of Peace and Reconstruction (2011)

Minister of Women, Children, and Senior Citizens (2022-23)

Minister of Forests and Soil Conservation (2011)

Minister of Youth and Sports RSP N/A

Minister of Industry, Commerce, and Supplies

Minister of Urban Development

Minister of Labor and Employment

Minister of Defence

CPN-UML

CPN (Unified Socialist)

RSP

CPN-UML

Minister of Industry, Commerce, and Supplies (2022-23)

Minister of Culture, Tourism, and Civil Aviation (2018-19)

Minister of Labor, Employment, and Security (2023)

Minister of Defence (2023)

Hit Bahadur Tamang

Jwala Kumari Sah

Nawal Kishor Sah Sudi

Padam Giri

Rajendra Kumar Rai

Rekha Sharma

Shakti Bahadur Basnet

Minister of Culture, Tourism, and Civil Aviation

Minister of Agriculture and Livestock Development

Minister of Forest and Environment

Minister of Law, Justice, and Parliamentary Affairs

Minister of Water Supply

Minister of Communication and Information Technology

Minister of Energy, Water Resources, and Irrigation

Sumana Shrestha

ELECTION UPDATES

Minister of Education, Science, and Technology

Nepali Congress Secures 10

National Assembly Seats

On January 25, an election was held for 19 seats for the National Assembly.10 A total of 52 candidates from eight different

CPN (MC)

CPN-UML

JSP

CPN-UML

CPN-UML

CPN (MC)

Minister of Youth and Sports (2011)

Minister of Agriculture and Livestock Development (2023)

State Minister (Madhesh) of Social Development

Minister of Health and Population (2022)

Minister of Land Management, Cooperatives, and Poverty Alleviation (2022-23)

Retained position

Minister of General Administration (2015)

Retained position

CPN (MC)

Minister of Forest and Environment (201820)

Minister of Home Affairs (2015-16)

Minister of Health and Population (2011)

RSP N/A

parties – CPN-UML, Nepali Congress (NC), CPN (MC), CPN (Unified Socialist), JSP, Nepal Workers and Peasants Party, Rastriya Prajatantra Party (RPP), and Janamat Party – had filed for nominations. The former ruling coalition swept the elections, having won 18 of the 19 seats.11

Table 2. Results of the National Assembly Election

NC won 10 seats, followed by CPN (MC) with five seats, Unified Socialist Party with two seats, and one each to JSP and CPN-UML.12

The newly elected members, whose term began from March 4, are shown in Table 2.

Province Name Party Bagmati

Bishnu Devi Pudasaini

Ghanshyam Rijal CPN (Unified Socialist)

Jit Jung Basnet

Shree Krishna Adhikari

Kiran Babu Shrestha

Gandaki

Manrupa Sharma

CPN (MC)

CPN (MC)

Padam Bahadur Pariyar NC

Source: Office of the Prime Minister and Council of Ministers, Government of Nepal, March 20249

Karnali

Koshi

Lumbini

Madhesh

Sudurpaschim

BILATERAL AND MULTILATERAL UPDATES

Indian External Affairs Minister Visits Nepal

The Indian External Affairs Minister S. Jaishankar came for an official visit to Kathmandu for the NepalIndia joint commission from January 4 to 5.14 The commission resulted in multiple agreements regarding reconstruction, energy trade, and infrastructure, seeking to strengthen Nepal-India bilateral ties, which have been detailed in ‘Infrastructure and Real Estate’ under the Sectoral Review section of this report. During the visit, Foreign Minister Jaishankar paid a courtesy call to President Ram Chandra Paudel and Prime Minister Dahal to discuss IndiaNepal connectivity and matters of mutual interest.15 He also held talks with NC Chief Sher Bahadur Deuba and CPN-UML Chair KP Oli to discuss economic partnership and bilateral relations.16

Overall, the visit went by smoothly,

Bishnu Bahadur Bishwakarma CPN (MC)

Krishna Bahadur Rokaya NC

Savitri Malla CPN (Unified Socialist)

Krishna Prasad Sitaula NC

Rukmini Koirala CPN-UML

Bishnu Kumari Sapkota NC

Jhakku Prasad Subedi CPN (MC)

Ananda Prasad Dhungana NC

Pooja Chaudhary JSP

Baldev Bohra NC

Narayan Dutta Bhatt NC

Renu Chand CPN (MC)

Source: Federal Parliament of Nepal, Government of Nepal, January 202413

other than Foreign Minister Jaishankar’s dissatisfaction regarding the simultaneous arrival of Shi Yugang, Deputy Secretary of the Standing Committee of the Communist Party of China Yunnan Provincial Committee.17 The Indian delegation had urged the Nepal government to coordinate the visits to prevent overlap. However, due to the prescheduled nature of the Chinese visit, this request could not be accommodated.

Deputy Prime Minister Shrestha Visiting China

Deputy Prime Minister and Foreign Minister Narayan Kaji Shrestha will be travelling to China in the last week of March 2024 for an official five-day visit. He will hold discussions with the Foreign Minister of China Wang Yi and other senior officials.18 It is speculated that he will also sign the implementation agreement for the Belt and Road Initiative (BRI) during the visit. However, the government has reportedly

not held consultations regarding the matter among major parties either.19

Despite signing the BRI framework agreement in 2017, Nepal has not implemented a single project under the framework. Reasons for delays have been attributed to disagreements over the funding modality and geopolitical concerns.20 Following Prime Minister Dahal’s 2023 China visit, discussions surrounding BRI implementation has gathered steam. In January 2024, when Shrestha had been serving as the Minister of Home Affairs, he had stated that Nepal and China would sign the implementation plan ‘very soon’, but had not shared specifics.21

Chinese Vice Minister Visits Kathmandu

Sun Haiyan, Vice Minister of the International Department of the Chinese Communist Party, visited Kathmandu from January 26 to 29 and met with multiple political leaders, including Prime

Minister Dahal, NC President Sher Bahadur Deuba, UML Chair KP Oli, and RSP Chair Rabi Lamichhane.22

During this visit, she expressed concerns regarding attempts by unspecified countries to disrupt Nepal-China ties. She asserted that there were countries actively working against the development of a robust bilateral relation between the two, and stressed the importance of strengthening relations to counter potential regional conflicts.23 Sun also emphasized the need for comprehensive infrastructure development policy reforms in Nepal to further enhance bilateral cooperation, hinting towards the

Outlook

expectation of Nepal’s active participation in China’s BRI framework.24

British Minister of State Launches Fund Worth

GBP 400 Million (NPR 67.29 billion)

During his Nepal visit from February 19 to 20, the United Kingdom (UK) Minister for Development, Andrew Mitchell, launched a development portfolio providing Nepal with grants worth GBP 400 million (NPR 67.29 billion) by 2030.25

UK’s support is expected to aid Nepal in its graduation from least-developed country status by attracting investment

and creating employment.26

Further details regarding the aims and objectives of the fund have been discussed under the ‘Macroeconomic Overview’ section of this report. Minister Mitchell also met up with top government officials including PM Dahal, outgoing Finance Minister Ram Sharan Mahat, and outgoing Foreign Minister NP Saud during the official visit.27 He expressed strong support for the upcoming third Investment Summit April 28 and 29, which the new Finance Minister Barshaman Pun has assured will not be affected by political changes.28

The instability in the Nepali political climate serves as a significant barrier to establishing Nepal as an investor-friendly country. It could reduce the efficacy of the various policy changes the government has introduced in preparation of the upcoming Investment Summit. Furthermore, considering that both KP Oli and Prime Minister Dahal are two dominant personalities in politics, it is speculated that future conflicts are inevitable within the new coalition. It is necessary for the incoming government to recognize opportunities within their sectors and encourage them to be able to regain public trust.

Another concern of the sudden government change is its impact on bilateral ties and the geopolitical equation, particularly in regards to India-China relations. The two major Communist parties of Nepal forming a coalition is perceived to be beneficial to China, which has been attempting to speed up implementation of BRI projects in Nepal in light of MCC also beginning its expansion. While foreign countries may extend their willingness to work with the new government, it does not negate their rising concerns regarding needing to navigate a changed environment every few months. This also brings into question the smooth continuity of development initiatives started during the preceding government’s term and calls for turning such crises to windows of opportunities.

International Economy

The global economy stands at a crossroads in 2024 between the hopeful prospects of a soft landing and the looming challenges of subdued economic growth, intensified by uncertainties such as geopolitical tensions, climate change, and mounting debt levels. Projections for 2024 suggest a path towards economic recovery, with a modest growth improvement of 3.1%, decrease in global inflation to 4.4%, and resilient trade towards reglobalization. Meanwhile, climate-friendly efforts like COP28, the Green Climate Fund, and a shift to electric vehicles, are driving investments in green technologies. However, amidst these hopeful signs, a sobering reality looms — the 2020s may mark the weakest half-decade of global growth since the 1990s, compounded by mounting debt levels. Looking at 2024, uncertainties stemming from record-breaking 50 national elections, escalating geopolitical tensions, and the rise of Artificial Intelligence could reshape international trade, energy security, and geopolitical dynamics.

ECONOMIC CRISIS UPDATES

Global Economy’s Soft Landing with Turbulence Ahead

The global economy is on track for a soft landing with growth expected to remain steady at 3.1% in 2024 from 2.9% in 2023 and inflation is projected to ease to 4.9% in 2024 from 6.6% in 2023.39 Despite ongoing geopolitical tensions, global economic activity has shown resilience through robust private and government spending on the

demand side along with improved supply chains and increased labor force participation on the supply side.40 While the US and China anticipate slower growth, the Eurozone is expected to rebound after narrowly averting a recession, and emerging economies, such as Brazil, India, and Southeast Asia, are set for accelerating growth.41 However, the World Bank Group warns that record debt levels and high interest rates could spiral developing countries into a crisis, highlighting the urgent need for governments across the world to

FACTSHEET

address elevated public debts.42

2020s Reckoning: A Transformative or Wasted Decade?

The 2020s may witness one of the weakest half-decade of global growth at 2.2%, resembling the modest improvement observed during the first half of the 1990s at 2.1%, as seen in Figure 1.43

Economic uncertainty looms large with escalating conflicts,

including the Russia-Ukraine war, Israel-Hamas war, and disruptions in the Red Sea trade route, posing threats to global supply networks and energy stability.44 While developed economies are expected to return to prepandemic income levels by the end of 2024, around two-thirds of low-income and conflictaffected nations may remain trapped in high debt and onethird of their populations may be

constrained by limited access to food. Amidst a global landscape of uneven recovery, these uncertainties raise questions about whether the decade will witness transformative progress toward Sustainable Development Goals (SDGs) and a zero-carbon global economy or be marked by missed targets and wasted opportunities.45

Figure 1. Global halfdecade growth from the 1990s to 2020s

Source: World Bank46

INTERNATIONAL FINANCIAL UPDATES

Growth in Climate Finance after COP28

The United Nations Climate Change Conference (COP28) was held in Dubai from November 30, 2023, to December 13, 2023, with some 85,000 participants, including 150 heads of state and government, alongside representatives from the civil society, businesses, indigenous people, youths, philanthropists,

and international entities.47

The conference led to the implementation of the world’s first ‘global stocktake’, which recognizes the necessity of reducing global greenhouse gas emissions by 43% by 2030, to limit global warming to 1.5°C.48 As a result, a significant increase in Climate Finance has been witnessed. The Green Climate Fund (GCF) has received a record pledge of USD 12.8 billion (NPR 1.69 trillion) from 31 countries.49 Similarly, the 14-year Growth

Markets Fund II, launched by Copenhagen Infrastructure Partners, aimed to raise USD 3 billion (NPR 398.07 billion).50 These funds will focus on investing in renewable energy projects in emerging and middle-income countries.51 However, there is still a significant gap, with emerging and middle-income countries requiring USD 2.8 trillion (NPR 371.53 trillion) in investment by 2030 to accomplish the cleaner energy targets set at COP28.52

INTERNATIONAL TRADE UPDATES

Escalating Red Sea Trade Disruptions Spark Alarm

Iran-backed Houthi rebels have intensified attacks on international commercial vessels in the Red Sea since October 2023, posing a threat to 11% of global trade passing through this route.53 Consequently, shipping companies and oil tankers have opted for rerouting around the Cape of Good Hope in Africa which takes an additional 10 days. This disruption has driven up insurance, shipping, and fuel costs, contributing to a surge in oil prices at USD 80 (NPR 10,615) per barrel.54 Such a rise in trade costs translates into not just higher expenses for consumers but also an increased risk of global inflation. In response to the security threat, the European Union (EU) launched a defensive maritime Operation Aspides, i.e., the Greek word for shied, in February 2024 to establish an EU naval presence for safeguarding freedom of navigation against multi-domain attacks in the Red Sea.55

Chinese Electric Vehicles

Reshape Global Automobile Industry

The Chinese auto industry, led by BYD, is transforming the global electric vehicle (EV) market with innovation, efficiency, and clean technology.56 In 2023, China's EV exports surged by 70% to USD 34.1 billion (NPR 4.5 trillion), primarily to the European Union which received nearly 40% of the exports.57 In contrast, the United States imported Chinese battery electric vehicles worth USD 368

million (NPR 48.83 billion) in 2023, partly due to restrictions such as a 27.5% tariff.58 Moreover, its anticipated growth in market share poses a looming threat to America's Big Three automobile giants - Ford, General Motors and Stellantis.59 Thus, synergy between Chinese electric vehicle producers and shipbuilders is projected to propel the global automobile transition towards clean technology.

KEY HIGHLIGHTS OF INTERNATIONAL REPORTS

Global Economic Trends Shows Decline

As per World Economic Outlook for January 2024, global growth is projected at 3.1% in 2024 and 3.2% in 2025, which is lower when compared to the historical average of 3.8% in 2000-2019.60 This decline is because of stringent central bank policy to curb inflation, the withdrawal of fiscal support amid high debt levels, and sluggish underlying productivity growth. Global inflation is expected to fall to 5.8% in 2024 and to 4.4% in 2025.61

The report further emphasizes that although there is disinflation and stable growth, the likelihood of a severe economic downturn is low. However, the Red Sea Crisis poses a risk of inflation due to the disruption in the supply side. Moreover, the report highlights the need to implement targeted and wellsequenced structural reforms, required for productivity growth to ensure debt sustainability and increase progress toward higher income levels of a nation. Additionally, the report also addresses need for multilateral coordination addressing debt

issues, preventing debt distress, and attracting necessary investments, as well as mitigating the impact of climate change.

World Trade Report 2023

Pushes for Re-globalization

The World Trade Report 2023 advocates for a renewed focus on re-globalization amidst concerns over the fragmentation of the multilateral trading system.62 Despite the benefits of economic interdependence in fostering growth, trade, and peace, ongoing poly-crises have raised fears about excessive risks associated with globalization. The report also highlights the positive impact of trade benefits in promoting economic security, poverty reduction, and environmental sustainability. Moreover, the World Trade Organization underscores the resilience of international trade in swiftly adapting to global challenges, such as the COVID-19 pandemic and geopolitical tensions, and calls for reforming a rejuvenated WTO to strengthen global trade governance.

GLOBAL EVENTS UPDATE

54th Annual Meeting of the World Economic Forum

Highlights Need for a New Economic Model

The 54th Annual Meeting of the World Economic Forum (WEF) convened from January 1519, 2024, under the theme of "Rebuilding Trust" in DavosKlosters, Switzerland. The leaders of government, business, and civil society from more than 125 countries participated in the event. The participants highlighted the ideas and initiatives to increase cooperation

and resilience in global security, recovery of economic growth and trade, advancement in artificial intelligence (AI), sustainable practices to reduce climate change, and investment in workforce development and healthcare.63 Among various matters, the need for a new economic model prioritizing productivity alongside sustainability and equitable distribution was central to the discussion.64 As per the new economic model the sustainable and equitable distribution of the businesses and economies will be based on their energy efficiency, environmental impact, equitable benefits for the stakeholders and adherence to appropriate governance and regulations.65

50 National Elections to be Held in 2024

The year 2024 will be recordbreaking for national elections, with over 50 countries, including the United States, India, Mexico, South Africa, Taiwan, Indonesia, Russia, Iran, Pakistan, among others, preparing for polls that

Outlook

will collectively engage more than two billion voters.66 So far the notable updates include the landslide victory of Bhutan's People’s Democratic Party (PDP); the re-election of Bangladesh's Prime Minister Sheikh Hasina for a fifth term; and the election of Taiwan's Lai Ching-te, sparking concerns in Beijing due to his pro-sovereignty stance.67 Similarly, in Indonesia, Prabowo Subianto was confirmed as the next President.68 The most anticipated election for 2024 is the United States presidential election, where former President Donald Trump will challenge incumbent President Joe Biden. On the other hand, Prime Minister Modi in India is expected to retain his office. The national elections to be held in 2024 will keep the global economy in a precarious situation, particularly in light on ongoing conflicts.69

India’s Interim Budget 2023/24 Prioritizes Fiscal Prudence

On February 1, 2024, Finance Minister Nirmala Sitharaman presented India's interim budget

for 2024/25 that prioritized fiscal prudence over populist measures ahead of the general elections scheduled between March and May 2024.70 The total expenditure is estimated at INR 47.65 trillion (NPR 62.81 trillion / USD 473.27 billion), with total capital expenditure set at INR 11.11 trillion (NPR 17.78 trillion / USD 133.99 billion), marking an 11% increase from the previous year's budget and demonstrating a commitment to infrastructure development.71 Additionally, it aims for fiscal consolidation by targeting a reduction of the fiscal deficit from 5.8% in 2023/24 to 5.1% of GDP in 2024/25, and ultimately to 4.5% by 2025/26.72 Moreover, India’s budget emphasized technology-enabled growth and social justice, especially for women, youth, poor, and farmers. While praised for refraining from populism, the budget also faced criticism for inadequate spending on human capital development, particularly in health and education sectors.73

Looking ahead, the global landscape stands at a critical juncture at the midpoint of the 2020s. Disruptive forces, such as record-breaking national elections, escalating conflicts, and advancements in green technology, are reshaping global dynamics. The results of national elections and changes in government policies could globally impact the flow of global trade and geopolitics. In the aftermath of the pandemic, mounting debt levels have emerged as a significant challenge, particularly in developing countries, underscoring the urgent need for prudent fiscal policies. Additionally, in 2024, global trade is expected to be resilient through concerted efforts towards re-globalization as opposed to fragmentation. Meanwhile, while climate-friendly efforts like COP28, the Green Climate Fund, and the transition to electric vehicles contribute to the green transition, a financing gap persists, especially for emerging and middle-income nations. Navigating this complex global landscape will require decisive action from nations, both at individual and multilateral levels, to address economic recovery, environmental stewardship, and geopolitical complexities.

Macroeconomic Overview

Macroeconomic Overview

During the review period from December 1, 2023, to February 29, 2024, macroeconomic indicators signaled a positive trend for the Nepali economy with a decline in the cost of goods and services, a reduction in the inflation rate, and an improvement in economic growth, projected at 5% in 2024. Foreign Direct Investment (FDI) experienced a significant 512.16% surge to NPR 4.53 billion (USD 34.13 million) in mid-January 2024 compared to mid-January 2023, indicating heightened confidence among foreign investors. Concurrently, the mid-term assessment of the budget for FY 2023/24 AD (2080/81 BS) reduced the budget size by NPR 200 billion (USD 1.51 billion). Moreover, several significant announcements were made in terms of foreign assistance, such as USD 200 million (NPR 26.5 billion) from the World Bank for the Green Resilient and Inclusive Development (GRID) project, GBP 400 million (NPR 67.29 billion) from the UK for the UK-Nepal development portfolio, and a USD 56 million (NPR 7.43 billion) loan from the International Finance Corporation (IFC) for gender financing. Meanwhile, while government debts rose, the trade deficit decreased, and tax revenues increased slightly. Additionally, driven by rising remittances, foreign exchange reserves reached a record high of NPR 1.81 trillion (USD 13.64 billion), which in turn contributed to the balance of payments surplus.

GROSS DOMESTIC PRODUCT (GDP)

FACTSHEET74

Particulars Amount/ Percentage

GDP at current prices

Year-on-year

NPR 5.38 trillion (USD 40.55 billion)

Net Foreign Direct Investment

Remittance inflows

Gross foreign exchange reserves

Total Domestic Debt

Total External Debt

Government expenditure

Government revenue

billion (USD

million)

billion (USD 5.52 billion)

NPR 1.81 trillion (USD 13.69 billion)

NPR 1.19 trillion (USD 8.96 billion)

NPR 1.17 trillion (USD 8.81 billion)

NPR 566.62 billion (USD 4.27 billion)

NPR 496.49 billion (USD 3.74 billion)

Total exports 75 NPR 13.52 billion (USD 101.89 million)

Total imports 76 NPR 129.23 billion (USD 973.9 million)

The GDP increased by 9.1% from the previous financial year in the same period. Figure 2. depicts the trend of annual GDP in Nepal at the current prices. It indicates an encouraging 28.29% increase since FY 2018/19 AD (2075/76

As per the Nepal Rastra Bank (NRB)’s ‘Current Macroeconomic and Financial Situation’ report based on the first six months’ data of FY 2023/24 AD (2080/81 BS), the Gross Domestic Product (GDP) at current prices stood at NPR 5.38 trillion (USD 40.55 billion) in mid-January 2024.77

Total trade balance NPR -693.19 billion (USD -5.22 billion)

Current Account NPR 16.16 billion (USD 121.54 million)

Balance of Payment NPR 273.52 billion (USD 2.06 billion)

BS), reflecting positive economic activities in Nepal.

Further, the sector-wise analysis for FY 2022/23 AD (2079/80 BS) highlighted that the service sector had the highest contribution to GDP at 62.43%, followed by the agriculture sector at 24.12% and the industrial sector at 13.45%.78 With the proliferation of hydro projects, the largest annual growth of GDP was in

electricity at 19%.79 Following this, the mid-term review for the FY 2023/24 AD (2080/81 BS) budget revealed a 6.54% growth in revenue collection as compared to the corresponding period in FY 2022/23 AD (2079/80 BS), reflecting fiscal health and stability.80 Despite these encouraging figures, according to the Quarterly Informal Economy Survey (QIES), Nepal's informal economy is estimated to be

33.3% of GDP, approximately USD 42 billion (NPR 5.56 trillion) in 2023.81 Looking ahead, the government remains committed to sustaining financial stability and fostering economic growth that reinforces the positive momentum observed in the macroeconomic landscape.

Figure 2. GDP in current prices over the last five years (in NPR billion)

Source: Current Macroeconomic and Financial Situation of Nepal (based on annual data, FY 2022/23 AD (2079/80 BS))82

INFLATION

The Consumer Price Index (CPI) measures any country's average inflation rate. According to Nepal Rastra Bank’s data, a notable decline in the year-on-year CPI was revealed, standing at 5.26% in mid-January of 2024 compared to 7.26% in midJanuary of 2023, as shown in Figure 3. Year-on-year Consumer Price Index (CPI) for November,

December and January of the last three FYs.Figure 3. The central bank attributed the fall in inflation to a drop in food prices while some economists attributed it to inaccuracy due to the traditional method of inflation calculation. The Asian Development Bank (ADB) attributed Nepal's decreased inflation to India's declined inflation as Nepal is highly reliant on imports from India.83 Despite

the relaxing numbers, concerns among people were evident as the cost of living continues to rise, undermining the reliability of the central bank’s statistics.

Figure 3. Year-on-year Consumer Price Index (CPI) for November, December and January of the last three FYs

Source: Current Macroeconomic and Financial Situation of Nepal (based on first six-months data of FY 2023/24 AD (2080/81 BS), ending in mid-January 2024)84

CONSUMPTION OF GOODS AND SERVICES

The Consumer Price Index (CPI) is a measurement to calculate the weighted average price of a

basket of consumer goods and services.85 The basket of goods refers to a fixed set of consumer products and services whose prices are evaluated regularly.86

Table 3. shows the pattern of

consumption for mid-December and mid-January of FY 2022/23 AD (2079/80 BS) and FY 2023/24 AD (2080/81 BS).

Table 3. Food and Non-Food Consumer Price Index over two consecutive periods (in percentage)

Source: Current Macroeconomic and Financial Situation (based on six months data ending mid-January, FY 2023/24 AD (2080/81 BS))87

As depicted in Table 3, compared to mid-January 2023, the CPI and non-food and service inflation moderated in mid-January 2024. The decreased inflation falls in line with the Asian Development Bank’s forecast for 2024 in the context of Nepal.88 The drop can be attributed to the declining interest rates and lower demand.

Furthermore, the decreased inflation in India, Nepal’s major trade partner, might have also affected the Nepali market.89 However, the decreased inflation failed to alleviate public concerns about the high cost of living.90 This tepid response can be attributed to Nepal's sluggish economic growth, which has

constrained consumer demand and consequently influenced price levels.

MID-TERM REVIEW OF BUDGET FOR FY 2023/24 AD (2080/81 BS)

The Ministry of Finance (MoF) released the budget for the current FY 2023/24 AD (2080/81

BS) amounting to NPR 1.75 trillion (USD 13.19 billion) in midJuly 2023.91 It anticipated an economic growth rate of 6% and to cap the inflation at 6.5%.92

In this regard, the mid-term budget review for FY 2023/24

AD (2080/81 BS), released by the MoF on February 12, 2024, revealed that the government had only spent NPR 573.63 billion (USD 4.32 billion), i.e. 32.75%, of the allocated budget, in the first six months of the current fiscal

Table 4. Comparison of budget from targets until mid-term spending

year.93 Table 4 shows a breakdown of the amounts envisaged in the budget initially and the actual amount spent at the six-month mark.

Following this, the then-Finance Minister Prakash Sharan Mahat reduced the size of the budget by over NPR 200 billion (USD 1.51 billion), down to NPR 1.53 trillion (USD 11.53 billion). He stated that the government’s inability to

significantly improve its revenue collection and expenditures was the reason for the reduction.95 This is also reflected in the data since, with the government having met only 42.17% of its revenue collection target by February 29,

2024, it would have been unlikely for them to achieve the initially set targets.96 The revised targets following the mid-term review are illustrated in Table 5.

Table 5. Revised estimates of the budget for the FY 2022/23 AD (2080/81 BS)

Source: Mid-term Review of Budget FY 2080/81 BS (2023/24 AD), Ministry of Finance94

Source: Mid-term Review of Budget FY 2080/81 BS (2023/24 AD), Ministry of Finance97

The mid-term budget review made several revisions to the inflows as well. Notably, it has revised the revenue collection target downward to NPR 1.20 trillion (USD 9.04 billion) from the previously set target of NPR 1.42 trillion (USD 10.7 billion). This reduction is attributed to various factors including a decline in foreign trade, the displacement of petroleum-based vehicles, a decrease in distributable profits, and delays in payments. Similarly, the review has also scaled back the expected amount in foreign grants to NPR 40.12 billion (USD 302.36 million) from NPR 49.94 billion (USD 376.36 million). Projected foreign loans have also seen a cut from the initial target of NPR 212.75 billion (USD 1.6 billion) to NPR 180.83 billion (USD 1.36 billion).98

FINANCE STATUS

Investments

In the first six months of FY 2023/24 AD (2080/81 BS), the

net Foreign Direct Investment (FDI) increased by about 512.16% to reach NPR 4.53 billion (USD 34.13 million) compared to NPR 749.4 million (USD 5.65 million) in the corresponding period in FY 2022/23 AD (2079/80 BS).99 This rise has been attributed to the government’s reduction of the minimum threshold for foreign investors from NPR 50 million (USD 376,818) to NPR 20 million (USD 150,727).100 While the change was introduced in FY 2022/23 AD (2079/80 BS), it gained momentum in the current fiscal year with a higher influx of foreign investment pledges in small- and medium-scale enterprises.101 Furthermore, Nepal Rastra Bank (NRB) announced that foreign investments in companies listed on the stock exchange, or for changes in share ownership following such investments, would not require its approval.102 A similar exemption has been made for foreign investment in priority industries as per the Industrial Enterprises Act 2020.

The policy and regulatory changes fall in line with the government’s efforts to make Nepal a more investment-friendly destination. They are partly in preparation for the Third Investment Summit 2024, to be held on April 28 and 29, which aims to attract foreign investment and promote investment opportunities in key sectors, including hydropower, tourism, and information technology.103 A meeting of the Investment Summit Directors’ Committee has urged the government to amend over a dozen more laws ahead of the summit to create an enabling environment for investment.104

4. Net foreign direct investments in Nepal until mid-January for five consecutive FYs

Source: Current Macroeconomic and Financial Situation of Nepal (based on six months data ending mid-January, FY 2023/24 AD (2080/81 BS) to FY 2019/20 (FY 2076/77 BS))105

FOREIGN ASSISTANCE

Aid Disbursements from Donor Agencies

During the review period, from December 1, 2023, to February

29, 2024, Nepal received aid disbursements from donor agencies including the World Food Programme (WFP), German Development Cooperation (GIZ), the Government of Norway, and

the U.S. Agency for International Development (USAID), as depicted in Figure 5.106 While USAID accounted for the highest aid disbursement (90%) in the prior review period (August 15

Figure

to November 15, 2023), the Government of Norway and the WFP emerged as leading contributors in the current review period by contributing 26% and 24% of the total foreign aid, respectively.

Figure 5. Aid disbursement share of donor agencies from December 1, 2023 to February 29, 2024 (in %)

Source: Aid Information Management System (AIMS), Ministry of Finance107

BILATERAL AND MULTILATERAL

AID

Project / Program-specific Aid

World Bank Approves USD 200 Million (NPR 26.50 Billion) for GRID Projects

The World Bank approved USD 200 million (NPR 26.50 billion) to finance two projects that support Nepal's transition to Green, Resilient, and Inclusive Development (GRID) and upgrade provincial and local road infrastructure.108 Of this amount, USD 100 million (NPR 13.25 billion) was allocated to the Second Fiscal Policy for Growth, Recovery, and Resilience Development Policy Credit for improving the regulatory framework of revenue collection, debt management, transparency, climate-resilient infrastructure spending, and foreign direct investment.109 The remaining USD 100 million (NPR 13.25 billion) was

for the Provincial and Local Roads Improvement Program to upgrade service delivery, strengthen road and bridge resilience, and ensure community access to markets and services.110 Initially to be implemented in Madhesh, Karnali, and Sudurpaschim provinces, the program holds potential for future expansion.

Nepal-India Grants’ Cap Raised to NPR 200 Million (USD 1.5 Million)

During the 7th Nepal-India Joint Commission meeting in Kathmandu on January 4-5, 2024, the ceiling for direct grants through High Impact Community Development Projects (HICDP) was raised from NPR 50 million (USD 376,818.14) to NPR 200 million (USD 1.5 million).111 Initially set at NPR 30 million (USD 226,090.88) in 2003, HICDP allows the Indian Embassy to select projects for investment at the local level, subject to

prior approval from the Ministry of Finance of the Federal Government of Nepal.112 However, civil society groups and entities like CPN-UML have expressed concerns about this grant's mechanism, citing potential impacts on the budgetary system, political interference, and violations of guiding principles for foreign aid mobilization.113

UK Launches New GBP 400 Million (NPR 67.29 Billion) Development Portfolio for Nepal

British Minister of State in the Foreign, Commonwealth, and Development Office (FCDO), Andrew Mitchell, announced a new GBP 400 million (NPR 67.29 billion) UK-Nepal development portfolio during his visit to Nepal on 19-20 February 2024 while marking the hundredth anniversary of the friendship between the two countries.114 The development portfolio will focus

on facilitating Nepal's systemic transformation through private sector funding, climate resilience, and transition from the Least Developed Country status. The plan aims to create 13,500 jobs, attract over USD 1 billion (NPR 132.69 billion) in investment, and provide access to quality healthcare and education services for two million women by 2030.115

Grant and Concessional Loans

India Boosts Grant to Nepal by 27.27%

The Government of India increased its annual grant to Nepal by 27.27%, from NPR 8.8 billion in 2023/24 AD to NPR 11.2 billion (USD 84.4 million) in 2024/25 AD through its union interim budget presented by Finance Minister Nirmala Sitharaman on February 1, 2024.116 Out of the total NPR 153.94 billion (USD 1.16 billion) grant pledged to foreign countries, Nepal ranks as the second-highest among South Asian countries, after Bhutan, which has been pledged NPR 33.08 billion (USD 249,302.88), in line with India's Neighborhood First Policy.117

IFC Provides Landmark Gender and Climate Financing to Global IME Bank

On February 2, 2024, the International Finance Corporation (IFC) made its largest investment in Nepal’s financial sector by granting a USD 56 million (NPR 7.43 billion) loan to Global IME Bank Limited.118 The loan will be used for pioneering the cause of gender financing in Nepal.119 IFC’s investment aims to bridge access to finance in the aftermath of the

coronavirus pandemic for small businesses, particularly womenowned SMEs and eco-friendly ventures. Half of the loan funds will be allocated equally between climate and gender financing, while the remaining half will directly support SMEs through lending in Nepal.120

Government of Nepal and ADB Sign NPR 21.7 Billion (USD 158.26 Million) Pact to Boost Municipal Resilience

On January 17, 2024, the Government of Nepal and the Asian Development Bank (ADB) finalized an agreement on a concessional loan of NPR 21 billion (USD 158.26 million) and a grant of NPR 700 million (USD 5.27 million), which was signed by Finance Secretary Krishna Hari Puskar and ADB Country Director Arnaud Cauchois.121 The agreement finances the Urban Resilience and Livelihood Improvement Project to build the capacity of municipal levels in Nepal. According to the agreement, the project aims to expand infrastructure, promote tourism, and implement reforms in targeted municipalities, including Pokhara Metropolitan, Janakpurdham Sub-metropolitan, Lumbini Cultural Municipality, Devdaha Municipality, Sainamaina Municipality, Siddhartha Nagar Municipality, and Tilottama Municipality.122

REMITTANCE AND MIGRATION

Surge in Remittances and Record Foreign Exchange Reserves

During the first half of the fiscal

year 2023/24 AD (2080/81 BS), remittance inflows surged by 25.3% to USD 5.52 billion (NPR 733.22 billion) compared to USD 4.50 billion (NPR 585.07 billion) during the same review period in FY 2022/23 AD (2079/80 BS).123 This surge is driven by a higher volume of migrant workers totaling 343,405 individuals and a stronger US dollar against the Nepali rupee, with the NPR depreciating by 0.91% against the US dollar.124 This increase has greatly contributed to the country's gross foreign exchange reserves, which reached a record NPR 1.81 trillion (USD 13.64 billion), with central bank reserves at NPR 1.60 trillion (USD 12.05 billion) and reserves held by banks and financial institutions at NPR 216.35 billion (USD 1.63 billion).125 As a result, the banking sector's foreign exchange reserves are sufficient to cover prospective merchandise and services imports for about 12 months.126

months data)127

Nepal Suspends Work Permits for Russia and Ukraine

Nepal's Department of Foreign Employment (DoFE) suspended the issuance of work permits for Russia and Ukraine on January 4, 2024, after at least 14 Nepali casualties were reported in the ongoing Russia-Ukraine war.128 While Russia has agreed to compensate the families of the deceased through the Nepali Embassy in Moscow, the process for compensation and the repatriation of bodies is yet to be initiated. Due to the lack of progress on the matter, Foreign Minister NP Saud, during

the 19th summit of the NonAligned Movement in Uganda on January 19, 2024, urged Russian Deputy Foreign Minister Sergey Vershinin to uphold Nepal's policy of prohibiting Nepali citizens from enlisting in any foreign army besides the British and Indian forces and facilitate the repatriation of those already recruited.129

Top Ten Labor Destinations

As observed in Table 6, 207,970 Nepali migrant workers sought employment abroad in the first six months of FY 2023/24 AD (2080/81 BS), reflecting a

decrease from the previous year's figure of 275,643. The Gulf region emerged as the primary destination, with the United Arab Emirates (UAE) and Saudi Arabia experiencing labor influx growth of 127.3% and 50.1%, respectively. Moreover, emerging labor markets like South Korea and Japan witnessed significant increases of 26.9% and 116.4%, respectively, indicating a growing preference among Nepali migrant workers for East Asian countries. Conversely, Malaysia and Qatar exhibited declining trends.

Source: Current Macroeconomic and Financial Situation of Nepal from FY 2019/20 AD (2075/76 BS) to FY 2023/24 AD (2080/81 BS) (first six

Figure 6. Workers' Remittances and Gross Foreign Exchange Reserves

Table 6. Top 10 Labor Destinations of Nepali Migrant Workers in the First Six Months of the Last Three FYs

GOVERNMENT FIGURES

Government Reserves

As per the Current Macroeconomic Financial Situation ending in mid-January 2024, the gross foreign exchange reserves were NPR 1.81 trillion (USD 13.64 billion) in the first six months of FY 2023/24 AD (2080/81 BS).131 This shows an 18% surge from the NPR 1.53 trillion (USD 11.53 billion) recorded in

mid-July 2023.132 Specifically, reserves held by the NRB surged by 18.9%, reaching NPR 1.6 trillion (USD 12.05 billion) compared to NPR 1.34 trillion (USD 10.09 billion) in mid-July 2023 while reserves held by banks and financial institutions experienced an 11.8% rise, reaching NPR 216.35 billion (USD 1.63 billion) from NPR 193.59 billion (USD 1.45 billion) in midJuly 2023.133

As per the central bank's

assessment, based on the last six months of FY 2023/24 AD (2080/81 BS), the foreign reserves are deemed adequate, providing coverage for merchandise imports for 14.5 months and services imports for 12.1 months.134 Additionally, in mid-January 2024, the ratios of reserves-toGDP, reserves-to-imports, and reserves-to-M2 stood at 33.8%, 100.9%, and 27.7% respectively.135

As depicted in the Table 7, the reserves-to-GDP ratio stood at 33.8% in mid-January 2024 compared to 24.9% in mid-

January 2023.137 This trend suggests that foreign reserves are increasingly occupying a significant proportion of the GDP,

backed by the continuous rise in remittances, which is the largest source of foreign exchange in Nepal.

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-Jan 2024)136

Table 7. Reserve to GDP ratio of first six months of last three FYs (in %)

Source: Current Macroeconomic and Financial Situation of Nepal FY 2021/22 AD (2078/79 BS) to FY 2023/24 AD (2080/81 BS) (first six months data)130

Figure 7. Gross Foreign Exchange Reserves in midJanuary of the last seven consecutive years (in NPR trillion)

Source: Current Macroeconomic and Financial Situation of Nepal 2017-2023 (ending mid-Jan)

Government Debt (Total, Domestic, and External)

The Government of Nepal’s accumulated domestic debt can be categorized into various types including treasury bills, development bonds, citizen saving bonds, foreign employment bonds, and others. These debts are managed through Nepal Rastra Bank (NRB), commercial banks, development banks,

finance companies, and other financial institutions. As of midJanuary, the total domestic debt stood at NPR 1.19 trillion (USD 8.96 billion) compared to NPR 964.18 billion (USD 7.25 billion) in midJanuary 2023.138 It is noticeable that there has been an increase of 23.8% in the domestic debt in a year. Moreover, the external debt as of mid-January 2024 reached NPR 1.17 trillion (USD 8.8

billion) which is a 14.14% rise from NPR 1.025 trillion (USD 7.72 billion) in mid-January 2023.139 This suggests that the government is experiencing a liquidity crunch caused by multiple factors, including rising expenses of provincial governments, slow economic growth, and continuous trade imbalances. Table 8 illustrates the trend of domestic debt in the last three years.

Table 8. Domestic Government Debt as of mid-January in the last three years (in NPR billion)

Government Spending (Expenditure and Revenue)

As per the data provided by the Financial Comptroller General Office (FCGO), the total government expenditure and revenue for the first six months of the FY 2023/24 AD (2080/81 BS) was NPR 566.62 billion (USD 4.27

billion) and NPR 496.49 billion (USD 3.74 billion) respectively.141

It is noticeable that both the capital and recurrent expenditure are around 8.57% and 4.05% less than the previous year. Financial expenditure, on the other hand, saw a surge of 18.06%. The notable reduction in capital expenditure

can hinder the progress of development projects in the country because of insufficient funds available for these projects. On the other hand, the total revenue generation has seen an improvement of 8.17% with tax collection strengthened by 9.44% and non-tax revenue by 1.45%.

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-Jan 2024)140

Figure 8. Government Expenditure and Revenue in the first six months of the last two FYs

Source: Current Macroeconomic and Financial Situation of Nepal (ending midJan 2024)142

TRADE STATUS

Foreign Trade Scenario

The total foreign trade deficit in the first six months of FY 2023/24

Figure 9. Total foreign trade in the first six months of FYs

Source: Current Macroeconomic and Financial Situation of Nepal ending mid-Jan FY 2021/22 AD (2078/79 BS) to FY 2023/24 AD (2080/81 BS) 145

Top Imports and Exports

According to the ‘Current Macroeconomic and Financial Situation of Nepal Ending midJanuary 2024’, the top five imports during FY 2023/24 AD (2080/81 BS) were petroleum products (18.4%), transport equipment (4.5%), machinery

AD (2080/81 BS) reached NPR 693.19 million (USD 5.22 billion), indicating a decrease in trade deficit by 2.59% from NPR 711.15 million (USD 5.35 billion) in the

same period of FY 2022/23 AD (2079/80 BS).143 The share of exports and imports in total trade was 8.9% and 91.9% respectively.144

and parts (4.5%), medicines (2.8%), and telecommunications equipment (2.5%).146 Similarly, in terms of exports, the top five products were zinc sheets (8.1%), polyester yarn and thread (7.4%), woolen carpets (7%), cardamom (5.2%), and juice (5%).147

While exports to other countries

grew by 3.6%, exports to India and China fell by 40.1% and 25.2%. On the other hand, imports from India, China, and other countries fell by 19.4%, 24.6% and 21.4% respectively.148

Figure 10 depicts the total imports, exports, and trade balance in the first six months of the last five consecutive fiscal years.

Source: Current Macroeconomic and Financial Situation of Nepal from FY 2019/20 AD (2077/78 BS) to FY 2023/24 AD (2080/81 BS) (ending mid-Jan 2024)149

Balance of Trade

As per the Current Macroeconomic and Financial Situation, the total trade balance decreased by 2.69% to NPR

693.19 billion (USD 5.22 billion) in FY 2023/24 AD (2080/81 BS) as compared to 23.69% in the corresponding period of the previous FY 2022/23 AD (2079/80 BS).150 As per the data from the

Department of Customs for the first six months of FY 2023/24 AD (2080/81 BS), Nepal had a trade deficit with 127 out of its 154 trading partner countries.151

Source: Current Macroeconomic and Financial Situation of Nepal from FY 2019/20 AD (2077/78 BS) to FY 2023/24 AD (2080/81 BS) (ending mid-Jan 2024)152

Balance of Payments

As per the six months’ data of FY 2023/24 AD (2080/81 BS), the current account continued to be at a surplus of NPR 16.16 billion (USD 121.54 million) compared to a deficit of NPR 35.56 million (USD 267,993.06) in FY 2022/23 AD (2079/80 BS).153 On the other hand, the Balance of Payments (BoP) remained at surplus at NPR

273.52 billion (USD 2.06 billion) in FY 2023/24 AD (2080/81 BS).154 The increase in remittances and foreign investments has mostly contributed to the surplus in the BoP.

Figure 10. Total imports, exports, and trade balance during the first six months of the last five FYs

Figure 11. Total trade balance during the first six months of the last five years

Figure 12. Balance of Payments trend as of first six months of the last eight FYs

Source: Current Macroeconomic and Financial Situation of Nepal

FY 2016/17 AD (2073/74 BS) to FY 2023/24 AD (2080/81 BS) (ending in mid-Jan)155

Exchange Rate Fluctuations

The Nepali currency depreciated by 0.65% against the USD in mid-January 2024. This depreciation is lower than the 10.29% depreciation recorded in mid-January 2023.156 The continuous depreciation of Nepali currency visa-à-vis the USD has had a significant impact on making imports expensive and consequently causing an escalation in inflation in the nation. Figure 13 demonstrates the exchange rate fluctuations over the last seven years.

Figure 13. Exchange rate fluctuations in mid-January of the last seven years

Source: Current Macroeconomic and Financial Situation of Nepal

FY 2016/17 AD (2073/74 BS) to FY 2023/24 AD (2080/81 BS) (ending in mid-Jan)157

Gold/Silver Updates

Imports decreased by 145.91% from NPR 29.19 billion (USD 219.98 million) in mid-January of 2023 to NPR 11.87 billion (USD 89.45 million) in 2024.158 The share of gold in this amount of total imports was 1.5% based on the first six months’ data of FY

2023/24 AD (2080/81 BS). This makes gold among the top 20 import commodities of Nepal. Conversely, the import of silver

was not on the list of major importing commodities. Silver, however, was one of the most exported commodities from

Nepal, amounting to NPR 2.06 billion (USD 15.52 million) in the first six months of FY 2023/24 AD (2080/81 BS).159 Additionally,

silverware came under the top 14 commodities that Nepal exports to countries other than India and China.160

Figure 14. Import trend of gold for mid-January in the last four FYs

Source: Current Macroeconomic and Financial Situation of Nepal from FY 2020/21 AD (2077/78 BS) to FY 2023/24 AD (2080/81 BS) (ending mid-Jan 2024)161

Outlook

The Nepali economy shows positive growth indicators driven by remittances, foreign aid, and investments, amid ongoing challenges. Foreign assistance to Nepal is evolving while prioritizing Nepal’s development aspirations through targeted programs to promote gender equity, combat climate change, and foster sustainable growth. While the surge in remittances has led to record-high foreign exchange reserves, rising domestic and external debts might create liquidity crunch. Fiscal and inflationary pressures call for prudency in future macroeconomic policies to ensure economic stability. Lastly, the government should focus on expediting amendments of recommended laws before the third International Investment Summit to foster favorable investment climate and drive positive transformation of Nepal.

3

Sectoral Review

FACTSHEET

Agriculture and Livestock

Nepal's agriculture sector faced significant challenges in this quarter, primarily due to prolonged winter droughts that affected crop yields. This reduced rainfall impacted staple crops like barley, citrus, lentils, mustards, vegetables, and wheat, leading to dried fields and decreased productivity. Despite these hurdles, there were positive developments in rice production, which increased despite a reduction in cultivation area. Additionally, the popularity of climate-resilient crops, like fox millet, surged, offering hope for future agricultural resilience. However, the dairy industry encountered setbacks, with delayed payments to farmers exacerbating existing issues. The situation prompted protests and government intervention to stabilize the dairy value chain. Swine flu outbreaks in several districts added to the livestock challenges, requiring swift action to mitigate the spread. On the innovation front, projects like AI integration in rural agriculture and initiatives targeting women farmers aim to enhance productivity and sustainability. The dominance of the informal economy in the agriculture sector underscores the need for targeted interventions to address issues of food security and market access.

Top 4 agricultural commodities imports (based on six months’ data ending in midJanuary 2024)

Top 4 agricultural commodities exports (based on six months’ data ending in midJanuary 2024)

Rice/paddy: NPR 10.1 billion177

Edible oil: NPR 8.00 billion178

Crude soybean oil: NPR 7.84 billion179

Vegetables: 7.75 billion180

Cardamom: NPR 3.91 billion181

Juice: NPR 3.76 billion182

Jute goods: 3.63 billion183

Palm oil: NPR 2.90 billion184

PRODUCTION UPDATES

Crops Affected by Prolonged Winter Drought

According to data from the Department of Hydrology and Meteorology, the average winter rainfall from December to February each year in Nepal is 60 mm.185 However, in the past 12 years, two-thirds of the country’s winters had prolonged winter droughts with rainfall less than this average.186 This year, although the Department of Hydrology and Meteorology predicted more than the average rainfall, Nepal faced persistent drought with 1.9 mm of rainfall by mid-January and 12.1 mm by the end of February.187 This marks the lowest recorded rainfall in the country since 2008.188

Approximately 80% of Nepali farmers are dependent on rainfed agriculture due to the lack of proper irrigation channels.189 These winter droughts often lead to heavy downpours towards the end or after winter, causing further challenges for the agricultural production that requires distributed rain spread throughout winter.190 Reduced rainfall during winter has resulted in reduced crop yields, affecting the production output for barley, citrus, lentils, mustards, vegetables, and wheat.191 Thus, the prolonged droughts led to dried winter wheat in the Terai plains and dry terrace fields in the hills.192 The shifting rainfall patterns and prolonged droughts, attributed to climate change, pose significant concerns for food security in Nepal and have become a growing source of

frustration among farmers.193

Increased Seed Efficiency of Domestic Rice

In April, the South Asian Climate Outlook Forum (SASCOF-25) and the Department of Hydrology and Meteorology predicted below-average rainfall that led agricultural scientists to urge the government to opt for alternate paddy farming techniques. However, in January, the Ministry of Agriculture and Livestock Development reported an increase in rice production.194 The production increased from 5.49 million tons in FY 2022/2023 AD (2079/80) to 5.72 million tons in FY 2023/24 AD (2080/81) due to a better variety of seeds, reduction in diseases and pests, reduction in disasters like floods and landslides, and an increased availability of fertilizers, despite a reduction in cultivation area of 8,800 hectares.195 Consequently, rice productivity increased by 4.97% in 2023 compared to 2022.196 Among the provinces, Koshi had the highest yield followed by Madhesh and Lumbini, respectively.197 Koshi also had the highest productivity with 4.43 tons per hectare.

Government Initiates Programs to Support Farmers

The government body, Food Management and Trading Company Ltd., is set to purchase rice paddy worth NPR 2 billion (USD 15.07 million) to ensure price stability and support farmers.198 1.75 million kilos of the purchased rice will be redistributed and 1.80 million kilos will be sold at a concessional price in remote areas to reduce food insecurity.199

As part of the program, an additional budget of NPR 435 million (USD 3.28 million) is allocated for the transportation of the rice to remote areas.200

Indigenous Crop Resurfaces as a Climate-Resilient Crop

Fox millet‘s popularity has increased due to various reasons, particularly its drought-resistant properties.201 Another reason behind this also has been the UN's Food and Agriculture Organization's (FAO's) emphasis on local varieties of millet in 2023, which has contributed to the resurgence of this crop.202 Further, fox millet is now registered for sale, enabling farmers to profit from its cultivation, while the local government provides incentives, machinery support, and subsidies.203 As a result, the average cost of production was reduced by 22% and the average milling recovery was enhanced by 15%.204

Overall, the cultivation area for fox millet increased from 0.025 hectares in 2013 to 4.7 hectares in 2023.205 This expansion has led to a substantial increase in production from 0.006 tons a decade ago to 4.1 tons in 2023.206 Millet, once a nutrientdense staple crop in indigenous Gurung villages in Lamjung, experienced a steep decline last decade due to various factors, including an increase in demand for cash crops like rice, its laborintensive and difficult postharvest processes, and a lack of nutrient knowledge.207 However, the crop’s unique cultivation cycle, sowed during dry seasons and harvested before monsoon, has contributed to its revival,

particularly when other crops fail to thrive during the season.208

LIVESTOCK UPDATE

Dairy Producers Delay Payments to Dairy Farmers

Dairy farmers in Nepal were deprived of payment for more than six months, amounting to a total of NPR 6.05 billion (USD 48.99 million) by private companies and NPR 950 million (USD 7.16 million) by the government-owned Dairy Development Corporation (DDC).209 The dairy producers reasoned that payments were stalled due to sluggish sales of farmer’s milk products in the market.210 The delayed payments from the dairy producers to farmers exacerbated the already struggling dairy economy plagued by reduced sales and rising livestock feed costs. Further, reduced demand for dairy products resulted in the dairy companies’ breach of their contract with the farmers by purchasing milk of lower quality than agreed upon.211

Following the dire financial state of farmers, the National Peasants’ Coalition Nepal organized a protest on the streets of Kathmandu.212 The protest was staged on 22 February by pouring milk on the streets and was stalled after private and stateowned dairies agreed to disburse payments to farmers by 3 April 2024.213 The protest resulted in a five-point agreement between the Ministry of Agriculture and Livestock Development (MoALD) and the Central Dairy Cooperative Association Limited Nepal (CDCAN) on 2 March 2024. The agreement includes clauses

such as securing continuous milk purchases by dairy industries while maintaining production levels, collaborating with MoALD to facilitate milk and dairy product exports, integrating export promotion strategies into next fiscal year's policies, and maintaining government incentives for animal husbandry and farmer insurance.214

Following these developments, DDC has sought a bailout fund of NPR 300 million (USD 2.26 million) from the government, which is under review by the finance ministry.215 If approved, it is expected to be disbursed by mid-March. They aim to settle the farmers’ payments by April 3 by selling stocked products worth NPR 1 billion (USD 7.54 million).216 On the other hand, private dairy producers are grappling with increasing interest on their loans with stocks of butter and milk powder worth NPR 5 billion (USD 37.68 million).217 This situation presents challenges, especially regarding the uncertainty surrounding farmers' payments if the stocked products remain unsold by April.

Five Districts Affected by Swine Flu

Swine flu was detected in five districts in Nepal - Kaski, Kathmandu, Lalitpur, Lamjung, and Tanahun - during a surveillance by the Department of Livestock Services (DoLS).218 The Livestock and Fisheries Development of Bagmati Province revealed cases of swine flu were detected in Kirtipur Municipality in Kathmandu and Godavari Municipality in Lalitpur, prompting the office to write a

letter to the local government to initiate awareness programs.219 Hospitals in Kathmandu also observed a rise in infection due to swine flu.220

KEY DEVELOPMENTS

Empowering Women through AI Integration in Rural Agriculture

In the past quarter, Heifer International and FruitPunch AI launched the AI for Women Farmers Challenge project.221 The project comprises two components: one focuses on enhancing the livelihood of rural women, while the other involves integrating AI into rural development initiatives. While Heifer International was previously mostly working on improving agriculture in Nepal, this project aims to integrate women farmers into the digital economy. It is working with women-led agricultural cooperatives to digitize their finance and agriculturerelated data.222 This comes following the realization that the lack of digitization impeded agricultural cooperatives from benefiting from their data on loans, production, and sales.223 The cooperatives, through this project, are expected to enhance their capacity to obtain growth capital, improve their business processes, and increase their market presence.224 Thus, the project intends to improve the livelihood of rural women smallholder farmers by developing sustainable AI engineering skills like assisting them in utilizing data.

Outlook

Recent winter droughts have had a significant impact on crop production, exacerbating concerns about food insecurity. In the next quarter, districts with high levels of food insecurity, such as Bajura, Dhading, Gorkha, Humla, Kalikot, and Mugu, will require assistance to mitigate the effects of these droughts.225 On the other hand, although indigenous crops are gaining popularity due to their resilience to climate change, there is a need to promote information about their benefits to reach a broader audience of farmers and consumers. Additionally, the agriculture sector remains dominant in the informal economy, underscoring the importance of targeted interventions to support its growth.

Besides this, Nepal's dairy production currently exceeds demand, leading to a surplus. Prioritizing dairy exports could help alleviate this surplus and provide farmers with a stable income by addressing the issue of oversupply. Despite various challenges, including climate-related issues and limited market access, ongoing efforts to address these challenges, improve market access, and foster innovation continue to drive the agriculture sector forward.

OPPORTUNITIES

Building Proper Irrigation

Insufficient irrigation infrastructure has forced farmers to rely on rain-fed agriculture.226 Investments in projects that improve irrigation systems and promote water-efficient farming practices could address this challenge by ensuring the distribution of adequate water, particularly during winter droughts.227 Improving irrigation can reduce poverty in the country by increasing year-round cultivation and increasing agricultural income for the large population dependent on farming.228

Climate Adaptation and Resilience through Indigenous Crop Revival

Investments in climate adaptation and resilience measures are essential to address the increasing vulnerability of Nepal's agriculture sector to climate change.229 Supporting projects focused on building climate-resilient infrastructure, promoting climate-smart agricultural practices, and strengthening disaster preparedness and response can mitigate risks and enhance the sector's sustainability.

With frequent droughts affecting traditional crops, investing in climate-resilient crops like fox millet presents a lucrative opportunity.230 The crop's increasing popularity, coupled with government incentives and reduced production costs, offers a promising investment prospect.231 Promoting indigenous crops with climate-resilient properties presents an opportunity to diversify agricultural production and enhance food security.232 Investments in research, extension services, and market promotion of indigenous crops can support their revival and contribute to sustainable agricultural development.233

Improving Export Market Access for Dairy

Despite current challenges, the dairy industry in Nepal has immense growth potential. Investments in infrastructure, technology, and market access to export can address issues such as delayed payments to farmers and surplus production. Supporting dairy producers with access to finance

and facilitating export opportunities can further stimulate growth in this sector.234 For example, DDC, that started exporting ghee worth NPR 4.74 million (USD 0.036 million) to Japan in FY 2020/2021 AD (2077/78 BS) expanded to Canada, India, and Hongkong in FY 2021/22 AD (2078/79 BS), with a total export of NPR 19.3 million (USD 0.145 million) and is now looking to export other dairy products.235

Education

During the review period, Nepal's education sector underwent significant changes and controversies. Prof. Dr. Keshar Jung Baral was appointed as the Vice Chancellor of Tribhuvan University following the extensive discussion and debate that occurred over this matter in the last quarter. On the other hand, the government's enactment of the education bill continued to stir debate. While aiming to decentralize the education system and transform private schools into trusts, it faced criticism for potentially infringing on property rights and neglecting the private sector's contributions. Nonetheless, the government has shown willingness to address concerns by agreeing to revise the bill. Amidst these discussions, challenges in rural education persisted, with issues like low student enrollment and teacher shortages remaining prevalent.

KEY DEVELOPMENTS

Appointment of Tribhuvan University Vice Chancelor Sparks Debate

On February 22, 2024, Prime Minister and Chancellor of Tribhuvan University (TU) Pushpa Kamal Dahal, appointed Dr. Keshar Jung Baral as the ViceChancellor (VC) of the university, selecting him from a pool of three recommended candidates. The pool was created after 14 out of 43 applicants for the Vice-Chancellor position were shortlisted for presentation and interviews.241 According to the authorities, Baral’s appointment was made based on educational qualification, training, research articles, interviews and presentations.242 However,

many entities have opposed this and raised concerns that Baral’s selection was influenced by his closeness to the ruling Communist Party of Nepal (Maoist Center) (CPN (MC)) amidst the rampant politicization in the university.243 Previously, in 2007, Baral served a four-year term as the Vice-Chancellor of Pokhara University after being appointed under the Maoist quota.

Besides Baral’s appointment, there was also a lot of discussion and debate regarding the very selection process for the appointment as the Education, Health, and Information Technology Committee of the House of Representatives had flagged the names shortlisted for the position, citing allegations

FACTSHEET

Indicators

of intellectual theft, corruption, and concealment of information against some candidates.244 In February 2024, it had urged the Ministry of Education, Science, and Technology to review the selection process and also demanded an investigation into Baral’s appointment due to his political affiliation and allegations against him for corruption.245

School Education Bill Attracts Debate for Converting Schools to Trust

The School Education Bill 2080 BS (2023 AD), that was registered on September 13, 2023, attracted amendments from 152 lawmakers in the recent House session.246 Most of these amendments have been about the conversion of private schools into trusts,

centering around the timeframe for the conversion, with opinions ranging from five to 20 years.

Nepali Congress, Communist Party of Nepal-United Marxist Leninist (CPN-UML) and CPN (MC) lawmakers have reportedly proposed ten years; the Rastriya Swatantra Party has proposed 20 years; and the Nepal Majdoor Kisan Party wants them to be allotted five years.247 The School Education Bill had initially required all private schools to convert into trusts in five years.248 However, after a nationwide protest from September 20, 2023, the bill was amended to give existing schools the autonomy to choose whether to change their ownership structure, and required only new schools to be registered as trusts.249 This discussion has sparked concerns for overlooking investment interests of private sector in the education, which plays an important role in the economy.

Japan Hands Over Classroom Building in Sankhuwasabha District

The Government of Japan inaugurated a new classroom building at Shree Himalaya Secondary School (SHSS) in Makalu Rural Municipality, Sankhuwasabha District on February 28, 2024.250 The building was constructed under the Grant Assistance for Grassroots Human Security Project funded by Government of Japan, with assistance amounting to USD 185,971 (NPR 23.2 million) given after the 2015 earthquake.251 The grant also includes nonrefundable financial assistance, given to Nepali NGOs and other

non-profit organizations.252 Previously, SHSS, which has approximately 400 students, had a 40-year-old main structure, which posed safety concerns due to cracks in the walls and roof leaks. With the new twostory building, comprising 11 classrooms and modern toilet facilities, the hope is that there will be an enhancement in the learning environment for both students and teachers.253

National Assembly Endorses Bill to Establish Dashrath Chand Health Science University

The Minister of State for Education, Science, and Technology, Pramila Kumari, proposed a bill on February 12, 2024 to pass the ‘Martyr Dashrath Chand Health Science University Bill, 2080 BS’ which was then endorsed on the same day.254 Before the endorsement, several lawmakers of the National Assembly participated in discussions to clarify their queries regarding the bill that aims to establish the Dashrath Chand Health Science University in the Sudur Paschim Province.255 This bill was in line with the government’s efforts to provide quality higher education in provinces away from the center.256 As per the constitutional procedure, the bill will be forwarded to the House of Representatives for approval.

Nepal Misses Total Literacy Target

Despite spending more than NPR 11 billion (USD 82.85 million) across a decade, the government has failed to achieve its aim of total literacy FY 2023/24 AD

(2080/81 BS).257 This is due to a variety of reasons that can be illustrated through the example of the Karnali province.

Public schools across Karnali province have been seeing a low number of students following an already low literacy rate of 76%, as depicted in the 2021 census report. Officials have stipulated the major reasons behind this decreased enrollment to be migration and lowered trust of guardians in public education.258 Additionally, the problem in education system is also persistent in Karnali due to many factors such as the delay in enacting the Federal Education Act and a lack of budgetary resources. According to reports, there is demand to create 60,000 teaching positions for different levels up to Grade 12. However, the finance ministry has not yet approved the budget to create this position and, as an alternative, 40,000 temporary positions have been filled to meet the requirement.259 Following the low enrollment and lack of resources, the government had urged rural municipalities to consider merging schools, but resistance arose due to concerns over employment of municipal leaders' relatives in schools without students.260

School Textbook Printing Rights Revised

In February 2024, the Ministry of Education Science and Technology (MoEST) revised its policy of the printing of school textbooks. Private publishing houses, once in charge of printing textbooks for grades 1-5, will now handle grades 1-4. Whereas,

the government-owned Janak Education Material Center will now broaden its printing duties for grades 5-12, expanding from its previous responsibility of books for grades 6-12.261 According to the authorities, the government chose Janak Education Material Centre due to their progressive track record on printing the material and delivering them in a timely manner.262

Outlook

The education sector in Nepal stands at a critical juncture, necessitating a united effort towards transparency, inclusivity, and collaboration to address pressing issues and ensure universal access to quality education. The recent appointment of Professor Dr. Keshar Jung Baral as Vice-Chancellor of Tribhuvan University has ignited discussions on the selection process within educational institutions, underscoring the urgent need for transparency and integrity in key academic appointments. Concurrently, debates surrounding the School Education Bill 2080 have revealed disagreements over the timeline for converting private schools into trusts, highlighting the delicate balance between promoting educational quality and considering private sector interests. Meanwhile, international collaborations remain vital in enhancing educational standards, as evidenced by the inauguration of a classroom building in Sankhuwasabha, funded by the Government of Japan. Fostering a culture of cooperation and accountability is essential in achieving the shared vision of inclusive and highquality education for all Nepali citizens.

OPPORTUNITIES

Affiliation with Colleges and Universities

According to the data provided by the government, 1.5 million students leave the country annually for higher education.263 This is due to various reasons such as limited educational resources, poor socio-economic environment, and political instability. Thus, this is a number that can be tapped and retained in Nepal if the proper resources are provided to students – primarily the availability of good education. Therefore, this poses as a major opportunity in the sector whereby colleges and universities can establish affiliations with global institutions to enhance educational standards and curb youth migration. This collaboration can facilitate access to advanced learning resources, promote international exposure, and ultimately contribute to retaining talent within the country, thus benefiting Nepal's overall social and economic development. Presently, more than 80 colleges in Nepal have affiliated with universities around the world.264

Promotion of Digital Literacy

Promoting digital literacy in rural areas yields manifold benefits, particularly in breaking down educational barriers for children with physical and intellectual disabilities. By providing access to tailored learning resources and tools, digital literacy initiatives can significantly enhance educational opportunities for these children. Nepal has demonstrated remarkable growth in the information and communication sector in recent years, underscoring the importance of prioritizing the digitalization of educational resources by the government. Furthermore, initiatives aimed at enhancing digital literacy enable children to pursue their education from the comfort of their homes, which is especially advantageous for children with disabilities and those residing in areas with challenging topography. Embracing digital education ensures uninterrupted learning, even during disasters, when attending traditional schools may be impractical. This approach not only fosters inclusivity but also cultivates resilience in learning environments, empowering children to thrive academically regardless of their circumstances.

Energy and Environment

The past quarter saw many developments in the sector. The total capacity of energy production in Nepal stands at 3600 MW for FY 2023/24 AD (2080/81 BS), with the peak energy generation marked in August 2023 with the capacity of 2120 MW. With the onset of the dry season, electricity output from run-of-river hydropower projects is bound to fall and therefore the investment modality of reservoir-based hydro projects is being pushed. Moreover, for the optimal utilization of electricity, the Nepal Electricity Authority (NEA) has agreed to sign Power Purchase Agreements (PPAs) with smaller hydropower developers with the capacity of 10 MW. Besides this, to promote sustainability and curb the 13% of country's trade deficit coming from importing fossil fuels, the government is also promoting sustainable policies to encourage the use of electric vehicles as well as hydrogen production. Another major development has been that climate change and sustainability is getting a dedicated policy section, in alignment with Nepal's goal of becoming carbon neutral by 2045.

POLLUTION RISKS AND MANAGEMENT

Air Quality Deteriorates in Kathmandu Valley

The past quarter saw air quality in the Kathmandu valley reaching hazardous levels, with PM 2.5 levels peaking at 305 μg/m3 on 14th February.272 According to the United States Environment Protection Agency, PM 2.5 levels exceeding 300 μg/m3 are considered hazardous, posing risks to both vulnerable populations and the general

public, often prompting emergency alerts.273 Despite the readings surpassing this threshold, no health emergency was declared, and business carried on as usual.274 Industrial pollution, solid waste, and transportation are cited as the main causes of poor air quality, exacerbated by the winter drought the country faced in the last few months.275 Additionally, research on vehicular emissions published in December 2023 revealed that gasoline vehicles like bikes, scooters, taxis, and cars emit the maximum amount of PM 2.5,

FACTSHEET

Indicators

Total petroleum product imports (based on annual data of FY 2023/24 AD (2080/81 BS))265

Peak energy demand266 (from the month of Falgun 2080 (FebMar 2024))

Total electricity capacity267 (for FY 2023/24 AD (2080/81 BS))

Peak energy generation (August 2023)268

Highest energy import 269 (for the month of Falgun 2080 (FebMar 2024

billion (USD 1.06 billion)

MW

MW

MW

while buses, jeeps, microbuses, minibuses, trucks, and vans emit comparatively lower amounts.276 Interestingly, the latter category emits a maximum amount of PM 10 compared to the former.277

Government Approves Amendment to Conservation Act

On January 4, 2024, the parliament approved the amendment of the 1974 National Park and Wildlife Conservation Act, allowing for the implementation of large infrastructure projects and

tourism in the conservation areas.278 The Department of National Parks and Wildlife Conservation (DNPWC) initially proposed this amendment to update and consolidate the previous act to align with the current federal system.279 Despite its fairly recent approval, more than 298 projects received permission to conduct feasibility and environmental assessments while eight hydropower projects are already under construction.280 This amendment has raised heightened concerns among experts about the potential for encroachment, exploitation, and the consequent threat to biodiversity, which they believe can significantly jeopardize the hard-earned successes of the past decades in terms of conservation.281

Gas and Fertilizer Production Initiatives Address Solid Waste Management in Birendranagar

In January 2024, KP Commercial Private Limited (KPC), Karnali’s sole company focused on environmental sanitation and hygiene, inaugurated its first solid waste management project of converting biodegradable waste from municipal vegetable markets and shops to clean energy bio-gas and organic fertilizer.282 The project, initiated in Birendranagar-11, Karnali, has

capped the price of the products at a market competitive price of NPR 140 (USD 1.05) per kg of bio-gas and NPR 25 (USD 0.19) per kg of fertilizer, with a daily production of 720 kgs of biogas, 9 metric tons of manure, and 15,000 liters of liquid manure.283 The project, initiated under a trilateral agreement between KPC, Birendranagar Municipality, and Alternative Energy Promotion Centre, comes following the submission of an initial detailed report and environmental impact assessment to the relevant government body in 2020.284 It has secured funding from multiple stakeholders among which, out of the total estimated budget of NPR 140 million (USD 1.05 million), NPR 17.2 million (USD 129,684) will be supported by the provincial government and NPR 50 million (USD 376,250) will be supported by the World Bank.285 However, it also faces various issues such as the lack of large storage requirements and the lack of a proper market, which it hopes to tackle in the coming future. 286

ENERGY PRODUCTION AND TRADE

Power System Expansion

Project Enhancing Nepal's Energy Infrastructure

South Asia Subregional

Economic Cooperation (SASEC) aims to expand Nepal’s power grid capacity and enhance renewable energy through their Power System Expansion Project by 2025. The project is funded through multiple sources including the Government of Norway, the Asian Development Bank (ADB), and the European Investment Fund.287 By February 2024, a total of USD 91 million (NPR 12.07 million) was received as grants, USD 500,000 (NPR 66.35 million) as technical assistance, and USD 320 million (NPR 4.25 million) as loans for this project.288 Although the project was set to be completed in 2022, its implementation period was extended by two years till 30 July 2024.289 This quarter, the project also extended the expression of interest for the construction of solar energy systems and hybrid (solar-wind) energy systems.290 While the focus was on solar energy, other consultants for the construction and upgradation of transmission lines.

Table 9. Power System Expansion Project Funding Details (as of 24 February 2024)

Loan

Loan

Technical Assistance

Grant

Loan

USD 180 million (NPR 23.88 billion)

ADB: Asian Development Fund

USD 120 million (NPR 15.92 billion) European Investment Fund

USD 500,000 (NPR 66.35 million)

USD 20 million (NPR 2.65 billion)

USD 20 million (NPR 2.65 billion)

Nepal Imposes Tariff for Electricity Export to Bangladesh

Nepal is headed to conclude the negotiation of exporting 40 MW of electricity during six months of the rainy season to Bangladesh.292 The proposed tariff ranges from NPR 8.96 (USD 0.067) to NPR 9.28 (USD 0.069) per unit. The rate is approximately equivalent to the rate that Nepal charges India under a five-year power purchase agreement. Further, it has been agreed that the amount must be paid off within 45 days of trade.293 In terms of the cost, there is an incentive for early payment which waives the tariff, if paid off within seven days of trade as well as penalty charges for failure of payment within the specified timeframe.294 While the trade is between Nepal and Bangladesh, crossing India is a crucial element. Nepal will deliver power to a substation at Muzaffarpur, India that will be transferred to the BaharampurBheramara connection with the cost of transportation borne by Bangladesh.295 While the details have been generally agreed

ADB: Technical Assistance Special Fund

ADB: Strategic Climate Fund

ADB: Concessional Ordinary Capital Resources Lending

upon, Nepal Electricity Authority (NEA) awaits Bangladesh’s formal approval.296

HYDROPOWER

Nepal Signs Agreement for 1,063 MW Upper Arun Hydropower Project

A USD 25.4 million (NPR 3.37 billion) consultancy agreement was signed for the supervision of the 1,063 MW Upper Arun Hydropower Project on February 14, 2024.297 The project will have a mixed model of investment involving Tractebel Engineering GmbH of Germany as the lead firm, Traceteble Engineering S.A. of France, and WAPCOS Limited of India.298 While 51% of the equity will be collected from promoter shares of Upper Arun Hydroelectric Company, the promoter of the projects and subsidiary of NEA, the remaining 49% will be sourced from public shares.299 The project was started in March 2023, and its pre-construction phase is aimed to finish by 2026. After it is operational in 2033, it is expected to operate for six hours

Source: Asian Development Bank.291

daily during winter, producing 4.53 billion units annually and significantly contributing to Nepal's energy sector and economic growth.300

NEA to have Power Purchase Agreements (PPA) with Smaller Projects

In a board meeting held in the first week of February 2024, NEA decided to sign Power Purchase Agreements (PPAs) with small hydropower companies under the run-of-the-river (RoR) modality, where the production is highly dependent on river flow/seasons, with the capacity of up to 10 MW. As decided in the meeting, NEA has offered a rate of NPR 8.40 (USD 0.063) per unit in the dry/off season and NPR 4.80 (USD 0.036) per unit in the wet season. As per the discussion, the rate will be signed on a take-or-pay basis, which means that NEA will have to pay as agreed, irrespective of whether it buys the electricity from the small projects or not. After the announcement, 89 projects have been waiting for the NEA’s nod to sign the PPA,

with an estimated total of 351 MW of electricity. Additionally, NEA has fixed the PPA ceiling at NPR 5.94 (USD 0.045) per unit for the solar-based power projects, expecting to allow PPA of 800 MW of solar electricity projects.

Projects totalling 106 MW have already started production and an additional 30 MW of solar projects are in the pipeline to sign PPA with the NEA.301

Arun III Hydroelectric Project Reaches 70% Completion Milestone

Arun III, a 900 MW hydroelectric project, began in November 2014 after an agreement between Investment Board Nepal and SJVN Arun-3 Power Development Company Pvt. Ltd. (SAPDC) and construction begain in 2018 on a build-own-operatetransfer (BOOT) basis.302 As per the most recent update, the project in Sankhuwasabha district has achieved about 70% physical progress in dam construction area, and tunnel and powerhouse construction works. While 99.6% of the Phaksinda Dobhan dam's concrete work has been completed, the 11 km tunnel from the dam site to the underground powerhouse is near completion, and construction of the powerhouse in Chichila Rural Municipality 3 is progressing swiftly. This completion was slightly delayed due to facing obstacles related to compensation and local disruptions. If the obstacles don’t resurface, all construction is to be completed within the next two years.303 Following that, SAPDC will to operate the facility for 25 years and then transfer the ownership to the Government of Nepal.304

NEW DEVELOPMENTS

Government Makes It

Mandatory for Fuel Stations to Have EV Charging Units

Nepal Electricity Authority (NEA) mandated gasoline stations to install charging ports for electric vehicles (EVs) starting January 4, 2024, as per the new provision. This is in line with the Ministry of Energy's work plan to boost electricity use and reduce fossil fuel dependency. According to the provision, while existing petrol pumps are required to manage charging points immediately or during their license renewals, new establishments are required to do so during the license acquisition. Despite 10,000 EVs on roads across the country as of FY 2022/23 AD (2079/80 BS), only around 150 charging stations exist and even those are mainly concentrated inside the Kathmandu valley. Among the 150 stations, NEA operates 51 charging stations while the private sector operates 81 stations, with 14 more under construction.

Despite this provision, according to the preliminary study for this mandate, a major obstacle is that thereis a lack of adequate space at existing petrol pumps to operate charging stations. Thus, to address this issue, the Ministry of Energy has also introduced a policy to encourage the private sector to build charging stations by leasing out the public land for this purpose.305

16th Five-Year Plan to Have Separate Chapter on Climate Change

Nepal's upcoming 16th Five-Year Plan, covering FY 2024/25 AD (2080/81 BS) to FY 2028/29 AD

(2084/2085 BS), marks a pivotal shift with a dedicated chapter on climate change. The plans aims to emphasize immediate, midterm, and long-term strategies to tackle climate change. Within this, the issues requiring immediate action are to be incorporated in the annual plan and budget while mid-term strategies are to be devised to fulfill the objectives of the 16th five-year plan. Overall, the key priorities that will be included in the chapter are environmental sustainability, climate-friendly development, and a focus on renewable energy. Furthermore, the plan permits a dual approach, prioritizing climate friendly activities and preparing for potential disasters by bringing in special programs.306

Bill Related to Renewable Energy to be Presented in Parliament Soon

During Alternative Energy Promotion Center (AEPC)’s 27th anniversary event, the Ministry of Energy announced their plans to introduce the 'Renewable Energy and Energy Efficiency Bill 2080' to Parliament soon. The bill aims to include legislation for all forms of renewable energy, without limiting its scope. This initiative also aligns with Nepal's commitment to carbon reduction and sustainable energy development.307 Additionally, the announcement also highlighted the significance of private sector participation towards renewable energy production in addition to the government’s initiatives. With the new bill, the government, along with APEC, plans to emphasize their goal of achieving 100% electricity access in two years.308

ADB and World Bank Join Forces for Sustainable Development of Nepal’s Hydropower Sector

The Asian Development Bank (ADB) and the World Bank have announced a collaborative effort to enhance Nepal's hydropower sector, focusing on the proposed

Outlook

1060 MW Upper Arun and 635 MW Dudh Koshi hydropower projects. The memorandum of understanding (MoU), signed for an initial five-year period during COP28 on 6 December, 2024, aims to strengthen energy security, support power trade with neighboring countries, and promotes green and inclusive development.309 Both institutions will share knowledge and experiences, conduct joint analytical studies, and provide consultation to strengthen the development of Nepal's hydropower sector310

Nepal’s energy sector has witnessed a remarkable shift in recent years, gradually emerging from an era of energy crisis, with 16-hour load shedding, to an electricity surplus with export capacity. As described above, Nepal aims to extend electricity access to 98%. With proliferation of hydro projects, as well as major solar electricity projects and the introduction of a Green Hydrogen policy, Nepal’s energy landscape looks more promising than ever. Additionally, with proper charging infrastructure, the momentum of electric vehicles is here to stay and is in line with the government’s emphasis on climate change. However, it is vital to note that challenges still exist, such as off-grid electrification, electricity theft, a lacking transmission network as well as significant quantity of lost electricity during transmission and distribution. The inadequate exploitation of vast amounts of renewable energy resources is also a challenge. To tackle these, diversifying and prioritizing electricity alternatives i.e. the solar and hydrogen energy could be a good policy intervention for rural electrification. For any of this, the key to realizing full potential is effective policy implementation and collaborative efforts between the government and the private sector.

OPPORTUNITIES

Private Sector Participation in Energy Infrastructure Development

The private sector has played an increasing role in hydropower sector in Nepal, having undertaken the development of 169 projects.311 To further boost their participation, the National Planning Commission (NPC) has decided to onboard private sector for infrastructural developments. 312 The Public Private Partnership (PPP) model has seen success in the hydropower sector in projects such as the Chimile Hydropower and Arun III HEP.313 Considering Nepal’s goal to boost electricity generation to 11,769 MW, and raise per capita consumption to 700 units, private stakeholders have tremendous opportunities in developing energy infrastructure, particularly by tapping into Nepal’s hydropower potential.314

Research and Development of Innovative Alternative Energy Sources

The increasing number of extreme weather events and climate change disasters has raised concerns about electricity stability in Nepal, given its heavy reliance on hydropower. 315 To address this, it is crucial to diversify the energy mix by exploring alternative sources. Hydrogen, in particular, has garnered public and private attention due to its potential to decarbonize the energy system. A similar interest can be observed in Nepal, with the government approving the Green Hydrogen

Policy 2080 BS (2024 AD) in January 2024.316 It aims to leverage hydrogen for producing, utilizing, and storing green hydrogen, reducing petroleum dependency, contributing towards a low-carbon economy. As a relatively new sector, hydrogen as an energy source has immense potential for a variety of usage in like iron mining, fertilizers, and transportation.317

NEA’s Removal of Hydropower Capacity Restrictions

NEA is considering removing its capacity restriction mandating hydropower projects to generate electricity in full power for at least 4.8 months.318 The restriction is currently imposed though Power Purchase Agreements between the NEA and the producers. With its removal, hydropower projects are allowed to generate maximum capacity as per their ease, which makes way to optimize the capacity of hydropower projects by 2.5 times.319 This development especially seeks to encourage small investors to better utilize their hydropower potential. 320 As it will result in higher generation, the Independent Power Producers’ Association of Nepal (IPPAN) asserts this change contributes to leveraging Nepal’s power sell in South-Asia.321

Health

During the review period, from December 2023 to February 2024, Nepal’s health sector found itself facing multiple issues continued from the previous quarter. Escalating issues surrounding antimicrobial resistance stemming from overprescription, alongside the looming health hazards posed by declining air quality were of particular concern. It was also found that vulnerable communities such as brick workers were at disproportionate risk of overexposure to air pollutants and health hazards due to pollution continue despite government initiatives such as street cleaning and water spraying aimed at mitigating air pollution. Additionally, the government encountered hurdles in effectively executing vaccination and neonatal programs, as well as in ensuring drug quality testing, exacerbated by shortages in both manpower and funding. These persistent issues highlight the urgent need for investment in the sector to recruit and retain skilled workers and improve program planning and implementation.

GOVERNMENT PROGRAMS

Government Launches National Measles-Rubella Vaccination Campaign

The government launched a nationwide vaccination campaign against measles and rubella on February 25, 2024, scheduled to run until March 20, 2024.328 The vaccines will be administered to over 5.7 million children between the ages of nine months to 15 years in 21 districts in Terai and nine months to five years for the remaining districts.329 The drive has been motivated by Nepal’s 2023 measles outbreak, which affected 19 districts with

over 1,300 cases and one death despite the fact that many of these districts had been declared ‘fully immunized’ prior to the outbreak.330 Following this, officials have been concerned about how immunization in big cities consistently surpasses targets, but has an overall lower rate of coverage.331 This has been attributed to the fact that, while urban areas have more accessible health facilities compared to rural areas, there is an increased apprehension surrounding vaccinations as well as a large floating population, which makes routine immunizations challenging.332

Ministry’s Neonatal Treatment Package Fails to Cover Health Facilities’ NICU Costs

Research from the Nepal Health Research Council (NHRC) has shown that the NPR 8,000 (USD 60.29) provided by the Ministry of Health and Population (MoHP), under its ‘Free Neonatal Treatment Program Procedure Guide, 2074’ is insufficient.333 The research has shown that, on average, treatment for newborn children at a neonatal intensive care unit (NICU) costs hospitals over NPR 33,000 (USD 248.70) in tertiary care public hospitals.334 This figure is based on four

public and private tertiary care centers around Kathmandu: Kanti Children’s Hospital, Tribhuvan University Teaching Hospital, HAMS Hospital, and the International Friendship Children Hospital.335 While this deal is, reasonably, unacceptable to health facilities, e MoHP does not have the budget to increase the costs allocated to the treatment, and is further at risk of facing yet another budget cut in the upcoming fiscal year 2024/25 AD (2081/82 BS).336

KEY DEVELOPMENTS

USMLE Invalidates Exam Scores in Nepal due to Cheating Suspicions

The United States Medical Licensing Examination (USMLE) has invalidated the examination scores of around 832 test takers from Nepal due to a pattern of anomalous exam performance.337 The USMLE is questioning the validity of test results and suspects that the high scores of Nepali test takers could indicate prior unauthorized access to exam content.338 This adds on to the existing concerns regarding the quality of medical education and its graduates in Nepal since, the Nepal Medical Council (NMC) licensing exams held between January 30 to February 2, 2024, only 1,146 of the 2,028 doctors were able to secure pass marks.339 While this failure rate of 44% is an improvement from the 58% in 2022, the council is still concerned about how this will affect the country’s healthcare.340

Sharp Rise in STDs Among Female Sex Workers in Pokhara

According to a 2023 Integrated Biological and Behavioral

Surveillance Survey conducted by the NHRC, there has been a sharp rise in sexually transmitted diseases (STDs) in sex workers in Pokhara. Among the various findings, the report found that syphilis cases have increased to 14.8% of all tested in 2023 from 0.6% in 2011.341 The study further highlighted that 55% of the 364 participants had never undergone an HIV test and 76.4% were unaware of what Hepatitis C infection is.342 Furthermore, around 3.9% of workers were oblivious to knowledge about sexually transmitted infections.343 Overall, the study highlighted critical knowledge gaps within the sex work industry that need to be addressed to safeguard public health and safety, especially given that sex workers often lack education regarding sexual and reproductive health.344

Research Suggests

Brick Workers Vulnerable to Respiratory Infections from Air Pollution

A research titled ‘Personal Exposure to Fine Particulate Air Pollution among Brick Workers in Nepal’, published in the Atmosphere journal in December 2023, has shown that brick workers in Kathmandu are exposed to approximately eight times the World Health Organization (WHO)-recommended levels of PM 2.51 345 The high amount of exposure stems from working in kilns, indoor pollution, and traffic emissions.346 In conjunction with poor sanitation and diet, this puts brick workers at increased vulnerability to respiratory illnesses like chronic obstructive pulmonary disease.347 The research was conducted by the Brigham Young University, in 1 Fine droplets or solids in the air that are 2.5 microns or less in diameter

collaboration with the University of Utah, Kathmandu University and the Karnali Academy of Health Sciences.348

HEALTH RISKS

People Urged to Wear Masks Due to Deteriorating Air Quality

Experts have advised people to avoid exposure to pollution and encouraged the use of face masks due to an increasing risk of respiratory illnesses.349 Kathmandu has been appearing among the most polluted cities globally based on air pollution in various rankings, including the list reported by IQAir.350 PM 2.5 levels in Kathmandu, similar to Bhaktapur and Lalitpur, remained in the unhealthy range (55.5 to 150.4 μg/m³) in January to February 2024.351 And this is despite the fact that the Environment Department of the Kathmandu Metropolitan City (KMC) has deployed around 300 cleaning staff and has been spraying water to reduce dust.352

65% of Patients Given Antibiotics Without Prescription

According to a preliminary report for the ‘Community Education and Surveillance of Antibiotics Use Among Young Children: Experimental Evidence from Nepal’ study, antibiotics are administered without prescription in 65% of cases in Nepal.353 The study was carried out in collaboration with Pennsylvania State University, GTA Foundation, Henry Ford Health, and SunyaEk — a health record and data management organization.354 Despite being prescription drugs, antibiotics can be purchased over the counter in

Nepal without prescriptions and many patients do not complete the course of medication. Experts have raised concerns that such practices are contributing to antimicrobial resistance in Nepal, thereby reducing the efficacy of antibiotics.355 This is not just a problem for humans, as antibiotics are being overused in wildlife and livestock as well. The haphazard use of antibiotics is also contributing to such resistant microbes being found in meat, poultry, soil and water sources and finally making way into human bodies.356

Unregistered Drugs Sharing a Name Causes Public Concern

On February 20, 2024, the Department of Drug Administration (DDA) published a notice calling attention to two different medicines manufactured by different companies – Torrent Pharmaceuticals, India and Grace Pharmaceuticals, Rupandehi –sharing the same brand name ‘Rovor 20’.357 The ones produced by Torrent are Rivaroxaban tablets, a blood thinner,

Outlook

whereas Grace’s medicines consist of Rabeprazole, used to treat duodenal ulcers, gastroesophageal reflux, and the overproduction of stomach acid.358 Given the distinct uses of the two drugs, the fact that they share the same brand name has caused concern regarding confused prescriptions. Furthermore, the DDA has also stated that both the drugs were unregistered with the department.359 They suspect that such unregistered medicines could have been smuggled into Nepal which may have gone unnoticed due to the shortage of manpower limiting monitoring efforts.360

Substandard Paracetamol Recalled from Market

Laboratory tests have revealed that batch CT-2023 of Cetophen, a 500 mg paracetamol brand manufactured by Lomus Pharmaceuticals, has failed to meet quality standards in laboratory tests.361 Reportedly, the drugs had been supplied to Nepal Army which then sent it to the DDA for quality checks.362

Following this, the manufacturer was directed to recall the medication in January 2024. However, DDA does not have the capacity to ensure whether all substandard medicines have actually been recalled.363 This has raised a lot of concern as paracetamol is a widely used medication available over the counter.

The DDA collects drugs from pharmacies across the country through random sampling and tests their quality. Around 11% of the medicines sold in FY 2022/23 AD (2079/80 BS) were found to be substandard in these examinations.364 With this recall of Cetophen, and a later recall of Pancizole 40 mg from Affy Prenterals on February 2, 2024, a total of ten drugs have been withdrawn from the market so far in the first seven months of FY 2023/24 AD (2080/81 BS).365

The measles-rubella vaccination drive is an important step to strengthen public health resilience against a preventable disease, which could otherwise turn deadly. However, the increase in the population in urban cities missing routine vaccinations, coupled with a large number of sex workers being unaware about sexual health, shows a growing unawareness of basic health knowledge. This could negatively affect the effectiveness of public health campaigns and heighten the risks of the spread of preventable diseases. Furthermore, the inadequate monitoring of drug quality could deepen the public’s hesitance regarding receiving healthcare. In order to tackle these issues, the MoHP requires better planning and control measures. However, with a possible looming budget cut, the health sector could face challenges in maintaining current health programs, let alone improving them. This was apparent in MoHP’s neonatal treatment package not being able to cover the actual costs of NICU treatment. Such gaps put the financial burden on the patient, increasing the vulnerability of people from low socio-economic backgrounds to unexpected health expenditures. With Nepal’s health concerns evolving, it is crucial for the sector to seek additional ways to finance the resource and investment gap they face and introduce effective and inclusive programs.

OPPORTUNITIES

Growing Spending in Healthcare

Approximately 55% of Nepal's healthcare spending comes directly from individuals' out-of-pocket payments, drawing from their household income and savings.366 This percentage is notably higher than the estimated 23% seen in developing countries worldwide, and has been linked to rising disposable incomes and a growing inclination to invest more in health, including participation in medical tourism.367 This trend suggests rising demands for quality healthcare facilities which are currently not available domestically in abundance. It opens opportunities for healthcare investment within Nepal, facilitating the introduction of innovative services available within the country through joint ventures between national hospitals and international providers.

Pharmaceutical Industry for Medicine Production

Pharmaceutical manufacturing could be a promising sector for investment, as highlighted by Prime Minister Dahal, given the need for easily accessible and high-quality medicines produced domestically.368 Currently, despite domestic firms catering to roughly half of Nepal's market demand by volume, the country relies on imports for complex products like vaccines.369 This underscores a significant gap in local production capabilities. Moreover, Nepal, like other least-developed countries (LDCs), has been granted an extended period until July 1, 2034, to align patent laws with the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).370 This extension presents Nepal with a crucial opportunity to replicate patented drugs from non-LDC nations, contingent upon investments in required technology and infrastructure.

Increasing Interest in Ayurvedic and Holistic Medicine

Nepal is home to around 1,624 species of medicinal plants and also indigenous practices and manuscripts of Ayurvedic treatment. 371 These herbs have high medicinal, culinary and cosmetic values, making Nepal a possible destination for ayurvedic medication manufacturing. Furthermore, the government has also been supportive of Nepal’s ayurvedic sector, establishing the Department of Ayurveda and Alternative Medicine under the MoHP for better management and support. The department has collaborated with multiple educational institutions to provide training to aspiring health practitioners.372 Establishing Ayurveda Holistic Treatment Centers would not only utilize such promising trained manpower, but also be able to harness the abundant traditional ayurvedic knowledge and local medicinal herbs.

Infrastructure in Healthcare Education

A challenge Nepal’s medical education faces is the lack of infrastructure and advanced technologies.373 This has driven over 1000 medical students to seek education in foreign countries in 2023 alone, leading to medical education providers seeing a decline in enrollment.374 While there is a considerable amount of private investment in the sector already, it is evident that it could benefit from more, especially if the investment is able to offer well-developed infrastructure domestically.375

Information and Communication Technology

The Information and Communications Technology (ICT) sector has emerged as a promising avenue for foreign investment. Nepal has recognized its potential and has made several developments to strengthen the sector in the past quarters. Building on the momentum, the review period, from December 2023 to February 2024 witnessed predominantly positive advancements within the sector. A notable event was the commencement of cross-border digital payments between Nepal and India, which leveraged the popularity of e-wallets among the people. It is expected to benefit Nepali and Indian vendors and tourists and deepen economic cooperation and relations between the two countries. Similarly, Nepal's commitment to fostering accessible internet services remained steadfast, as evidenced by Nepal Telecom's expansion of affordable fiber connections to 74 districts and the upcoming initiative to offer free internet access at airports nationwide.

Source: NTA MIS Report, Asoj 2080 (18 September to 17 October, 2023)381

Figure 15. Market Share of Telephone Operators (based on active subscribers)

TikTok Sends Official Request to Lift Ban

TikTok reached out to the Government of Nepal on February 11, 2024, requesting for the ban on the app to be lifted. In the letter directly addressed to Minister of Communication and Information Technology, Rekha Sharma, it reaffirmed its dedication to operating within the legal framework of Nepal and run internet security and digital literacy campaigns in the country.383 Furthermore, the company also mentioned strengthening content filtering and moderation to nullify antisocial content by employing Nepalis for better content filtering and moderation.384 This comes following the fact that the government decided to ban the social media app on November 13, 2023, citing that it undermined social harmony.385 TikTok had also previously written to the Nepal Telecommunication Authority (NTA) on November 16, 2023, and to the Ministry of Communication on December 6, 2024, asking

for the withdrawal of the ban.386 While the government is yet to send an official response, Prime Minister Dahal has stated that he is open to the idea of lifting the ban and regulating TikTok, given that they abide by their letter.387

ISPs Allowing TikTok Despite Government Ban

Despite being informed of the ban on the app, a few Internet Service Providers (ISPs) have been allowing TikTok to operate in Nepal. The NTA has sought an explanation from ISPs regarding the matter and has warned of ‘strict action’ if they continue to ignore the law.388 Additionally, the NTA has urged the public to report any ISP that is allowing access to TikTok.

NTC to Offer Complimentary WiFi at Airports

The Nepal Telecom (NTC) and Civil Aviation Authority of Nepal (CAAN), on February 23, 2024, jointly launched a campaign to offer free Wi-Fi internet service in 34 airports across Nepal.389 The

agreement is part of NTC’s plan to expand its internet coverage in the country.390 Initially, NTC will set up the WiFi service in the arrival and departure halls of the domestic and international terminals at the Tribhuvan International Airport.391 Then, the company will develop similar services in all other airports in the country. Further, NTC will also be setting up an information and assistance room within the airports. Meanwhile, CAAN will be responsible for providing NTC with suitable locations to connect the devices for the operation and management of the service.392

NTC Fiber Available in 74 Districts

Nepal Telecom (NTC) has expanded its fiber internet service in 74 districts across Nepal, up from the 68 districts it serviced in February 2023.393

The latest district connected to the service is Dang where the Rajpur Rural Municipality and Banglachuli Rural Municipality have been connected to NTC’s high-speed fiber internet.394

Figure 16. Market Share of Internet Service Providers (ISPs) in Nepal

Source: NTA MIS Report, Asoj 2080 (18 September to 17 October, 2023)382

NTC aims to further expand, and upgrade fiber-to-thehome (FTTH) services across the country, which will allow the company to provide high-speed and more reliable internent connectivity.395

Cross-border Payment Begins between Nepal and India

Cross-border payment between Nepal and India began on February 28, 2024, allowing Indian nationals to make payments in Nepal through QR codes by using registered e-wallets.396 This was made possible by an agreement between Fonepay, a digital payment system in Nepal, and the National Payments Corporation of India (NPCI).397 Following the agreement, Indian nationals can pay in Nepal via PhonePe and BHIM, two popular digital wallets in India.398 From the Nepali side, most prominently, Khalti and e-Sewa have signed up to enable the service through Fonepay QR.

Outlook

Meanwhile, Nepal Rastra Bank is deciding on transaction limits for Nepalis visiting India to launch cross-border payments for Nepali citizens as well.399

India Allows Easy SIM Access to Nepali Visitors

Nepali nationals visiting India will now be able to obtain an Indian SIM card that can be used during their stay, given that they provide valid proof of their identity.400 This valid proof of identity considers a citizenship certificate, voter identification card, or a limited-validity photoidentity certificate issued by the embassy of the respective country as valid proof of identity, as mandated by the Indian Ministry of Communications.401 The issued mobile connections will be valid for a maximum of three months at a time.402 However, no international roaming shall be permitted on mobile connections provided to such

visitors. The same arrangement has been made in regard to Bhutanese nationals as well.403

NAS-IT Becomes a Member of APICTA

The Nepal Association for Software and IT Services Companies (NAS-IT), a not-forprofit organization established by Nepali companies in those sectors, announced its membership in the AsiaPacific ICT Alliance (APICTA) on December 11, 2023.404 This makes NAS-IT the 17th member economy to join the alliance.405 APICTA is a coalition of ICT communities working together to foster technological innovation in the Asia-Pacific region.406 The membership is expected to bring NAS-IT opportunities for knowledge-sharing, investment, market expansion, and developing a global network.407

In the past quarter, Nepal has continued to improve its digital infrastructure and services to establish digital connectivity as a robust public service. The improved internet penetration has catalyzed the growth of the ICT export sector and has also heightened its appeal as an attractive career choice for many, with 106 IT service export companies and over 14,700 freelancers in the sector in 2022.408 Furthermore, NAS-IT’s membership in APICTA and Fusemachines listing on NASDAQ opens the door for Nepal to be a part of a global network and strengthen its positioning as an attractive destination for ICT investment. The sector’s rapid growth paired with its untapped potential makes it a prime highlight for attracting foreign investment.

However, despite all its progress, Nepal still struggles in terms of cyber and data security. The associated risks could dwarf its achievements and make investors apprehensive. With Nepal's increasing digitization across various sectors, including finance, government operations, and business workflows, it is paramount to safeguard sensitive data. Thus, it is crucial for Nepal to develop and implement robust cyber security and data protection regulations to brace its digital ecosystem.

OPPORTUNITIES

Export of IT Services

A study by the Institute for Integrated Development Studies (IIDS) found that IT service exports in Nepal reached USD 515 million (NPR 68.33 billion) in 2022, representing a growth of 64.2% when compared to 2021.409 Similarly, according to the IIDS research, there were 106 IT service firms and 66,509 freelancers exporting IT services from Nepal as of 2022.410 Given these positive trends in the IT sector, Nepal has huge opportunities for earning foreign currency and creating quality jobs by attracting and collaborating with foreign firms and investors.

Gaps in Quality and Extension of Internet Services

Although internet penetration is at 98.98% of the population, Nepal still has the potential to improve the internet speed in both fiber and mobile internet.411 According to a report by Ookla, a global connectivity intelligence company, as of January 2024, Nepal ranks 84th in fixed broadband services with a speed of 61.96 mbps and 126th in mobile internet services with a speed of 16.02 mbps.412 This shows a huge investment gap in terms of tapping into the market by improving both the quality and coverage of internet services.

Increase in IT Graduates

IT development in Nepal and the widespread use of technology have altered Nepal’s economy, giving rise to e-commerce, software, and other IT companies. Producing an estimated 15,000 IT graduates annually, Nepal has a huge human resource base that potential investors can utilize.413 The graduates have specializations in wide-ranging subjects including AI, data science, cybersecurity, and machine learning that are required for cutting-edge technologies. Furthermore, with many domestic and international companies requiring their own unique software and IT services, the demand for IT labor force is expected to only increase.

Infrastructure and Real Estate

The three-month review period, from December 1, 2023 to February 29, 2024, witnessed a positive outlook in the sector with aid and reconstruction of earthquakeaffected infrastructure in western Nepal and more. The sector also benefitted from increased investments in home loans by Banks and Financial Institutions (BFIs) and assistance from the World Bank for the development and maintenance of Nepal’s provincial and local road network. Moreover, there was also a positive trend in terms of the increasing number of hotel construction and establishment of new automobile assembly plants in the country. However, the real estate sector is still the largest contributor to the informal economy of Nepal, which reflects a gap in regulations and the need for monitoring increasing tax evasions through the purchase of lands.

World

Bank Approves USD 200 Million (NPR 25.54 Billion) in New Financing

to Nepal

In the past quarter, the World Bank approved assistance of USD 200 million (NPR 25.54 billion) for two projects in Nepal to support the country’s transition towards Green, Resilient, and Inclusive Development (GRID), and to enhance the development and maintenance of provincial and local road networks of Nepal.415 Out of the total amount, USD 100 million (NPR 13.27 billion) will be used for the Provincial and Local Roads Improvement Program that will support the implementation of a comprehensive program for the development and maintenance of Nepal’s provincial and local road network.416 It will guarantee that

communities have safe access to markets and services, boost the resilience of selected provincial highways and bridges, and help increase the effectiveness of service delivery.417 On the other hand, the rest of the amount - USD 100 million (NPR 13.27 billion) – will be used for the Second Fiscal Policy for Growth, Recovery and Resilience Development Policy Credit that aims to strengthen revenue collection, reduce fragmentation of debt management, and increase debt transparency to promote FDI inflows and facilitate automation to streamline the process of FDI.418 With the potential to scale up in the future, this is the first of a three-phase series of programs that will be implemented at the provincial

and local level in Madhesh, Karnali, Sudurpaschim.419

India Commits USD 75 Million (NPR 1 Billion) for Reconstruction of Earthquakehit Infrastructure

India is set to provide financial assistance of NPR 1 billion (USD 75 million) for rebuilding infrastructure after the deadly earthquake that hit western Nepal in November 2023. Killing over 150 people and injuring nearly 400, the 5.7 magnitude earthquake that struck Jajarkot on November 3, 2023 was the deadliest to strike Nepal since 2015.420 Highlighting India’s commitment to continue redefining its relationship with its neighbors, the details for the aid package were provided by

India’s External Affairs Minister, S. Jaishankar, after his first visit to Nepal in January 2024.421 India had already started to provide emergency relief, that included five tranches of essential items and prefabricated houses, within 48 hours of the earthquake. Besides the commitment to provide aid for the Jajarkot earthquake, Minister Jaishankar and his Nepali counterpart also jointly inaugurated other reconstruction projects taken up in Nepal following the earthquakes of 2015 and 2023, which included 25 schools, 32 health projects and a cultural heritage project.422

BFIs Invest NPR 32.74 Billion (USD 246.56 Million) in Home Loans

In the first half of the current fiscal year 2080/81 BS (2023/24 AD), BFIs invested NPR 32.74 billion (USD 246.56 million) in personal home loans following an increase in demand for housing loans.423 The demand for home loans started to increase after Nepal Rastra Bank (NRB) extended the limit of such loans from NPR 15 million (USD 113,081) to NPR 20 million (USD 150,775) through the monetary policy of FY 2023/24 AD (2080/81 BS).424 Additionally, the central bank also reduced the risk weightage of mortgage loans from 150% within the threshold of 125% through the first quarterly review of its monetary policy in December 2023.425

India, Nepal Sign MoUs for Three High Impact Community Development Projects

On February 1, 2024, Nepal and India signed an MoU for undertaking three High Impact

Community Development Projects (HICDPs) in Nepal. At a total estimated cost of NPR 122.52 million (USD 922,103), the three projects include the construction of school and hostel buildings for Shree Dang-Bang Secondary School in Pyuthan district; construction of Khamlalung Health Post Building in Tehrathum district; and infrastructure development work in Chandan Bharateshwor Mahadev Temple in Chandragiri Municipality, Kathmandu.426 Along with 62 other projects of HICDPs taken up by India in Nepal that are at various stages of implementation, the construction of these three new projects aims to provide better education and healthcare facilities, as well as enhance the cultural linkages between Nepal and India.427

Surge in Hotel Constructions in Nepal

The hospitality sector in Nepal has marked significant growth with the addition of four five-star and 16 four-star hotels over the past three years, with many more in the construction phase.428 The construction of new starrated hotels in and outside the Kathmandu valley include The Kingsbury in Birtamod, Hyatt Place and Hotel Lhasa International in Kathmandu, and Ichha Hotel in Simara.429 In the hope of a substantial rise in the arrival of tourists, investors are rapidly investing in the construction of hotels, encouraged by an uptick in tourist numbers last year. In 2023, the government met its target of welcoming a million tourists to Nepal as a total of 1.15 million tourists entered the country just via the air route.430

Koshi Province Establishes Road Link to China

The long-awaited motorable track connecting Phungling, the district headquarters of Taplejung, to China has finally opened after six years.431 SBA Elite JV, a Kathmandu-based construction company, was awarded the project at a cost of NPR 440 million (USD 3.312 million), which involved the construction of a 37 km track from Tapethok to Olangchungola.432 The 85 km-long Phungling-Gola-Tiptala section, which includes the Tapethok to Olangchungola track, is a part of the larger Mulghat-DobhanOlangchungola road project, also called the Tamor corridor road.433 This road not only integrates the settlements of Taplejung into the national road network, but also connects Nepal, India and China, bringing about transformative change in the region, fostering economic growth and regional connectivity.

CG Motors Partners with Hero MotoCorp to Setup Assembly Plant in Nepal

Hero MotoCorp, renowned as one of the largest two-wheeler brands of the world, is set to expand its reach in Nepal by appointing CG Motors as its distributor, which includes establishing a state-of-the-art greenfield facility dedicated to assembling products.434 With an annual capacity of 75,000 units, the operations of the assembly facility in Nawalparasi district is set to begin in March 2024.435 This strategic move aligns with Hero MotoCorp's vision of providing top-tier products and services while contributing to the automotive landscape and

creating job opportunities in Nepal, which it has considered to be one of its key markets in Asia since 2014.436

Real Estate Sector Contributes the Largest to Informal Transactions

According to a research report titled ‘Size of Informal Economy in Nepal’, published by Tribhuwan University (TU) in January 2024, the informal sector of Nepal is estimated to have constituted 42.6% of the country’s GDP from FY 2010/11 AD (2067/68 BS) to FY 2020/21 AD (2077/78 BS). In monetary terms, informal transactions amounted to NPR 1.44 trillion (USD 19.10 billion), where 99.97% of the real estate sector transactions were done through the informal economy as of FY 2020/21 AD (2077/78 BS).437 The report, released by the Central Department of Economics of TU, also highlights a significant tax evasion associated with land transactions and

asset depreciation. Tax evasion through the purchase of land as a means of hiding wealth tends to be accounted for by the informal economy. The report further highlights that such a sector currently contributes about 10% to the overall GDP.438 This supports the concerns that entities like the Nepal Land and Housing Developers’ Association have been raising, who have been asserting that the real estate sector has the highest share of the informal sector economy among the sectoral averages, and have been demanding that the government should make arrangements for dealing in real estate only after taking a license to shift such informal transactions into formal business.439

1501 Poor Households in Gandaki Province Receive New Houses

The Ministry of Physical Infrastructure Development and Transport has highlighted that a

total of 1,501 houses have been completed and handed over to 2,911 beneficiaries in the Gandaki province under the Janata Aawas Karyakram (People’s Housing Programme).440 However, 435 houses from the contract are yet to be handed over to the beneficiaries along with the final payments, including the building of toilets for the remaining households.441 The program, started by the federal government in FY 2066/67 BS (2009/10 AD) to provide safe housing for Dalit, impoverished, endangered and highly marginalized communities, had been transferred to the provincial government since FY 2075/76 BS (2018/19 AD). Implemented through the District Infrastructure Development Office under the provincial government, only the beneficiaries identified as poor in the province and selected in FY 2074/75 BS (2017/18 AD) were included in the program.442

Source: Department of Land Management and Archive443

Figure 17. Revenue from land transactions and number of land transactions

Land Transactions Witness Positive Trend

According to the most recent data, covering information from March 2023 to February 2024, from the Department of Land Management and Archive, the number of land transactions reached a maximum of 141,816 in February 2024. While the

Outlook

first quarter of FY 2023/24 AD (2080/81 BS) marked a sharp fall in the number of land transactions due to the economic slowdown, this number started to rise after NRB adopted a lenient policy through its first quarterly review of the monetary policy on December 8. In addition, the gain in momentum of land transactions is credited to a

fall in interest rates on property loans issued by BFIs after they had an increase of loanable funds. During the review period (December 1, 2023 to February 29, 2024), the government also collected land revenue of over NPR 9.46 billion (USD 71.31 million) from the property transactions.

The second quarter of the current fiscal year witnessed a positive trend towards infrastructure development and economic expansion. Nepal's collaboration with the World Bank and India through high-impact projects highlights its commitment to comprehensive development, and is positioned to create employment, reduce poverty, and improve the overall well-being of Nepali residents. These collaborative efforts are pivotal for the improvement and expansion of infrastructure in Nepal, with an emphasis on establishing new structures, indicating a promising trend in infrastructure development. Moreover, there has been a surge in land transactions, driving up government revenue in the fiscal year’s second quarter. These developments indicate a growing trend toward financial accessibility and increased economic activity in the real estate sector. Additionally, the recent policy reforms instituted by the NRB and the proactive role of financial institutions play a crucial role in shaping the current landscape of infrastructure and real estate in Nepal, setting a positive outlook for continued growth and development in these sectors.

OPPORTUNITIES

Agriculture Infrastructure Development

Out of the 14.7 billion hectare area of Nepal, only 2.6 million hectares are arable, with only 1.8 million irrigable hectares.444 Hence, Nepal needs to heavily invest in physical infrastructure such as irrigation canals, roads and electrical power along with advancements in technology for higher productivity. Investing in agricultural extensions like agricultural farms, cold storage units, collection centers, agriculture training centers and plant quarantines could significantly boost productivity and profitability in this vital sector.

Tourism Infrastructure

The star hotels in Nepal are disproportionately concentrated in Kathmandu with 12 5-star hotels in Bagmati while only 8 in the rest of Nepal.445 Investing in hotels, resorts, and other tourism-related infrastructure outside Kathmandu is needed to capitalize on the rise of tourists in Nepal with 1.15 million tourists visiting Nepal in 2023 via the air route.446

Road Infrastructure

Nepal as a landlocked country depends heavily on India and China for trade. However, it severely

lacks well-made roads for travel and trade, with only 17,480 km of paved roads out of a total road length of 34,100 km, as of mid-March 2023.447 Thus, the development of new routes to India and China, along with maintenance, is a great opportunity that would facilitate economic growth and provide attractive returns.

Rise in Cement Consumption

The surge in hotel constructions and real estate developments amid Nepal's construction boom has resulted in a substantial increase in cement demand. As urbanization and infrastructure projects continue to flourish, Nepal would require 25.88 million tonnes of cement annually by 2024-25.448 Given the abundant limestone deposits in Nepal, investing in cement manufacturing facilities could be lucrative, capitalizing on this increasing demand.

Tourism

The Nepali tourism industry is experiencing a remarkable resurgence, nearing pre-pandemic levels, with over a million tourists welcomed in 2023. This resurgence has spurred unprecedented growth in tourist numbers in the Annapurna and Mustang regions. In order to ensure the safety of the increasing number of tourists who arrive for hiking and mountain climbing, in the past quarter, the Government of Nepal mandated that they lease a tracking chip when climbing Mount Everest. To further streamline the visitor experience, the government also initiated e-visas, online permits, and online payment systems, significantly simplifying the immigration process. The surge in tourism has also spurred growth and stimulated expansion in the hotel industry. Consequently, Nepal Airline Corporation (NAC) is seeking investments for development in flight capacity and management.

TOURIST ARRIVALS

Nepal Welcomes Over a Million Tourists

The Government of Nepal’s goal of welcoming one million foreign tourists into Nepal in the year of 2023 was achieved well ahead of schedule. Around 1.01 million foreign visitors came to Nepal in 2023, reflecting an increase of 65.25% as compared to the 2022.457 While the figures finally rebounded to pre-pandemic levels, they are yet to reach the peak observed in 2019.458 Additionally, a total of about 79,100 foreign tourists arrived in January 2024 alone, marking an increase of 43.62% from last year.459 The current progression of tourist arrivals suggests a promising upward trend that

might surpass the record numbers achieved in 2019.

Among tourists who come to Nepal, Indians have consistently been emerging as the foremost source market despite the fact that many tourists entering via the land border remain unaccounted for due to the open border.460 Not including those numbers, 2023 marked a milestone, with Nepal welcoming a total of 319,936 Indian tourists, 31.52% of the total number of tourists that arrived in 2023.461 This was the highest recorded arrivals for Indian tourists after the year 2019 which recorded a number of 254,150. 462 After Indians, American and Chinese tourists recorded high numbers of arrivals in Nepal in 2023.463 The American tourist count surpassed

FACTSHEET

No. of tourist arrivals (December 2023 - February 2024)

Outstanding credit to the tourism industry NPR 24.83 billion (USD 187.12 million)450

Number of registered hotels (with

Number of registered casinos

Number of registered travel agencies 3,801456

the pre-pandemic levels while the Chinese tourist count finally experienced a revival, attributed to China's border reopening.464

Source: Current Macroeconomic and Financial Situation Table (Based on Six Months of Data, FY 2023/24 AD (2080/81 BS)), Nepal Rastra Bank465

MOUNTAINEERING UPDATES

Unprecedented Growth of Tourists in the Annapurna Region

In 2023, the Annapurna region saw an unprecedented number of 191,558 tourists, surpassing the previous record of 181,000 tourists in 2019, as per the Annapurna Conservation Area Project (ACAP).466 The region attracted travelers from 173 nations, mainly from India, France, Germany, the United States, the United Kingdom, and China. This rise in tourist arrivals signals the recovery of the tourism sector, which was severely affected by the COVID-19 pandemic.467

In Mustang, foreign visitors reached 90,356 in 2023, which is a 36.67% increase compared to 2022.468 Similarly, Upper Mustang, a semi-prohibitive area, saw 3,487 tourists in 2023, which is an 8.56% increase compared to 2022. This is noteworthy considering the fact that foreign visitors need to buy a permit to visit Upper Mustang, which costs

USD 500 (NPR 66,345) for 10 days, with an additional USD 50 (6,634.5) per day after that.469

The rise in tourist numbers has helped the Government of Nepal earn a total of NPR 229.14 million (USD 1.72 million) in 2023, as per ACAP.470 This rise in tourist numbers has been attributed to various factors including increased publicity following the visit of the United Nations Secretary-General Antonio Guterres as well as international recognition from the American news agency CNN as one of the top 23 destinations to visit in 2023. Furthermore, the Shinta Mani Mustang (SMM) resort was featured in National Geographic’s ‘Best of the World’ list of top 22 new hotels for 2024.471

Mount Everest Climbers to Require a Tracking Chip

For the 2024 Mount Everest Season, the Government of Nepal mandated that all climbers must lease and utilize tracking chips, following the passing of a new rule by the Department of Tourism on February 27, 2024. Climbers are

required to pay a fee, ranging from USD 10 to 15 (NPR 1326.9 to 1990.35), for each chip and return it to the government after their descent.472 Climbing Mount Everest, at 8,848 meters, is a major goal for mountain climbers worldwide. Given the considerable risks associated with climbing the highest peak on Earth, the utilization of tracking chips could prove crucial for search and rescue operations of climbers during an emergency case as these chips are fitted with a global positioning system (GPS) to monitor the climber's location.

FINANCIAL SITUATION

NAC Seeks Major Investment Amid Tourism Surge

Nepal Airline Corporation (NAC) issued an Expression of Interest (EoI) on January 23, 2024 seeking a loan of USD 1.01 billion (NPR 135 billion) to enhance Nepal’s airline sector.473 This is the biggest loan, so far, that a Nepali company has sought from international lenders. The issued EoI aims to engage

Figure 18. Tourist Influx in 2023

a wide array of stakeholders, including national and international government entities, banks, financial institutions, lender companies, licensed loan providers, international organizations, and other relevant parties. According to NAC, they plan on utilizing the financing to manage existing loans as well as purchase aircrafts and set up hangars.474

Rising Tourist Numbers Propel Growth in Hospitality Sector

Following the resurgence of tourist arrivals post the pandemic, a

significant number of luxury hotel operators have experienced a return to profitability. As per an analysis report published by the Nepal Stock Exchange (NEPSE), all four hotel companies listed under NEPSE experienced a surge in business. For example, Soaltee Hotel recorded a net profit of NPR 263 million (USD 1.98 million) in the first half of FY 2023/24 AD (2080/81 BS), marking a 6.64% increase in net profit from the same period last year.475 Similarly, Taragaon Regency Hotels Limited, which oversees Hyatt Regency Kathmandu, recorded

a substantial rise in net profit, reaching NPR 181.62 million (USD 1.36 million) during the initial six months of the current fiscal year 2023/24 AD (2080/81 BS) which reflected an increase of 71% when compared to last year.476 Furthermore, observing these positive trends and the increase in number of tourist arrivals, investments in the hotel industry have also started rising.477

Table 10. Profit Earned by Hotel Companies in the Second Quarter

Source: Nepal Stock Exchange (NEPSE) 478

NEW DEVELOPMENTS

Visa Processing Facility

Extends Working Hours

Starting on February 13, 2024, the Department of Immigration (DoI) has expanded its operation hours to 8 am to 8 pm, including public holidays. Previously, their operation hours were from 10 am to 5 pm on six days of the week.479

This extended service will be applicable for e-visa applications and approvals, tourist visa extensions, issuance of trekking,

and more. The DoI expects to streamline the process and increase the number of tourist arrivals in Nepal with this new facility. Further, applicants can easily access detailed information about the services on the DoI website and pay through options such as bank apps, Phone Pay, Connect IPS, Khalti and e-Sewa, to facilitate transaction.480 The department is proactively shifting towards an online system and has a goal for a “faceless” operation in the future.481

Himalayan Airlines Registered in IOSA

Himalayan Airlines became the first airline in Nepal to be registered as an International Air Transport Association (IATA) Operational Safety Audit (IOSA) certified operator after receiving the certification on December 28, 2023. The certification remains valid until March 3, 2025.482

Himalayan Airlines, which is a Nepal-China joint venture, has a fleet of 4 aircrafts, offering international flights

to destinations such as UAE, Malaysia, Qatar, Saudi Arabia, Kuwait, Bangladesh, and China.483 The certification will help the company position itself as an airline that maintains the highest safety standards which will in turn help build customer confidence and ultimately contribute to the growth and development of the Nepali aviation industry.

PROGRAMS, EVENTS, AND CAMPAIGNS

First Campaign of Visit Nepal Decade Launched

In response to the recovery of tourism, the Government of Nepal introduced the Visit Nepal Decade 2023-2032 campaign, with a goal to attract 3.5 million tourists over the next decade.484

Additionally, Nepal Tourism Board (NTB) also aims to create one million direct jobs in the tourism sector and raise daily tourist spending to USD 125 (NPR 16,586) with this campaign.485 Following preparations in 2023, the first tourism campaign under the Visit Nepal Decade in the Bagmati province was planned. Thus, with the inauguration of the year 2024, The Bagmati Province Visit Year 2024 was officially launched as well. The ministry planned to invest about NPR 20 million (USD 150,727) in this campaign to boost tourism activities in Bagmati Province by identifying, protecting, enhancing and promoting the province’s existing tourist spots and potentials.486

Bharatpur Visit Year 2024

While the Government of Nepal

and Nepal Tourism Board (NTB) launched Visit Nepal Decade 2023-2032 and declared Bagmati Province for the tourism campaign year 2024, Bharatpur Metropolitan City (BMC) also launched their own ‘Visit Bharatpur 2024’ program on March 1, 2024.487 Seven major and 21 additional tourist destinations were identified for the campaign, with an estimated cost of around NPR 60 million (USD 452,181).488

The NTB, along with other major tourism organizations, actively supported this initiative. The BMC asserted that the success of this program hinged on tourists accessing Sauraha and Meghauli through the Bharatpur route. Furthermore, they established committees for both national and international promotion with the aim of attracting one million visitors.489

POLICIES AND REGULATIONS

Online System Launched for Permits for Restricted Areas

The Department of Immigration (DoI) eased the process of a traveling permit, on February 23, 2024, for domestic and foreign tourists traveling to restricted areas such as Upper Mustang in Mustang; Upper Dolpa in Dolpa; Chum and Nubri Valleys in Gorkha; Simikot, Changkehli, Namkha in Humla; and Kanchenjunga in Taplejung.490 Travelers can now obtain permits via an online permit system and make payments online. Previously, DoI issued paper-based permits to tourists visiting restricted areas, which was tedious and time

consuming. This shift to an online system is expected to increase the flow of tourists to Nepal as tourists and entrepreneurs can obtain permits with ease.491

New Travel Provisions Issued for Nepali Citizens on Visit or Tourist Visa

On January 23, 2024, the Government of Nepal issued a provision requiring Nepali travelers going abroad on visit and tourist visas to carry a passport with six-month validity with a valid visa for countries other than issuing on-arrival visa. The travelers must also provide evidence of two-way air tickets, hotel booking, and proof of exchange of USD 500 (NPR 66,345) to the Department of Immigration (DoI).492 The travelers staying with relatives need to present documents revealing the relation with the relatives, while those invited by the government or nongovernment organizations need to present an invitation letter instead of proof of USD exchange. These measures aim to improve the travel experience and avoid intermediary charges. Furthermore, travelers to Gulf countries on visit visas need to fill out a self-declaration form of no engagement in activities other than travel.

Outlook

In this review period, the tourism industry recovered with increased number of tourist arrivals in comparison to previous years. The increasing number also created hope for the first campaign launched under Visit Nepal Decade 2023-2032 in the Bagmati province. Also, with the overall number of tourists that increased, trekking and hiking areas like the Annapurna region also saw a rise in the number of visitors. However, Nepal has the potential to explore and capitalize on more diverse tourism segments beyond just hiking, trekking, and backpacking. From adventure to wellness to sports, Nepal can attract a wide range of travelers with a variety of preferences, budgets, and interests. Thus, it is important to enhance and promote tourist regions according to their qualities, and also for all the relevant stakeholders from both private and government sectors to work together.

OPPORTUNITIES

Sport Tourism

Cricket fever has consumed Nepal with the national men’s cricket team playing in the T20 World Cup held in the United States through June 1-29, 2024.493 With immense support and interest from Nepali people in cricket, Nepal is becoming a powerhouse in the sport. The unprecedented rise of Nepalese cricket, regular visits from Associate Cricketing Nations’ teams to play in Nepal and Nepal, as a neutral venue for Cricket in South Asia, has opened huge potential for investor to capitalize in sports tourism.

Wellness Tourism

The global wellness tourism market size was valued at USD 904.1 billion (NPR 119.96 trillion) in 2024 and is expected to expand at a compound annual growth rate (CAGR) of 10.9% from 2024 to 2033.494 Tourists indulge in physical, spiritual, and mental activities by practicing yoga, spas, meditation, etc. As Nepal is already known for its spirituality, meditation, yoga, etc. it offers lot of potential for investors to capitalize this segment and unleash true potential in wellness tourism.

Meetings, Incentives, Conferences, and Exhibitions (MICE)

Nepal offers an ideal setting for MICE, benefiting from its strategic location between the two economic giants, China and India. Serving as a crossroad for these nations and others, Nepal has great climate, accommodations, diverse cuisines, and sightseeing options. Thus, it serves as a perfect blend of business and travel.

Adventure Tourism

Nepal has huge potential in adventure tourism due to its geography. It offers wide range of adventure activities in a short period of time such as paragliding, bungee jumping, mountain flight, skydiving, river rafting, mountain biking, trekking, etc. However, it is yet to reach its full potential as an ultimate destination for adventure seekers as it requires investment to develop proper infrastructure, trained manpower, branding, etc. Thus, it presents exciting opportunities for investors interested in adventure tourism.

Financial Market

During the review period (December 1, 2023 to February 29, 2024) of FY 2023/24 AD (2080/81 BS), Nepal's Balance of Payments (BoP) remained at a surplus and marked a significant increase compared to the same period in the previous FY 2022/23 AD (2079/80 BS). This improvement in BoP is credited to an increase in remittances and Foreign Direct Investments (FDIs) along with a contraction of imports, thereby decreasing the trade deficit. Consequently, the significant improvement in the BoP along with increased remittance inflows accelerated the deposit growth in Banks and Financial Institutions (BFIs) over the first six months of current FY 2023/24 AD (2080/81 BS). The second quarter of the fiscal year also saw the long-awaited endorsement of the anti-money laundering bill, aligning Nepal with the international standards to address the issue of money laundering.

Second Quarter Performance Analysis of Commercial Banks496

As per the unaudited second quarterly results of commercial banks for FY 2023/24 AD (2080/81 BS), the operating profit of commercial banks decreased by 4.78%, while the net profit fell by 9.09% compared to the same period in the previous FY 2022/23 AD (2079/80 BS).

In the second quarter of FY 2023/24 AD (2080/81 BS), Nabil Bank had the highest net profit of NPR 3.20 billion (USD 24.10 million), followed by Prime Commercial Bank and Global IME Bank with a net profit of NPR 2.18 billion (USD 16.40 million) and NPR 2.04 billion (USD 15.36

million) respectively. Likewise, compared to the same period in the last FY 2022/23 AD (2079/80 BS), Himalayan Bank and Prime Commercial Bank had a whopping increase of 57.53% and 32.13% in their net profits, amounting to NPR 1.50 billion (USD 11.31 million) and NPR 2.18 billion (USD 16.42) respectively. On the other hand, Nepal Bank registered the lowest net profit of NPR 590.05 million (USD 4.44 million).

In terms of reserves and surplus, Rastriya Banijya Bank held the highest amount of reserves of NPR 37.24 billion (USD 280.74 million) followed by Nabil Bank and Nepal Investment Mega Bank with NPR 27.17 billion (USD 204.62 million) and NPR 26.08 billion (USD 196.31 million) respectively.

FACTSHEET495

Gross Foreign Exchange Reserve (mid-January 2024)

trillion (USD 13.68 billion) Buying

2024)

In total, nine banks fared better than the reserves and surplus industry average of NPR 15.15 billion (USD 114.12 million).

Overall, by the end of six months of the current FY 2023/24 AD (2080/81 BS), deposits at commercial banks grew by 16.11%, compared to the corresponding period in FY 2022/23 AD (2079/80 BS). The highest deposits were mobilized by Global IME Bank, Nabil Bank and Nepal Investment Mega Bank with NPR 454.25 billion (USD 3.42 billion), NPR 428.83 billion (USD 3.23 billion), and NPR 389.03 billion (USD 2.93 billion), respectively. Whereas,

Standard Chartered Bank recorded the lowest deposits from customers of only NPR 115.70 billion (USD 870.64 million). Also, compared to the same period in the previous FY 2022/23 AD (2079/80 BS), Himalayan Bank recorded the highest increase in deposits in commercial banks of 69.10% by the end of six months of the current FY 2023/24 AD (2080/81 BS) which amounted to NPR 298.03 billion (USD 2.25 million).

In terms of credit growth, the total credit growth of commercial banks was 6.31%, compared to same period in the previous FY 2022/23 AD (2079/80 BS). Among the commercial banks, Global IME Bank held the highest loan and advances portfolio of NPR 364.75 billion (USD 2.75 billion) followed by Nabil Bank and Nepal Investment Mega Bank at NPR 362.88 billion (USD 2.74 billion) and NPR 312.61 billion (USD 2.35 billion) respectively. Meanwhile,

19. Deposit Mix at Banks and Financial Institutions (Percentage Share)

Source: Current Macroeconomic and Financial Situation based on six months’ data, Nepal Rastra Bank, FY 2023/24 AD (2080/81 BS)498

Standard Chartered Bank had the lowest credit disbursement of NPR 77.65 billion (USD 584.80 million).

Lastly, the average percentage of Non-Performing Loans (NPLs) of commercial banks stood at 3.40% as compared to 2.30% in the same period last FY 2022/23 AD (2079/80 BS). Furthermore, the average cost of funds was 7.35% against the 8.50% in the same period in the last financial year. Similarly, the average base rate stood at 9.42%, during the review period, which was 10.82% in the same period last FY 2022/23 AD (2079/80 BS). The highest base rate was that of Himalayan Bank at 10.59% followed by Prime Commercial Bank at 10.38%.

On the other hand, Standard Chartered Bank had the lowest base rate at 7.56%.

KEY INDICATORS

Some of the key macroeconomic indicators as per the Current

Macroeconomic and Financial Situation report published by Nepal Rastra Bank (NRB) are highlighted below.497 These are based on the six months’ data of FY 2023/24 AD (2080/81 BS) ending in mid-January of 2024 AD.

Deposit and Credit Mobilization

The deposits at BFIs grew by 6.6% in the review period as compared to 4.2% in the same period last FY 2022/23 AD (2079/80 BS). Furthermore, on a year-on-year basis, deposits at BFIs experienced a substantial expansion of 14.9% by midJanuary 2024. Among the total number of deposits, demand deposits, saving deposits and fixed deposits accounted for 6.8%, 26.8%, and 59.9% respectively. These proportions have experienced a slight change compared to a year ago when the respective shares were 7.8%, 25.6%, and 60.3%.

Figure

Similarly, in the review period, credit provided to the private sector by BFIs witnessed a rise of 4%, compared to the corresponding period of the previous financial year. This increase contrasts with the previous year's corresponding period, where credit grew by 3%. Looking at the year-onyear basis, the credit extended to the private sector from BFIs

experienced a 4.9% increase in mid-January 2024.

Additionally, BFIs witnessed an increase in outstanding loans to various sectors. The construction sector witnessed a rise of 4.1%, the industrial production sector saw an increase of 8.0%, the agricultural sector experienced a growth of 1.1%, while the transportation, communication, and public sectors observed a substantial growth

of 10.6% in outstanding loans, compared to the second quarter in the last FY 2022/23 AD (2079/80 BS). Moreover, as compared to the same period last year, outstanding loans to the service industry increased by 4.5%, while the wholesale and retail trade sector experienced a modest increase of 2.0%, and the consumable sector saw a rise of 7.0%.

Credit of Banks and Financial Institutions (Amount in NPR in billion)

Source: Current Macroeconomic and Financial Situation based on six months’ data, Nepal Rastra Bank, FY 2023/24 AD (2080/81 BS)499

BFIs also experienced changes in the extension of various types of loans. Term loans witnessed an increase of 13.2%, while real estate loans, including residential personal home loans, saw a more modest growth of 4.7% compared to last FY 2022/23 AD (2079/80 BS). Furthermore, trust receipt loans for imports experienced an increase of 5.8% and margin nature loans increased by 10.5%. However, hire purchase loans and overdraft loans decreased by a significant 19.9% and 41.0% respectively, primarily due to the reclassification of loans from the last year.

Liquidity Management

NRB injected a total liquidity of NPR 515.11 billion (USD 3.88 billion) based on turnover in the first six months of FY 2023/24 AD (2080/81 BS). This liquidity injection consisted of NPR 1.20 billion (USD 9.04 million) through the Standing Liquidity Facility (SLF) and NPR 513.91 billion (USD 3.87 billion) through the Overnight Liquidity Facility (OLF). In the same period last FY 2022/23 AD (2079/80 BS), NPR 3.10 trillion (USD 23.29 billion) net amount of liquidity was injected through various instruments of open market operations including SLF.

Compared to the last financial year, the net amount of liquidity injected decreased by NPR 2.59 trillion (USD 21.64 billion) this financial year.

Moreover, NRB injected liquidity amounting to NPR 366.14 billion (USD 2.76 billion) through the net purchase of USD 2.76 billion (NPR 366.47 billion) from the foreign exchange market. In comparison, in the corresponding period of the previous year, a liquidity of NPR 358.90 billion (USD 2.70 billion) was injected through the net purchase of USD 2.76 billion (NPR 366.47 billion).

Figure 20. Sectorwise Outstanding

Additionally, NRB purchased Indian currency (INR) equivalent to NPR 242.08 billion (USD 1.82 billion) through the sale of USD 1.82 billion (NPR 242.08 billion) in the first six months of FY 2023/24 AD (2079/80 BS). Comparatively, in the corresponding period last year, INR equivalent to NPR 296.22 billion (USD 2.23 billion) was purchased through the sale

of USD 2.28 billion (NPR 302.65 billion).

Foreign Exchange Reserves and Adequacy

As of mid-January 2024, the total value of foreign exchange reserves rose by 18.0% to NPR 1.82 trillion (USD 13.69 billion), compared to NPR 1.54 trillion (USD 11.71 billion) in mid-July

2023. Similarly, the reserves held by BFIs, excluding the NRB, increased by 11.8% to NPR 216.35 billion (USD 1.63 billion) in mid-January 2024 from NPR 193.59 billion (USD 1.46 billion) in mid-July 2023. Within this, the proportion of Indian currency in the total reserves amounted to 22.5% as of mid-January 2024.

Table 11. Foreign Exchange Adequacy Indicators

Source: Current Macroeconomic and Financial Situation based on 6 months’ data, Nepal Rastra Bank, 2023/24 AD (2080/81 BS)500

Based on the imports as of the second quarter of FY 2023/24 AD (2080/81 BS), the foreign exchange reserves of the banking sector have been deemed sufficient to cover approximately 14.5 months of prospective merchandise imports and 12.1 months of both merchandise and services imports.

Interest Rates

The weighted average rate for the 91-day treasury bills remained steady at 3.37% as of mid-January 2024, compared to 10.89% in the corresponding period last year.

Meanwhile, the weighted average inter-bank transaction rate among commercial banks, which was 7.53% a year ago, decreased to 2.86%. Additionally, the average inter-bank rate of BFIs, which serves as the operating target of monetary policy, stood at 2.86% in mid-January 2024.

In the same period, the average base rate of commercial banks experienced a decrease, falling from 10.91% a year ago to 9.35%. Furthermore, the weighted average deposit rate and lending rate of commercial banks as

of mid-January 2024 stood at 7.32% and 11.38% respectively. Comparatively, these rates were 8.51% and 12.79% one year ago.

Balance of Payment

In the first six months of FY 2023/24 AD (2080/81 BS), ending in mid-January 2024, the Balance of Payment (BoP) was at a surplus of NPR 273.52 billion (USD 2.06 billion), which witnessed a percentage increase of 196.73% compared to the corresponding period of the previous year, where the BoP was at a surplus of NPR 92.15 billion (USD 693.84 million).

Highlights from the mid-term review of the Monetary Policy 2023/24 AD (2080/2081 BS) published on February 12, 2024501

Highlights from the mid-term review of the monetary policy

The average Consumer Price Inflation (CPI) up to mid-January is at 6.47%, which is within the objective of NRB to keep the average CPI under the threshold of 6.5% in the current fiscal year.

Provisions related to mandatory cash ratio and statutory liquidity ratio remain unchanged.

The banking system currently has comfortable liquidity conditions, with the weighted average interbank rate for banks and financial institutions standing at 2.86%. In the same month of the previous year, the interest rate was 7.53%.

Loans up to NPR 20 million (USD 150,656) provided to the agricultural, small, cottage and medium-scale enterprises will be eligible for inclusion in the ‘Regulatory Retail Portfolio’.

The interest rate for institutional fixed deposits shall be fixed at 1% below the rate offered for individual fixed deposits.

BFI’s have utilized NPR. 1.2 billion (USD 9.04 million) of liquidity from this bank through permanent liquidity facility and NPR 513.91 billion (USD 3.87 billion) through overnight liquidity facilities, amounting to a total of NPR 515.11 billion (USD 3.88). During this period, NPR 315.55 billion (USD 2.38 billion) liquidity has been mobilized through deposit collection.

KEY DEVELOPMENTS

BFI’s Struggle as CD Ratio Close to Fall Below 80%

In mid-January 2024, the NRB reported a Credit-Deposit (CD) ratio of 80.26%, which is significantly lower than the mandated 90% ceiling for BFIs to issue loans.502 This shortfall has raised concerns about liquidity constraints and the ability of banks to support economic growth. The decline in CD ratio can be attributed to sluggish lending growth compared to a sharp rise in deposits. As a result, many banks exceeded the CD ratio threshold in the fiscal year 2022/23 AD (2079/80 BS), prompting the government and NRB to implement measures

to ease liquidity constraints. Over the past few quarters, BFIs have been facing challenges in recovering increasing bad debts, attributed to the current economic slowdown.503 This has led to a 28% average decline in banks' profits and a drop in return on equity to 8% from over 20% a decade ago.504 Additionally, maintaining the mandatory capital adequacy ratio has become difficult for BFIs, affecting their lending capacity.505

Nepal's Private Sector Sees 4.9% Growth in Loans

Loans from BFIs to Nepal's private sector grew by 4.9% in the first six months of the current fiscal year 2023/24 AD (2080/81 BS), as per the NRB.506 By mid-January

2024, credit flow increased by 3% from NPR 137.33 billion (USD 1.03 billion) in mid-January 2023 to NPR 192.64 billion (USD 1.45 billion).507 Within this, loans to institutions comprised 63.2%, and loans to individuals and households stood at 36.8% of the total, compared to 64.9% and 35.1% respectively in the previous year.508 Additionally, commercial banks increased credit by 4.0%, development banks by 4.4%, and finance companies by 2.4%. In parallel, lending to the agricultural sector experienced a 1.1% uptick, while industrial production surged by 8.0%, construction by 4.1%, and transport, communication, and public services by an impressive 10.6%. Moreover, loans to wholesale and retail trade registered a 2.0% increase,

services grew by 4.5%, and the consumer sector witnessed a robust 7.0% expansion.509

HoR Approves Anti Money Laundering Bill to Avoid FATF Greylisting

The House of Representatives (HoR) approved the Anti Money Laundering and Business Promotion Bill on February 7, 2024, aiming to prevent Nepal from falling into the Financial Action Task Force's (FATF) grey list.510 The bill aligns with international standards for antimoney laundering and combats the financing of terrorism (AML/ CFT). In order to meet the FATF’s standards, lawmakers amended 19 laws, including the Land Tax Act 1977 and the Nepal Rastra Bank Act 2002.511 This move comes as the government faced pressure to address deficiencies outlined in the Asia Pacific Group on Money Laundering's (APG) Mutual Evaluation Report, which was prepared and unveiled in September 2023. Following the approval of the bill, FATF urged Nepal to expedite law implementation and enhance authorities' capacity, while Nepal requested for a one-year grace period to comply.512

NRB Reports Surge in Suspicious Banking Transactions

As reported by the Financial Intelligence Unit (FIU) of Nepal Rastra Bank (NRB) in its annual report published on January 23, 2024, there has been a significant increase in

suspicious banking transactions, with 5,935 cases registered in the fiscal year 2022/23 AD (2079/80 BS) compared to 2,780 cases in FY 2021/22 AD (2078/79 BS) and 1,533 cases in FY 2020/21 AD (2077/2078 BS).513 These transactions lack proper authenticity and may involve fraud, terrorist financing, money laundering, or other illegal activities. The report is based on the fact that financial institutions, moneychangers, cooperatives, insurance companies, and securities businesses are required to report any suspicious transactions to the Financial Intelligence Unit (FIU) of the NRB. Among the suspicious banking transactions, commercial banks accounted for the majority of reports (5,187), followed by development banks (257), remittance companies (146), securities companies (46), finance companies (44), microfinance institutions (28), and cooperatives (1).514 The rise in such transactions underscores the importance of vigilant monitoring and reporting to combat financial crimes.515

House of Representatives Amends Acts to Enhance Oversight of Cooperatives

The House of Representatives (HoR) approved amendments to the Nepal Rastra Bank Act on 7 February, 2024, granting the central bank authority to regulate cooperatives with transactions exceeding NPR 500 million (USD 3.77 million).516 This decision follows a recommendation from the Cooperative Department and

allows the NRB to supervise and inspect such cooperatives. The amendment, passed alongside the Anti-money Laundering and Business Promotion Bill, empowers the NRB to oversee cooperatives with share capital or annual turnover surpassing NPR 500 million (USD 3.77 million).517 Initially, the government registered an amendment bill proposing that NRB can regulate, inspect, and supervise cooperatives involving share capital of more than NPR 250 million (USD 1.88 million) or savings and loans of more than NPR 500 million (USD 3.77 million) annually. However, the HoR's Law, Justice, and Human Rights Committee revised the bill to align with NRB's oversight of cooperatives with turnovers exceeding NPR 500 million (USD 3.77 million).518 Additionally, the government made amendments to the Cooperative Act by registering a draft amendment to the Act, and setting the deposit limit in cooperatives at NPR 2.5 million (USD 18,835.69). The HoR then amended and passed the bill registered by the government, removing restrictions on cooperatives accepting deposits exceeding this amount. The amendments aim to streamline regulatory oversight and ensure sound governance in Nepal's cooperative sector. The bill will come into effect upon approval by the National Assembly and the President.519

Outlook

The NRB has kept key rates unchanged in the mid-term review of its monetary policy, indicating a cautious approach amidst expectations of economic recovery driven by falling interest rates. This could help to increase borrowings and investment, potentially benefitting banks in the long run. Meanwhile, the banking sector has experienced significant challenges, affecting banks' balance sheets amidst a sluggish economy. The economic downturn has adversely affected industries and businesses, leading to delays in loan interest payments by industrialists and businesspersons, consequently increasing the volume of non-performing loans. Despite efforts by banks to stimulate demand through reduced interest rates, the market for loans remains subdued. Consequently, with the increase in the non-performing loans, the net profit of many commercial banks has declined, reflecting the contraction in the economic sector. On the other hand, the recent approval of the Anti-Money Laundering and Business Promotion Bill by the HoR is a positive development for the financial market, as it is expected to boost confidence in Nepal’s banking sector by strengthening its legal framework against money laundering and promoting greater transparency in line with the international standards. Additionally, the NRB’s enhanced supervisory authority over cooperatives engaged in significant transactions is expected to play a pivotal role in safeguarding public funds and gain public trust towards financial institutions. These developments underscore the need for careful monitoring and strategic interventions to stabilize the financial sector and spur economic recovery.

Capital Market

During the review period, from December 3, 2023, to February 29, 2024, the secondary market demonstrated volatility and closed at 1,972.79 points, reflecting a modest increase of 6.53% in the period. It reached its peak on January 21, 2024 at 2,215.32 points. The increase can be attributed to Nepal Rastra Bank’s (NRB) supportive policy changes such as easing margin lending and lowering bank interest rates in the first quarter review of FY 2023/24 (2080/81 BS). However, the market could not maintain its strong upward trend due to a disappointing second-quarter performance by listed companies, especially financial institutions. This led to a sharp decline in the market in the second half of the review period. Moreover, the second-quarter monetary policy review and declining interest rates failed to excite investors and their confidence further plummeted.

FACTSHEET

Table 12. Key Market Indicators

Source: Nepal Stock Exchange (NEPSE)

During the review period (December 3, 2023 to February 29, 2024), the Nepal Stock Exchange (NEPSE) index increased by 6.53%, closing at 1972.09 points. The total market capitalization at the end of the review period amounted to NPR 3.33 trillion (USD 25.09 billion).523 Among the sectors, three experienced losses, with the Commercial Bank sub-index showing the most significant decrease at -7.26%, followed by the Life Insurance sub-index at -3.17%, and the Hotels and Tourism sub-index at

-1.76%. Conversely, the rest of the sub-indices showed increases, with the Manufacturing and Processing sub-index recording the highest gain at 37.62%, followed by Hydropower subindex at 25.61%, and Others subindex at 19.15%.

Source: Nepal Stock Exchange (NEPSE)

Primary Market

During the review period, the Securities Board of Nepal (SEBON) granted Initial Public Offering (IPO) approval to Sarbottam Cement Ltd and Reliance Spinning Mills Ltd.524

Table 13. Public Issue Size of IPO-Approved Companies

Source: SEBON, Initial Public Offerings Approved

KEY DEVELOPMENTS

34 Companies Awaiting SEBON Approval to Issue IPOs

A total of 34 listed companies are waiting for SEBON’s approval to issue over 116 million units of

Likewise, Himalayan Reinsurance

Limited successfully raised funds from the general public and were able to collect NPR 6.18 billion (USD 350.51 million) in total from the primary market.525

their IPOs worth over NPR 27.52 billion (USD 207.40 million) in the market.526 Three of the companies

- Hospital for Advanced Medicine and Surgery (HAMS), Shaurya Cement Industries, Maruti Cements and Jagdamba Steels -

have applied to issue at premium prices. According to the data, in the first seven months of FY 2023/24 AD (2080/81 BS), only seven IPOs were approved.527 This hinderance in the approvals is due to a delay in the appointing

Figure 21. NEPSE Index Movement

the chairperson for SEBON. The position has remained vacant since the former-chair, Ramesh Hamal concluded his tenure on January 5.528

SEBON Mandates Advance Notification of Lock-in Period

SEBON published a notice on December 11, 2024 to direct NEPSE, Central Depository Services (CDS) and Clearing Limited and all NEPSE-listed companies, regarding the advance notification of the lock-in period expiration of the shares of listed companies. The lock-in period, a regulatory measure, restricts share trading for a specified duration after the initial public offering (IPO) to stabilize market prices, curb the uninformed trading of lock-in shares, make informed decisions and enhance transparency in the stock market.529 SEBON policy dictates that the lock-in period of listed companies ends after three years of initial public offering (IPO) allotment. For instance, Green Life Hydropower published a notice regarding the lock-in expiration on February 18, 2024, three years post its IPO allotment. This notice was officially circulated one month in advance on January 16, 2024. The end of the lock-in period for Green Life Hydropower signifies shareholders' ability to trade their shares freely.530

Media Companies Prepare to Issue IPO

Several media companies in Nepal, following the footprints of Nepal Republic Media (NRM), are preparing to launch Initial Public Offerings (IPOs) for the public. NRM became the first media

company to issue IPO from June 9 to June 13, 2023, issuing 44.99% of its capital i.e. NPR 967.6 million (USD 7.29 million). Their decision to go public was to build an inclusive institution representing diverse Nepali and generate funds for expansion.531 So far, Kantipur Television Network and Dish Media Network are in the SEBON pipeline.532 In particular, Kantipur has requested permission to issue shares valued at NPR 75 million (USD 560,000 million).533 Meanwhile, Dish Media Network has proposed shares valued at NPR 238 million (USD 1.79 million).534 By floating IPOs, the companies aim to generate funds for expansion as well as enhance market position and visibility.

Large Inter-Province Disparities Found in Nepali Share Market Activity

Nepal Rastra Bank, along with the International Finance Corporation (IFC), conducted a Financial Inclusion Survey from 2022 which led to a report that studied the scope of financial investment in different provinces of Nepal. According to the findings, posted recently, 23.9% of the Nepali population invests in shares. Within this, Bagmati ranks as the highest investor at 43% of the investment in shares and Madhesh ranks as the lowest investor at only 9%. The investment disparity also extends to debentures as well. While share market participation has been growing, inter-province differences exist significantly. This also reveals varying financial inclusion and literacy levels while, at the same time, showing a potential for improvement through provincially-tailored interventions.535

Nepal Insurance Authority (NIA) Revises its Investment Guidelines

On January 8, 2024, the Nepal Insurance Authority (NIA) revised investment guidelines for insurance companies, allowing them to invest in various avenues. The revision permits insurance companies to purchase up to 15% of the shares of a public company, up from the previous limit of 5%.536 It also authorizes 10% of their total investment in ordinary shares and 1.5% in private equity and venture capital funds of the NEPSE-listed companies. The revisions aim to increase investment in promoter shares, thereby allowing representation in management, as well as to diversify investments beyond fixed deposits, addressing criticisms of limited capital accumulation.537

NEA to Issue IPO for Infrastructural Development

The state-owned power company, Nepal Electricity Authority (NEA), plans to raise approximately NPR 70 billion (USD 527.54 million) through an Initial Public Offering (IPO) to invest in various hydropower and transmission projects.538 NEA aims to sell up to 10% of its shares to the public and increase its authorized capital to NPR 300 billion (USD 2.26 billion) with its shares priced at NPR 230 (USD 1.73) per share. NEA also plans to secure external investors in the future. With the allotted shares, the authority hopes to focus on its transmission and distribution networks to improve the reliability of power supply as, according to recent research, NEA has to invest approximately

USD 4 billion (NPR 530.76 billion) by 2030 to improve the existing grid structure. This initiative aligns with the government's objective to generate over 28,000 MW of electricity by 2035.539

Fusemachines Inc. to be Listed on NASDAQ

Fusemachines Incorporation, an AI firm, is set to be listed on NASDAQ as the first Nepali-origin company, with the valuation of

Outlook

the company fixed at USD 200 million (NPR 26.53 billion).540 According to an agreement between Fusemachines and the CSLM Acquisition Corp, a special purpose acquisition company, as announced on January 23, 2024, their partnership is expected to be listed on NASDAQ under the ticker symbol “FUSE”.541

Fusemachines, founded by Nepali entrepreneur Sameer Maskey in 2013, has been working

on providing AI products and services across various regions including the US, Canada, Latin America, and Asia.542 The decadeold firm has been developing AI solutions for companies across various industries and has also been working on democratizing AI. The success story of Fusemachines has created excitement and encouragement among the IT sector firms in Nepal.543

In the review period, SEBON continued its pause from the previous quarter on IPO approvals. However, it is expected to resume once the regulatory body gets a new Chairman. The change is also expected to boost market activity, which investors are excited for. Furthermore, based on the NRB’s prediction of decreasing interest rates, the upcoming quarter is expected to see better liquidity and credit flow. However, to encourage the market, it is crucial for the government to formulate supportive policies and excite the investors, which has been highlighted due to the declining investor confidence following the mid-term monetary policy review failing to introduce sufficient changes. Looking ahead, the market’s performance will likely be influenced by a variety of factors, including political conditions, domestic policies and investor sentiment.

Introduction

Foreign direct investment (FDI) has grown to become a catalyst for economic development and modernization. Alongside much-needed capital, FDIs also encourage technology transfers, build up human capital, stimulate international trade integration, increase competitiveness, and enhance productivity.544

Given these benefits, developing and transitioning economies have made considerable efforts in making their respective countries a more attractive investment destination. FDIs have the unique characteristic of being a source of external finance which is motivated majorly by the investors’ expectations of profits in long-term prospects.545 In an effort to market themselves to foreign investors, developing economies have liberalized their FDI regimes by improving market access, rules regarding foreign ownership, and market linkages.546

Nepal has recognized this potential that FDI holds for its development and its importance as a bridging mechanism for gaps in domestic capital or funding availability.547 In line with this, Nepal has made several amendments to its policy and institutional landscape to better adhere to investor expectations, such as reducing the minimum threshold for FDI to NPR 20 million (USD 150,727.26) or automating approvals for a more streamlined and efficient process. At first glance, these measures seem to have taken fruit with Nepal’s FDI commitments seeing a 62.29% year-on-year increase, amounting to NPR 22.33 billion (USD 168.29 million), in the first six months of FY 2023/24 AD (2080/81 BS).548

However, despite its optimistic FDI commitments, Nepal is plagued with having a significant gap between approved FDI and actual FDI inflows. Between FY 1995/96 AD (2052/2053 BS) to FY 2021/22 AD (2078/79 BS), only 36.2% of the total approved FDI translated into inflows.549 This phenomenon has persisted with Nepal seeing net FDI inflows of NPR 3.92 billion (USD 29.54 million) in the first five months of FY 2023/24 AD (2080/81 BS) despite having received pledges amounting to NPR 20.61 billion (USD 155.32 billion).550 It is indicative of Nepal still needing to go a long way before being considered an investment paradise. While the government has been amending its policy framework, investors often consider a variety of other elements, including political stability, market behavior, and governance, which Nepal has areas to improve on.

This special section seeks to contribute to the ongoing dialogue by looking into contemporary and sectorspecific bottlenecks, such as limited investment areas and conflicts with the domestic private sector. The following section adopts a positive outlook, exploring possible avenues and suggestions for Nepal to bolster its foreign investment inflows and unitization.

The Third Investment Summit 2024 has been scheduled for April 28-29 and expects participation from national and international stakeholders and high-level representatives from the government, private sector, and development partners. It highlights the Government of Nepal’s prioritization of private sector investment and seeks to promote Nepal as an investment-friendly country.

Tapping into Nepal’s FDI Potential

By Sujeev Shakya Founder and CEO, Beed Management

While Nepal’s economic growth has been fueled by its domestic private sector, foreign investments remain at dismal levels. Since opening up for foreign investors in the 1990s, Nepal has not been able to attract global firms and investors like other countries such as Vietnam, who opened up to the world at similar times. Nepal's journey towards unlocking its FDI potential necessitates a shift in mindset towards fostering a conducive environment for foreign investment.

Factors Contributing to Low FDI

There are three key reasons for Nepal’s FDI remaining low. First, owing to its aid dependency, Nepal’s mindset approach is inclined towards assistance rather than investment for any project or activity it would like to conduct. In 2023, assistance and loans committed from development partners stood at nearly USD 2.5 billion (NPR 331.72 billion) while net FDI was less than USD 44 million (NPR 5.84 billion).551 This aid-dependence is also reflected in the fact that young and educated people still seek jobs with donor agencies rather than in the private sector, as they see donor agencies as coveted places to be in.

Second, the Nepali private sector has always been trade-oriented and therefore inward-looking. They see FDI as a threat to the current business environment which has been built around protectionism and collusion in the form of different cartels. Third, after the initial set of reforms in the early 1990s, there has been no champion for reforms to attract foreign investments. The major political parties follow the same socialist ideology which looks at capitalism as evil and the foreign capitalists as greater evil. Therefore, the lip service towards FDI continues without neither proper intent nor a framework to be able to deliver services to global individuals and firms.

Nepal’s growth till date has been driven by the private sector and it will continue to do so, but the scale of operations and the quantum of investments have to take a major leap. This requires a change of mindset to be able to think big and to engage in activities with a global mindset. For instance, when Nepal opened up the hydropower sector for FDI in 1996, two projects totaling USD 300 million (NPR 39.81 billion) met financial closing when the GDP of the country was just USD 6 billion (NPR 796.14 billion), that is 5% of GDP. If we extrapolate to current times, we should be able

to have projects with FDI of more than USD 2 billion (NPR 265.38 billion) in each sector!

Opportunities for Transformation

Nepal is, however, at the cusp of transformation where there is no other option but to figure out how to attract FDI. First, post-2026, after Nepal graduates to middle income country, many projects of the development partners will have to end. We are already seeing bilateral agencies pushing an investment and trade agenda to substitute the development assistance programs they would otherwise be engaged in.

Second, Nepal with a GDP of USD 44 billion (NPR 5.84 trillion) in 2024, requires close to USD 10 billion (NPR 1.33 trillion) of investments each year to stimulate growth and create jobs to stem large-scale migration.552 The domestic capital formation is not even a quarter of these requirements. This gap reinforces how there is no other option than to see how foreign investments can be attracted.

Third, the new-age entrepreneurs, who are seeing global opportunities, would like to build up Nepali businesses with global firms in Nepal and then take them to the world. For example,

the ICT and private equity industry, where international or Nepali pioneers structured to work globally, pushed for greater reform that the local cartels could not manage to resist. This will be a critical driver for more opening up.

Strategies for FDI Promotion

Nepal, with the support of development partners, has engaged in many studies and multiple reports have been produced outlining what needs to be done. The Nepal Economic Forum has also been a part of many such initiatives and has even led some of these initiatives. What needs to be done is known. What is important is to execute based on the findings rather than again start writing more reports.

The key steps forward are clear. First, accelerate the pace of economic reforms and spread the news to the world that Nepal is ready. Second, eliminate protectionism. For instance, global accounting firms, consulting firms, engineering firms, and legal firms cannot operate in Nepal. If they were allowed to, Nepali firms could collaborate or learn to compete with these firms to execute large scale projects as Nepal still has capability constraints. Third, allow Nepalis to invest abroad by abolishing the draconian law that prohibits them to do so. When Nepali firms will learn to compete in global markets, they will be in a better position to compete on their own.

Fourth, the diaspora globally are

the initial catalysts to drive FDI. It is imperative to engage with diaspora networks, showcase successful investments where diaspora is engaged, and proliferate the message that Nepal is ready for investment. Lastly, Nepal needs to share its transformation journey. Political uncertainty is a constant and the country has grown despite the challenges. This message has to be shared. We, at NEF, have attempted to do this through our publication, ‘Introspecting Change’, released in 2023, outlining the transformations over 15 years from 2008-2023. Now, we need to leverage FDI to build the narrative for the next 15 years of accelerated transformation.

Alternative Investment Funds: A Silver Lining for SME Finance

By Rojesh Bhakta Shrestha Lead Consultant, Beed Management

The Nepali financial market is highly dominated by banks and financial institutions (BFIs); it mobilizes almost 86.6% of financial assets in the financial system.553 Due to limited financing options, businesses, especially small and medium enterprises (SMEs), which constitute almost 85% of businesses in Nepal, mostly rely on financing from traditional financial institutions.554 Nonetheless, accessing finance from these institutions is a major challenge as it requires adequate collaterals and interest rates are generally high. Currently, the weighted average lending rate of BFIs is 11.26%.555 As per the study conducted by the UKAID Sakchyam Access to Finance Programme in 2018/19, the SME financing gap in Nepal is estimated to be about 15% of the national GDP at USD 3.9 billion (NPR 438 billion).

Globally, alternative investment funds such as private equity (PE), venture capital (VC), infrastructure funds, real estate funds, hedge funds, etc. have emerged as an alternative asset class — a valuable partner and strong source of long-term risk capital for competitive, scalable, innovative, transformative, and growth-oriented businesses, especially SMEs, to diversify their funding base. As per a McKinsey

study, the global private market assets under management totaled USD 13.1 trillion (NPR 1,738 trillion) as of June 2023.556

Likewise, as per Preqin’s ‘Future of Alternatives 2028’ report, global alternative assets under management (AUM) are expected to reach USD 24.5 trillion (NPR 3,250 trillion) by the end of 2028. Apart from financing, these alternative investment funds, such as PE and VC funds, tend to take a “capital plus” approach, wherein they provide a variety of technical support to businesses to enhance operations; build management capacity and market linkages; and improve governance and growth. This additional technical support plays a pivotal role in the growth of businesses, particularly SMEs, which lack such skills, knowledge, and networks.

Although Business Oxygen (BO2), Nepal’s first private equity fund, was launched in 2012, Nepal only got a Specialized Investment Fund (SIF) regulation in 2019, issued by the Securities Board of Nepal (SEBON). The entry of various funds provides an alternative mechanism for SMEs that might struggle to access finance from traditional financial institutions and is expected to play a major role in fulfilling the existing SME financing gap. And

while the alternative investment market in Nepal is still at a nascent stage, some of the trends and developments that provide evidence and opportunities for the growth of alternative investment mechanisms in Nepal are outlined below:

Funds with Foreign Direct Investments (FDI) Paving the Way

Both offshore and onshore foreign direct investment (FDI) funds have played a key role in developing the alternative funds market in Nepal and attracting foreign investments. Business Oxygen (BO2), Nepal’s first SME Venture Fund, has invested in 16 SMEs, and has already successfully exited from five investments. Likewise, Dolma Impact Fund, an offshore fund which is the largest PE fund in Nepal, has raised more than USD 100 million (NPR 13.26 billion) via its two funds. Both of these funds have primarily sourced their funding from development financial institutions (DFIs). Likewise, One to Watch has been able to significantly attract funds from private investors from Netherlands.

These funds with FDI have played a key role in developing both the legal and business

environment for alternative investment funds and attracting foreign investments in the form of private equity. Moreover, these funds have been instrumental in adopting international best practices such as environmental, social, and governance (ESG) factors in investment decisions and due diligence practices, amongst others.

More than USD 66 million (NPR 8.76 billion) Already Mobilized by PE-VC Funds

As per the market snapshot report published by the Nepal Private Equity Association (NPEA), Nepali PE-VC funds have mobilized around USD 66 million (NPR 8.76 billion) between 2012 and 2022, across 15 different sectors. Amongst which, 25% was mobilized by offshore FDI funds, 12.5% by onshore FDI funds, and 62.5% by local funds. These figures do not include investments from SIF-registered funds, as they have not made any investments as of 2022.557 In terms of instruments, 70.8% of investments have been made through equity, while the remaining 29.2% are through hybrid instruments. Likewise, in terms of the number of investments or deals, a total of 72 investments were made, out of which information and technology (IT) received the highest number of investments at 17, followed by renewable energy at 13, and agribusiness at 12.

More than 15 PE-VC Funds in Operation

Like any other growth trend in Nepal, the alternative investment fund market is currently witnessing the foray of new

fund managers and funds. As of mid-March 2024, SEBON, under the SIF regulation, has already provided the fund manager’s license to more than a dozen fund management companies, and has registered eight funds.558 Moreover, there are a couple other fund managers and funds in the pipeline awaiting SEBON’s approvals. Notably, most of the funds registered with SEBON are promoted by financial institutions such as commercial banks and insurance companies. Among the registered funds, Avasar Equity has already raised NPR 5 billion (USD 37.68 million) under its first PE fund, i.e., the Avasar Equity Diversified Fund, and has started to deploy the funds,. With these funds in the pipeline, SIF funds are estimated to raise and deploy between NPR 30 to 40 billion (USD 225.09 million to 300.12 million) in the next few years.

Development of an Ecosystem

The Nepal Private Equity Association (NPEA) and Invest for Impact Nepal (IIN) are some of the key actors that are working towards developing a strong ecosystem to support the development of alternative investment funds in Nepal and promote access to finance for SMEs. Currently, NEPA has 18 regular and seven associate members and is actively involved in providing training and support, policy advocacy and lobbying, research, and networking. Likewise, Invest for Impact Nepal is a collaborative platform established by British International Investment (BII), the Dutch Entrepreneurial Development Bank (FMO), and the Swiss Agency for Development Cooperation (SDC), that has been

complementing existing efforts to attract Development Financial Institution (DFI) investment in order to support private sector growth. Similarly, there are numerous well-established accelerators, incubators, law firms, and consulting firms required for the growth of the industry.

Opportunity to Mobilize Foreign Investments

Nepal offers ample investment opportunities in both greenfield and brownfield projects in highpotential sectors such as the energy, tourism, information technology, infrastructure, education, healthcare, and agriculture sector. Thus, alternative funds provide an opportunity to mobilize foreign investments in the form of private equity and particularly attract funding from DFIs. The ability to attract and involve DFIs provides a strong basis to attract foreign investment from other foreign commercial capital providers. Moreover, the SIF regulation allows investment from multilateral or bilateral international institutional investors, foreign nationals or firms, companies or foreign institutional investors, foreign registered funds, fund managers, and other types of institutional entities.

Few Successful Exits and Confidence-Inducing Capital Market

Having clear exit options is crucial for the development of the alternative investment fund market. Fortunately, the Nepali market has already witnessed some successful exits in the recent past. As per the NPEA

market snapshot report, a combined total of 17 full or partial exits have occurred, out of which 58.8% were full exits and 41.2% were partial exits. Moreover, the capital market provides the necessary depth required for such successful exits through initial public offerings (IPOs) since, as per SIF regulation, the lock-in period for SIF-regulated funds is only one year, which provides a substantial exit incentive for SIF-regulated PEVC funds.

Reforms in Regulations

The current SIF regulation has been amended once, and as the market evolves, there is a need to amend various regulations in

order to support full functioning as per the capacity of both local and international funds. To develop a favorable regulatory environment, various policy dialogues are currently ongoing, and some regulatory changes are required to accommodate the efficient operations of these funds and be able to route and attract foreign capital. Some of the areas of improvement are: tax pass-through for alternative funds; resolving the risk of blacklisting for local funds; and exemption from change-ofcontrol provisions for PE-VC funds under Section 7 of the Income Tax Act.559

The role of attracting foreign investments is crucial for

stimulating growth and employment opportunities.

Despite the significance of FDIs in the Nepali economy, Nepal has not been able to attract the desired level of foreign investment due to various market barriers, primarily an unstable policy and political environment. Positively, the recent developments in the alternative investment fund landscape offer a platform to attract foreign capital via these alternative funds. However, it is imperative to create an enabling environment by making the required timely reforms in the current regulatory and legal framework without any further delay.

Preparing for Foreign Investment in Nepal: An Overview of Current Challenges and Suggestions

FOREIGN INVESTMENT IN NEPAL

Foreign investment has grown to become an established channel for the transfer of technology between countries and job creation.560 It is also seen as a key element in international economic integration by creating lasting links, and even influence, through trade and market access between economics.561 The importance of foreign investment remains even more pertinent for Nepal

given the considerably increasing resource gap in the economy. In recent years, Nepal has increased its efforts to attract foreign investment in Nepal, including the lowering of the Foreign Direct Investment (FDI) threshold and automated approvals for investments up to NPR 100 million (USD 753,636).562 Such supportive measures have led to a 62.29% year-on-year increase of FDI commitment in the first

half of FY 2023/24 AD (2080/81 BS) to NPR 22.33 billion (USD 168.29 million). However, despite the growth, Nepal’s investment climate faces significant struggles from bureaucracy to political instability. This piece will go over a few of the key barriers affecting the attractiveness for investment into the various sectors of Nepal, and what could be done to make it a more attractive destination for investors.

Existing Situation Suggestions

Difficulty in Obtaining Work Permits

Many foreign investors and workers have expressed grievances regarding the challenging process involved in obtaining work visas, which involves approval from multiple government agencies.563 Moreover, the government imposes limits on the number of foreign employees allowed in a company.564

Nepal could explore flexible immigration laws to make it easier to legally obtain a visa for foreign stakeholders related to the investment. In particular, having an easy process for short-term work visas would be of use to foreign nationals seeking to come to Nepal as short-term employees or as consultants for the investment project.

Lengthy Approval Process

The government has attempted to streamline the approval process by introducing measures such as the automated approvals and online registrations for foreign investments. However, these processes are plagued with delays which the requirement for submitting hard-copies of documents contributes to.565

Firstly, it is crucial for the Single Window System to be fully realized and properly implemented to reap the planned benefits. Furthermore, there needs to be a focused effort on digitization to facilitate a more efficient and automated approval. It is crucial for the government to examine existing processes and recognize possible bottlenecks or the involvement of multiple government departments, such as the submission of hard copies of documents, to be able to fully streamline the process.

Poor Enforcement of Copyright Laws

A major concern that has been discouraging multi-national companies from entering Nepal is the weak enforcement of copyright laws and intellectual property rights in the country. Trademark infringements can cause revenue loss and even damage brand reputation of the actual company.566 Despite the rising number of cases, hardly any effective action is taken by the concerned authorities.567

AGRICULTURE

It is imperative to enforce stricter measures against unauthorized usage of copyrighted materials. The government could look into establishing a separate court or a commission dealing solely with intellectual property issues. Furthermore, it should be ensured that the legislation aligns with international practices. It would provide copyright owners confidence and clarity regarding the intellectual protection legal system in the country.

Existing Situation Suggestions

Reliance on Traditional Methods

Farming in Nepal still relies heavily on the traditional farming system, which requires more manpower and time but gives lower total output compared to using modern technology. For instance, the 2021 Agriculture Census showed that only 54.5% of arable lands had access to irrigation facilities.568 This can be attributed to the higher costs and training needs often associated with upgrading to modern methods.

While not completely uprooting the traditional farming system, it is important to change or add some modern technologies so that the process can be simplified and also produce good output with less time and manpower, while being sustainable. With the use of modern technology, for which training can be provided, we can reduce the effect of climate change and natural disasters on agriculture production.

Limited Access to Markets

Many Nepali farmers are not well connected to the market systems. They mainly rely on middlemen which leads to the farmers seeing reduced profits due to the middlemen taking large cuts.569 This, in turn, also causes higher product prices.

It is important to make sure that farmers are getting an adequate amount for their crops and have a system where they are directly connected to the markets. This can benefit both the farmers and consumers as the farmers will get paid more while the overall price of the product will decrease for the consumers, with no middlemen to pocket the profit in between.

Climate Disaster Risks

Nepal is disproportionately vulnerable to climate change risks and natural disasters. This has had an adverse effect on agricultural productivity and the livelihoods of farmers. With warnings of increased extreme weather events, including droughts and flooding, it is crucial to increase resilience in the agricultural sector.

Introducing Climate Smart Agriculture techniques in farming could help build resilience to extreme weather events and use resources more efficiently. However, it would require support from the government and development agencies in the form of financial and technical assistance to encourage farmers to adopt such measures.

EDUCATION

Existing Situation Suggestions

Digitized Teaching-Learning Activities

The online learning system introduced during the COVID-19 pandemic has proved to become an important tool with the potential to increase education access.570 However, the digital gap caused between the rural and urban areas still persists. The limited technological knowledge and infrastructure has hindered the adoption of digital teaching-learning activities in rural schools, which are, arguably, the areas that would have the most to benefit from remote learning.571

While the government’s online learning portal, Sikai Chautari, is a commendable initiative, it requires more promotion to increase the number of visits to the platform. The platform can also be made more attractive with the addition of upgraded audio-video quality and interactive tools to facilitate a better learning environment.572 Moreover, there is space to collaborate with the private information and technology sphere to ensure that required digital infrastructure is accessible to rural populations through reduced taxes and publicprivate partnership models.573

Politicization in Schools

The politicization of the education sector in Nepal has resulted in compromised education quality and increased focus on profit over quality teaching-learning activities.574 This is especially true in the case of public schools, which have individuals affiliated to political parties competing for, and being assigned to, top posts despite not having sufficient qualifications.575 Such politicization discourages the private sector from partnering with the public sector as it increases challenges in navigation and coordination while also reducing the integrity of competition.

The government should design and implement a code of conduct discouraging the politicization of education. While the School Education Bill 2023 has prohibited teachers from partaking in political activities, it is crucial to effectively implement this provision once the bill gets enacted.576 Furthermore, as the government seeks increased private sector collaborations in public sectors, including education, it is critical to have clear guidelines that detail the selection procedure of partners for projects, steps for dispute settlement, and a grievance-handling and coordination mechanism.

Deteriorating Education Quality

Nepal suffers from a deteriorating quality of education, as evidenced by the large proportion of students failing or scoring extremely low on national-level exams.577 This issue has been attributed to various factors such as the lack of adequate teacher training, lack of proper infrastructure, and limited access to education for underprivileged populations.578 Consequently, many students seek higher education in foreign countries in prospect of better quality education.

The decline in education quality has become a pervasive and complex issue. Proactive measures from educational institutions and the government are required to control it from worsening. Firstly, it is necessary to establish minimum standards for teaching and learning at all levels to promote and sustain quality education — a provision that has not been included in the School Education Bill. Furthermore, it is imperative to train teachers in modern teaching methodologies as well as update the curriculum, in-line with current trends and needs.

In the first six months of FY 2023/24 AD (2080/81 BS) itself, the government issued over 51,000 ‘No Objection Certificates’ for students seeking foreign education.579 The dwindling confidence in domestic education has led to decreased enrollment rates and vacant seats, even in well-established Nepali universities.580

ENERGY AND ENVIRONMENT

Existing Situation

There is also a need for educational institutions to introduce more innovative programs in higher education and restructure them to better prepare students to compete in the job market.

Suggestions

Governance Concerns

Currently, Nepal Electricity Authority takes on the responsibility for purchasing, transmitting, and distributing electricity across Nepal.581 There have been concerns regarding the lack of scientific approach when it comes to setting rates for electricity and power purchase agreements.582 The lack of transparency, paired with administrative delays in permits and government approvals, can be discouraging to private investors in the sector.

There is a pressing need to reform governance in the energy sector and implement conflict-ofinterest measures that decision makers could have. In particular, it is important ensure the pricings are based on scientific or economic calculations to ensure fairness. Similarly, it is crucial to develop a proper risk-sharing mechanism between investors and the government in order to encourage private engagements within the sector.583

Reliance on Hydropower

Currently, Nepal relies heavily on hydropower as its primary energy source for electricity. This has led to electricity generation being vulnerable to water availability and climate fluctuations.584 With an increase in extreme weather events and the decline in glacial volumes, Nepal could see decreased base flow available for hydroelectricity generation. While it would cause significant financial losses, a major concern would also be the risk it would pose to local populations of glacial floods and bursting dams.

Diversifying Nepal’s energy composition is a prerequisite for increasing competitiveness and energy security within the nation. Through diversifying the energy blend to include sources such as wind, solar, and biogas, Nepal can diminish reliance on a single energy source while also increasing opportunities for investment in diverse products. In addition, Nepal could also make its electricity generation systems more resilient to disaster and climate change through retrofitting plants, adopting climate-smart designs, installing early warning systems, and encouraging insurance.585

Variable Power Generation

Nepal’s hydroelectricity and the power generated is dependent on the weather conditions. In the wet season, there is an excess in electricity that can be exported. However, in the dry seasons, the generation drops to lower than the domestic demand and therefore, there is a need to import electricity from India. The lack of efficient storage systems for excess electricity generated has led to Nepal not being able to utilize its hydroelectricity capability to manage energy demands.586

There is a considerable need to develop pumped storage hydropower projects and build battery storage systems to smooth out Nepal’s existing generation curve.587 Furthermore, Nepal has been seen to have immense potential for solar energy.588 Having battery storage in conjunction with other renewable sources like solar energy could be the key for a stable and resilient energy sector in Nepal. However, the development of widescale solar farms and solar rooftop systems requires private sector participation. It makes it crucial for the government to create an encouraging policy environment by reducing bureaucracy, simplifying investment procedures, and providing subsidies.

HEALTH

Existing Situation Suggestions

The migration of medical professionals, especially doctors and nurses, has become a significant concern. In 2023, 2,318 doctors obtained character certificates from the medical council, signaling their intention to pursue opportunities abroad.589 This has created a shortage in healthcare resources and reduced access to quality medical services, worsening existing challenges in the healthcare system. To quantify this, Nepal’s doctor-topopulation ratio is 1.094 doctors per 1,000 populations, much lower than the benchmark of 4.45 doctors per 1,000 individuals.590

A major cause for the emigration of healthcare professionals is to have better financial opportunities, career development, continuing education, hospital infrastructure and resource availability. Thus, this emigration is a call for urgent remedial measures such as better working conditions, employment benefits, and competitive salaries to encourage retention. Further, while developing health infrastructure in rural areas would facilitate in creating employment opportunities, it is imperative for professionals who opt to work in rural areas to be given better incentives to encourage equitable distribution of healthcare facilities.

Limited Domestic Access to Advanced Technology

Nepal relies on imports for almost all technologically complex products, including inhalers, injectables, critical care products, anticancer medicines, vaccines and new molecule products.591 This demonstrates an insufficient manufacturing capacity which could be due to not having enough skilled manpower or technological knowledge. This unestablished market and probable technological inadequacies could deter investments into the sector due to being perceived as having a higher risk.

To make healthcare manufacturing encouraging to investors, it is paramount to ensure that infrastructural prerequisites such as transportation, energy, and telecommunications are stable and accessible. Similarly, there needs to be official research highlighting the profitability of such investments and requirements that the manufacturers would need to be cautious of, such as waste disposal and environmental management. To be able to provide domestic workers for similar projects, Nepal will also need to further invest in its medical education system for better quality.

Lack of Quality Control

The Department of Drug Administration (DDA) has been seeing an increased number of drug recalls due to poor quality.592 Furthermore, there have been instances of unregistered drugs being sold in the market after being smuggled into the country.593 The DDA has stated that it does not have adequate manpower which has led to such lapses. However, such instances do call into question the quality and safety of healthcare services in Nepal, which could make investors wary.

It is critical to be able to attract sufficient and skilled manpower for the DDA to effectively carry out its regulatory duties. In addition, it is vital for the DDA to work closely with pharmaceutical wholesalers and retailers to properly implement the Codes on Sale of Distribution of Drugs, Good Pharmacy Practices, and Good Storage and Distribution Practices guidelines.594 Similarly, the DDA could also introduce online medicine registration to streamline the process for manufacturers and have an efficient database.

INFORMATION AND COMMUNICATION TECHNOLOGY

Existing Situation Suggestions

Poor Enforcement of Cyber Laws

With over 20 million internet users, 91% of the population of Nepal has access to the internet, according to a report by the Nepal Telecommunications Authority (NTA).595 However, with the rising number of internet users, there has been a steep rise in cybercrime cases due to the absence of strong government regulations and a robust cybersecurity framework. The lack of technical expertise and resources to effectively monitor, prevent and respond to cyber incidents further amplifies concerns for foreign firms looking to establish ICT facilities or offer digital services in Nepal.

Nepal needs to invest in cybersecurity practices to avoid the rise of cyber-attacks on the government and to tackle security threats. There should be amendments in cyber-laws to cover critical cyber-crimes and the use of advanced security technologies while engaging in financial transactions.596 Robust cybersecurity measures and a strong legal framework are pivotal to inspiring confidence among foreign investors looking at Nepal's ICT sector. Moreover, a cyber-resilient ecosystem enables compliance with international security standards, positioning Nepal as a secure destination for technological investments.

Poor Digital Literacy

The digital divide between Nepal's urban and rural populations severely constrains the growth potential of the nation's ICT sector, hampering its ability to attract foreign investment. Digital illiteracy is visible early on for underprivileged Nepalis, as the majority of schools located in rural villages lack even basic computers.597 Consequently, foreign firms remain apprehensive about committing resources to a market grappling with a limited digitally-literate workforce and a regulatory environment with informational asymmetry.

To cultivate an environment conducive to foreign capital inflows, Nepal must prioritize widespread digital literacy initiatives. Digital training programs can be organized by making upskilling courses accessible to tackle the lack of awareness of the system and to bridge the digital divide between the urban and rural population. The existing university programs and training institutions must be equipped with updated technical courses to address the shortage of industry-ready ICT professionals.

Absence of Industry Representation

Nepal lacks active digital industry representation at a national level to engage the government in a systematic and strategic process. There is no effective public-private dialogue strategy which would foster open communication leading to reduced stakeholder inputs. Further, there is ambiguity regarding which ministries are responsible for related business rules as they are left to deal with government agencies informally.598

INFRASTRUCTURE AND REAL ESTATE

The creation of an independent governmental entity concentrated on supporting the ICT sector could provide dedicated focus and resources. Such an autonomous body could function as a centralized authority, formulating policies, executing initiatives, and coordinating efforts for the growth and advancement of the ICT industry.599 It could further tackle sector-specific hurdles, facilitate partnerships, and advocate for the industry's interests, ensuring its concerns and requirements are duly represented and addressed.

Existing Situation Suggestions

Geographical Constraints and Natural Disasters

Nepal is susceptible to devastating earthquakes, high-intensity monsoon rains, frequent landslides, floods, and glacial lake outbursts.600 The harsh terrain and frequent natural disasters increase construction costs by complicating logistics and damaging costly infrastructures, which in turn make the investors wary of financial viability. Attracting sufficient foreign capital for large-scale infrastructure development in Nepal remains an uphill battle due to the recurring need for infrastructure repair and maintenance.

Mitigating disaster risks through strategic infrastructure planning and adopting resilient construction techniques can boost investor confidence in the infrastructure sector of Nepal. Nepal could also leverage global expertise by partnering with international organizations to develop disaster-resilient infrastructure standards. Additionally, establishing a dedicated infrastructure development fund and exploring risk-sharing mechanisms like catastrophe bonds could attract foreign investment by addressing financial viability concerns.601

Regulatory and Bureaucratic Hurdles

FDI approvals in Nepal take several months and include lengthy processes to hire foreign workers. Such delays have the risk of stagnating the project or reducing its profitability. Additionally, prospective investors could find it challenging to familiarize themselves with the process itself as many FDI guidelines are yet to be officially translated into the English language from their original Nepali script. 602

The government could fully implement the single window system for obtaining all government clearances to reduce the length of the approval process and confusion on policies. The one-stop clearance system can include all policies, laws and regulations related to FDI in English to guide foreign investors. Alongside making information regarding policies easily accessible to foreign investors, it would also allow them to remain updated on different policy amendments.603

Legal Barriers to Infrastructure Development

Foreign investors have been shying away from investing in large infrastructure projects in Nepal primarily due to the unstable, complex and confusing legal framework. The uncertainty of laws, lack of specialized and technically sound authority for infrastructure projects, legal challenges, and politicization have decreased foreign investors’ confidence.604 Investors require a high degree of transparency, consistency, and assurance to commit substantial capital in large infrastructure projects, and to avoid falling victim to adverse regulatory changes midway through multi-year construction timelines.

TOURISM

Nepal could strengthen its legal system to increase investor’s confidence and foster an environment for infrastructure investment. The government can implement comprehensive capacity building initiatives to equip the legal system with experts who are capable of handling FDI related disputes.605 Such an initiative by the government would provide transparency and assurance to foreign investors when considering long-term, capital-intensive undertakings. Cultivating a legal ecosystem which addresses investor concerns could be imperative in attracting foreign investments which is essential for Nepal’s infrastructural development.

Existing Situation Suggestions

Underdeveloped Road Infrastructure

While Nepal’s major cities and areas are connected by road, the country still has an underdeveloped road network. Only 12% of Nepalis classified roads as ‘good’, according to a survey.606 Furthermore, the constant construction and repairing of the roads, often without prior notice, makes travel challenging and dangerous.

To avoid frequent disruptions in road infrastructure, it is crucial for different departments to meticulously plan and coordinate construction activities. Further, different road networks could be established as part of a tourism trail which can then connect the better-known urban tourist destinations to more remote locations.

Shortage of Skilled Manpower

The hotel and tourism industries are facing a shortage of qualified and skilled manpower. Only 47% of the workforce in the tourism industry is classified as skilled, which also adversely affects the performance of the hospitality sector with the two being intertwined.607 This is partially attributed to the outdated nature of the training provided to prospective human resources in related fields, despite the proliferation of hotel management and hospitality courses.

There is a need to update the courses related to hospitality management to align well with industry standards and changing customer demands to properly prepare incoming manpower to perform efficiently. It also raises the necessity of investing in train-the-trainer programs to foster ongoing development and knowledge exchange to ensure that existing staff are able to consistently deliver benchmark standard services.

Diverse Tourism Promotion

Nepal’s tourism sector has traditionally focused heavily on backpacking, nature, and adventure tourism which has led to a heavy reliance on seasonal activities such as hiking and trekking. 608 However, Nepal is full of natural and cultural attractions beyond just backpacking and adventure. Despite the potential, many sites remain unknown or undeveloped due to challenges in access, lack of promotion and security concerns. 609

To enhance tourism in lesser-known destinations and encourage more tourism products, Nepal could develop strategic tourist circuits connecting established and emerging attractions. Similarly, provincial and local bodies can be given the responsibility to recognize tourist sites and activities in their areas and develop tourism plans accordingly.

Learn more about other work produced by Nepal Economic Forum

NEF’s publication, ‘Introspecting Change’ probes into Nepal’s socio-economic journey from 2006 to 2021 – of what has been achieved and what is yet to be achieved. The publication presents a wealth of data spanning over a decade, covering diverse sectors such as tourism, agriculture, energy, and more.

Click here to get the report.

NEF has launched its Economic Dashboard - NEFData! It covers three sectors with a vast array of economic data. Additionally, for the first time, get insights into capital and recurrent expenditure for defense.

Click here to start exploring.

The Nefsearch titled, “Dissecting Nepal’s Trade: Trends, Challenges, and Future Potentials” analyzes the trends of trade in Nepal along with its future prospects.This Nefsearch has been authored by Pooja Suwal, Pratisha Lakhey and Sagar Jung Karki.

Click here to read the report.

The 55th edition of Nefport, "Strengthening the Himalayan Connect" special, comprises of selected proceedings and addresses from the inaugural event of the Himalayan Future Forum (HFF). HFF is an incubation center of the Nepal Economic Forum (NEF) that aims to serve as a platform to encourage multifaceted dialogues on the Himalayas by bringing together stakeholders from different countries and sectors.

Click here to read the report.

Nefmeet 2023, ‘Economic Transformations and Beyond’ concluded on 18 July 2023 on a thought provoking and inspiring note. It focused on the launch of the latest NEF Publication and NEFData dashboard.

Click here to watch the event

Himalayan Future Forum 2024, held on February 16th and 17th, marked the launch of HFF's flagship event. With 16 sessions, 60 speakers, and 25 youth fellows, the Forum offered a diverse program including keynote speeches, panel discussions, conversations, and presentations.

Clike here to find out more about HFF or here to watch the videos of the event.

Endnotes

1 “Democracy Index 2023”, EIU Report, Accessed March 01, 2024. Retrieved from https://www.eiu.com/n/ campaigns/democracy-index-2023/

2 “Freedom in the World Index 2024”, Freedom House. Accessed on March 01, 2024. Retrieved from https://freedomhouse.org/country/nepal/freedomworld/2024

3 “Press Freedom Index”, Reporters Without Borders, Accessed on February 19, 2024. Retrieved from https://rsf.org/en/index

4 “Economic Freedom in the World”, heritage.org, Accessed on February 19, 2024. Retrieved from https:// www.heritage.org/index/pages/country-pages/nepal

5 “Global Data”, Fragile States Index 2023, Accessed on February 19, 2024.Retrieved from: https:// fragilestatesindex.org/global-data/

6 “Corruption Perceptions Index 2023”, Transparency International, Accessed on February 19, 2024. Retrived from https://www.transparency.org/en/ cpi/2023

7 Binod Ghimire. “New coalition partners cement comradeship with 8-point deal,” The Kathmandu Post, March 5, 2024. https://kathmandupost.com/ politics/2024/03/05/new-coalition-partners-cementcomradeship-with-8-point-deal

8 Office of Prime Minister and Council of Ministers. “Council of Ministers,” Government of Nepal, https://www.opmcm.gov.np/en/cabinet/

9 Ibid

10 “52 candidates file nominations for 19 National Assembly seats,” The Kathmandu Post. January 8, 2024. https://kathmandupost.com/national/2024/01/08/52candidates-file-nominations-for-19-national-assemblyseats

11 “National Assembly elections: Coalition almost sweeps with 18 members elected out of 19,” Online Khabar, January 26, 2024. https://english.onlinekhabar. com/national-assembly-elections-result.html

12 Ibid

13 National Assembly, “National Assembly Member,” Government of Nepal. Accessed on March 29, 2024. https://na.parliament.gov.np/en/members

14 Press Release, “Visit of External Affairs Minister, Dr. S. Jaishankar to Nepal (January 04-05, 2024),” Embassy of India in Kathmandu, Nepal. January 4, 2024. https://www.indembkathmandu.gov.in/news_letter_ detail/?id=388

15 Ibid

16 Ibid

17 “Indian External Affairs Minister Jaishankar expresses displeasure over simultaneous Chinese officials' visit to Nepal,” myRepublica. January 5, 2024. https:// myrepublica.nagariknetwork.com/news/indian-externalaffairs-minister-jaishankar-expresses-displeasure-oversimultaneous-chinese-officials-visit-to-nepal/ 18 Pia Krishnankutty, “Nepal to sign BRI implementation plan with China? Foreign Minister likely to visit Beijing next week,” The Print, March 21, 2024. https://theprint.in/diplomacy/nepal-to-sign-briimplementation-plan-with-china-foreign-minister-likelyto-visit-beijing-next-week/2009392/

19 Anil Giri, “DPM Shrestha’s due China visit puts BRI execution in focus,” The Kathmandu Post, March 21, 2024. https://kathmandupost.com/national/2024/03/21/ dpm-shrestha-s-due-china-visit-puts-bri-execution-infocus

20 Anil Giri, “Nepal, China renew pledge to sign BRI execution plan ‘soon’,” The Kathmandu Post, March 27, 2024. https://kathmandupost.com/national/2024/03/27/ nepal-china-renew-pledge-to-sign-bri-execution-plansoon

21 “Nepal & China to Sign Implementation Plan of Beijing-backed BRI Projects: Nepal's Deputy PM,” News 18, January 28, 2024. https://www.news18.com/ business/nepal-china-to-sign-implementation-plan-ofbeijing-backed-bri-projects-nepals-deputy-pm-8757662.

html

22 “Chinese delegation calls on Dahal, Oli,” The Kathmandu Post, January 28, 2024. https:// kathmandupost.com/national/2024/01/28/chinesedelegation-calls-on-dahal-oli

23 “China says rivals trying to sabotage its ties with Nepal,” The Kathmandu Post, January 29, 2024. https:// kathmandupost.com/national/2024/01/29/china-saysrivals-trying-to-sabotage-its-ties-with-nepal

24 “Nepal & China to Sign Implementation Plan of Beijing-backed BRI Projects: Nepal's Deputy PM,” News 18, January 28, 2024. https://www.news18.com/ business/nepal-china-to-sign-implementation-plan-ofbeijing-backed-bri-projects-nepals-deputy-pm-8757662. html

25 “Minister for Development launches new UKNepal development portfolio,” Foreign, Commonwealth & Development Office, February 20, 2024. https://www. gov.uk/government/news/minister-for-developmentlaunches-new-uk-nepal-development-portfolio

26 Ibid

27 Anil Giri, “We believe Nepalis may want to

go to Britain to enhance their skills and come back,” The Kathmandu Post, February 22, 2024. https:// kathmandupost.com/interviews/2024/02/22/we-believenepalis-may-want-to-go-to-britain-to-enhance-their-skillsand-come-back

28 “Nepal Investment Summit 2024 will not be affected by the change in the govt: FinMin Pun,” República, March 8, 2024. https://myrepublica. nagariknetwork.com/news/nepal-investment-summit2024-will-not-be-affected-by-the-change-in-the-govtfinmin-pun/?categoryId=opinion

29 “World Economic Outlook.” IMF, January 30, 2024. https://www.imf.org/en/Publications/WEO/ Issues/2024/01/30/world-economic-outlook-updatejanuary-2024

30 Ibid

31 Unstacking global poverty: Data for high impact action, GLobal Multidimensional Poverty Index 2023, United National Development Programme”. https://hdr.undp.org/system/files/documents/hdpdocument/2023mpireportenpdf.pdf

32 ‘World Population Clock: 8.1 Billion People (Live, 2024),’ Worldometer, Accessed February 23, 2024, https:// www.worldometers.info/world-population/

33 “Monthly Crude oil price average for Brent January 2024, Statista, February 23, 2023.”

https://www.statista.com/statistics/262861/uk-brentcrude-oil-monthly-price-development/

34 “FAO Food Food Price Index”, Food and Agriculture Organization of the United Nations,, Accessed on Jan 04, 2024.

https://www.fao.org/worldfoodsituation/ foodpricesindex/en/

35 “Monthly fuel energy price index worldwide, Statista February 14, 2024” https://www.statista.com/ statistics/1302801/monthly-fuel-energy-price-indexworldwide

36 “Shipping & Freight Cost Increases, Freightos, February 1, 2024” https://www.freightos.com/freightblog/shipping-delays-and-cost-increases/

37 “COVID-19 Vaccine Equity Dashboard, United Nations Development Programme, November 29, 2023” https://data.undp.org/insights/vaccine-equity

38 Ibid

39 Pierre-Olivier Gourinchas “Global Economy Approaches Soft Landing, but Risks Remain.” The IMF, January 30, 2023. Retrieved from https://www.imf. org/en/Blogs/Articles/2024/01/30/global-economyapproaches-soft-landing-but-risks-remain

40 Ibid

41 “Here’s How the U.S., Europe, and China Are Faring in the Post-Pandemic Race for GDP Growth”, Fortune. Retrieved from https://fortune. com/2024/02/12/us-europe-china-post-pandemic-raceeconomic-growth/.

42 Elliott, “World Bank Warns Record Debt Levels Could Put Developing Countries in Crisis.” The Guardian, December 7, 2023. Retrieved from https://www. theguardian.com/business/2023/dec/07/greedflationcorporate-profiteering-boosted-global-prices-study

43 “Global Economic Prospects,” World Bank. Retrieved from https://www.worldbank.org/en/ publication/global-economic-prospects#downloads

44 “5 Major Risks Confronting the Global Economy in 2024,” Brookings. Retrieved from https://www. brookings.edu/articles/5-risks-global-economy-2024/.

45 Larry Elliott, “Risk of Financial ‘Wasted Decade’ for Poor Countries, World Bank Warns.” The Guardian, January 9, 2023. Retrieved from https://www. theguardian.com/business/2024/jan/09/risk-of-financialwasted-decade-for-poor-countries-world-bank-warns

46 “Global Economic Prospects,” World Bank. Retrieved from https://www.worldbank.org/en/ publication/global-economic-prospects#downloads

47 “COP28: What Was Achieved and What Happens Next?”. UN Climate Change, January 12, 2024. https://unfccc.int/cop28

48 “COP28 Agreement Signals “Beginning of the End” of the Fossil Fuel Era”, December 13, 2023. https:// unfccc.int/news/cop28-agreement-signals-beginning-ofthe-end-of-the-fossil-fuel-era

49 Ibid

50 Copenhagen targets $3 bln for emerging market greenfield renewables fund. December 4, 2023. https:// www.reuters.com/sustainability/sustainable-financereporting/copenhagen-targets-3-bln-emerging-marketgreenfield-renewables-fund-2023-12-04/

51 Ibid

52 Ibid

53 Al Jazeera, “Mapping the Red Sea Attacks by Yemen’s Houthis,” Retrieved from https://interactive. aljazeera.com/aje/2024/mapping-red-sea-shippingattacks/.

54 Richard Partington, “Oil Prices Hit $80 a Barrel as Fears Grow over Red Sea Disruption to Trade.” The Guardian, January 12, 2024. Retrieved from https://www. theguardian.com/business/2024/jan/12/oil-prices-fearsgrow-over-red-sea-disruption-to-trade-yemen

55 “EU Launches Mission to Protect Ships in Red Sea from Houthis. It Won’t Partake in Military Strikes.” APNews, February 19, 2023. Retrieved from https:// apnews.com/article/european-union-mission-red-seayemen-houthis-5f86b773931423210689cf3a5323823b

56 Chengyi Lin, “3 Drivers of China’s Booming Electric Vehicle Market.” Harvard Business Review, Retrieved from https://hbr.org/2024/01/3-drivers-ofchinas-booming-electric-vehicle-market

57 Joseph Webster, “China Has Become an Electric Vehicle Export Behemoth. How Should the US and EU Respond?” The Atlantic. Retrieved from https://www.

atlanticcouncil.org/blogs/new-atlanticist/china-hasbecome-an-electric-vehicle-export-behemoth-howshould-the-us-and-eu-respond/

58 Ibid

59 Ibid

60 World economic outlook update January 2024. International Monetary Fund, accessed on February 28, 2024. https://www.imf.org/en/Publications/WEO/ Issues/2024/01/30/world-economic-outlook-updatejanuary-2024

61 Ibid

62 “World Trade Report 2023 - Re-Globalization for a Secure, Inclusive and Sustainable Future,” World Trade Organization. Retrieved from https://www.wto.org/ english/res_e/publications_e/wtr23_e.htm

63 “Annual Meeting 2024: Rebuilding Trust Amid Uncertainty. World Economic Forum.” January 19, 2024. https://www.weforum.org/press/2024/01/annualmeeting-2024-rebuilding-trust-amid-uncertainty/

64 “Davos 2024: 4 things to know. World Economic Forum.” January 19, 2024. https://www.weforum.org/agenda/2024/01/davos-2024highlights-ai-growth-climate-security/

65 Ibid

66 “2024 is a record year for elections”. World Economic Forum, December 15, 2023. https://www. weforum.org/agenda/2023/12/2024-elections-aroundworld/

67 “Elections Tracker 2024”. The Guardian, February 22, 2024. https://www.theguardian.com/ world/2024/feb/23/2024-global-elections-tracker-votingdates-us-india-indonesia-belarus-haiti-pakistan-full-list

68 Ibid

69 “The Ultimate Election Year: All the Elections Around the World in 2024”.Time, December 28, 2023. https://time.com/6550920/world-elections-2024/

70 Ohri and Acharya, “India Refrains from Populist Budget before Election, Trims Fiscal Deficit.” Reuters, February 1, 2024. Retrieved from https://www.reuters.com/world/india/indias-financeminister-unveils-budget-says-economy-going-throughprofound-2024-02-01/

71 Ministry of Finance, Budget Division. "Budget at a Glance 2024-2025." Retrieved from https://www. indiabudget.gov.in/doc/Budget_at_Glance/budget_at_a_ glance.pdf

72 Nirmala Sitharaman,"Budget Speech." Government of India, 2024. Retrieved from https://www. indiabudget.gov.in/doc/Budget_Speech.pdf

73 Nikhil Inamdar, “India Budget 2024.” BBC, February 1, 2024. Retrieved from https://www.bbc.com/ news/world-asia-india-68151023

74 “Current Macroeconomic and Financial Situation of Nepal Based on Six Months’ Data Ending Mid-January

2023/24”, Nepal Rastra Bank, Accessed March 2024, https://www.nrb.org.np/contents/uploads/2024/02/ Current-Macroeconomic-and-Financial-Situation-EnglishBased-on-Six-Months-data-of-2023.24.pdf

75 “Nepal Foreign Trade Statistics Up to Magh 2080”, Department of Customs, Accessed March 2024, https://customs.gov.np/page/fts-fy-208081

76 Ibid

77 Ibid

78 “Current Macroeconomic and Financial Situation of Nepal Based on annual data of 2022/23”, Nepal Rastra Bank,

https://www.nrb.org.np/contents/uploads/2023/08/ Current-Macroeconomic-and-Financial-Situation-EnglishBased-on-Annual-data-of-2022.23.pdf

79 Ibid

80 “Mid-term review of budget: Economic indicators seem positive”, Nepal News, Accessed March 2024, https://nepalnews.com/s/business/mid-term-review-ofbudget-economic-indicators-seem-positive

81 “Nepal's Informal Economy Size”, World Economics, Accessed April 2024, https://www.worldeconomics.com/Informal-Economy/ Nepal.aspx

82 “Current Macroeconomic and Financial Situation of Nepal Based on annual data of 2022/23”, Nepal Rastra Bank, https://www.nrb.org.np/contents/uploads/2023/08/ Current-Macroeconomic-and-Financial-Situation-EnglishBased-on-Annual-data-of-2022.23.pdf

83 Ibid

84 “Current Macroeconomic and Financial Situation of Nepal Based on Six Months’ Data Ending Mid-January 2023/24”, Nepal Rastra Bank, Accessed March 2024, https://www.nrb.org.np/contents/uploads/2024/02/ Current-Macroeconomic-and-Financial-Situation-EnglishBased-on-Six-Months-data-of-2023.24.pdf

85 Fernando, Jason. “Consumer Price Index (CPI) Explained: What It is and How It’s Used”, Investopedia, February 13, 2024. https://www.investopedia.com/ terms/c/consumerpriceindex.asp

86 Banton, Caroline. “Basket of Goods: Definition, CPI Calculation, and Example,” Investopedia, June 27, 2023. https://www.investopedia.com/terms/b/basket_ of_goods.asp

87 Nepal Rastra Bank. “Current Macroeconomic and Financial Situation of Nepal (Based on six-months data ending mid-January 2023/24),” Government of Nepal, February 2024. https://www.nrb.org.np/ contents/uploads/2024/02/Current-Macroeconomic-andFinancial-Situation-English-Based-on-Six-Months-dataof-2023.24-1.pdf

88 “Nepal Macroeconomic Update Volume 11, no. 1,” Asian Development Bank. September 2023.

https://www.adb.org/sites/default/files/institutionaldocument/912721/nepal-macroeconomic-update-202309

89 “Inflation to fall below RBI’s estimates at 4.4% in FY25: CMIE,” Fortune India, March 4, 2024. https://www. fortuneindia.com/macro/inflation-to-fall-below-rbisestimates-at-44-in-fy25-cmie/116033

90 “Data show inflation easing but people don’t feel it,” The Kathmandu Post, January 14, 2024. https:// kathmandupost.com/money/2024/01/14/data-showinflation-easing-but-people-don-t-feel-it

91 Ministry of Finance. “Budget Speech of Fiscal year 2023/24,” Government of Nepal. 2023. https://www. mof.gov.np/uploads/document/file/1688901593_TC%20 -%20EDIT%20-%20FY2023_24%20Budget%20Speech_ R2.pdf

92 Ibid

93 Ministry of Finance. “Mid Term Review of Budget FY 2080/81,” Government of Nepal, February 2024. https://www.mof.gov.np/public/index.php/site/ publication-detail/3336

94 Ibid

95 Khatiwada, Bimal. “Failing in resource mobilisation and capital expenditure, finance minister reduces budget size,” The Kathmandu Post, February 13, 2024. https://kathmandupost.com/money/2024/02/13/ failing-in-resource-mobilisation-and-capital-expenditurefinance-minister-reduces-budget-size

96 Financial Comptroller General Office. “Daily Receipts & Payments Status,” Government of Nepal. February 29, 2024. https://www.fcgo.gov.np/ daily-budgetary-analysis?date_type=bs&eng_search_ date=&np_search_date=2080-11-17&submit=

97 Ministry of Finance. “Mid Term Review of Budget FY 2080/81,” Government of Nepal, February 2024. https://www.mof.gov.np/public/index.php/site/ publication-detail/3336

98 Financial Comptroller General Office. “Daily Receipts & Payments Status,” Government of Nepal. February 29, 2024. https://www.fcgo.gov.np/ daily-budgetary-analysis?date_type=bs&eng_search_ date=&np_search_date=2080-11-17&submit=

99 Ibid

100 “Lowered FDI threshold lures small investors,” The Kathmandu Post, January 23, 2024. https:// kathmandupost.com/money/2024/01/23/lowered-fdithreshold-lures-small-investors

101 Ibid

102 “No approval required for foreign investment in listed companies as NRB eases regulations,” myRepublica. February 10, 2024. https://myrepublica.nagariknetwork com/news/no-approval-required-for-foreign-investmentin-listed-companies-as-nrb-eases-regulations/

103 “Third Investment Summit rescheduled for April 28-29,” The Himalayan Times, January 3, 2024. https:// thehimalayantimes.com/business/third-investment-

summit-rescheduled-for-april-28-29

104 “Govt pledges to amend over a dozen laws before the Third Investment Summit 2024,” myRepublica. February 9, 2024. https://myrepublica.nagariknetwork. com/news/govt-pledges-to-amend-over-a-dozen-lawsbefore-the-third-investment-summit-2024/#/google_ vignette

105 Nepal Rastra Bank. “Current Macroeconomic and Financial Situation of Nepal (Based on six-months data ending mid-January 2023/24),” Government of Nepal, February 2024. https://www.nrb.org.np/ contents/uploads/2024/02/Current-Macroeconomic-andFinancial-Situation-English-Based-on-Six-Months-dataof-2023.24-1.pdf

106 “Aid management information system for Nepal”, Ministry of Finance, accessed on March 1, 2024, https://amis.mof.gov.np/AMP-portlet/api/dashboard

107 Ibid

108 “World Bank Supports Fiscal and Growth Reforms and Better Provincial and Local Roads in Nepal,” Text/HTML, World Bank, February 29, 2024. Retrieved from https://www.worldbank.org/en/news/ press-release/2024/02/29/world-bank-supports-growthreforms-and-better-roads-in-nepal.

109 Ibid

110 Ibid

111 “Gov to Prepare Procedure to Implement Projects up to Rs 200 Million under Indian Grant,” New Business Age, January 7, 2024. Retrieved from http:// www.newbusinessage.com/Articles/view/19913.

112 Ibid

113 Sajira Shrestha, “PM Dahal Defends Controversial HICDP as It Courts Serious Controversy in Nepal,” My Republica, January 6, 2024. Retrieved from http://myrepublica.nagariknetwork.com/news/150134/.

114 “UK Minister Launches New UK-Nepal Development Portfolio,” The Himalayan Times, February 21, 2024. Retrieved from https://thehimalayantimes. com/kathmandu/uk-minister-launches-new-uk-nepaldevelopment-portfolio.

115 Ibid

116 Ministry of Finance, Budget Division. "Expenditure Profile 2024/2025." Retrieved from https:// www.indiabudget.gov.in/doc/eb/vol1.pdf

117 “Nepal Set to Get Rs 11.2 Billion Indian Grants in 2024/25,” HimalPress, Retrieved from https:// en.himalpress.com/nepal-set-to-get-inr-7-billion-indiangrant-in-2024-25/.

118 “IFC’s $56-Million Investment in Global IME Bank to Bolster Gender and Climate Financing in Nepal,” IFC, February 2, 2024. Retrieved from https://ifcpressreleasesprod-v3.citop-ouo-asev3-prod. appserviceenvironment.net/All/Pages/PressDetail. aspx?ID=28015.

119 Ibid

120 Ibid

121 “Nepal and ADB Sign Agreement for Urban Resilience and Livelihood Improvement Project ” MOF Press Release, January 17, 2024. Retrieved from https:// mof.gov.np/uploads/document/file/1706076944_ Press%20Release_2024-01-24_115812.pdf.

122 “Govt Signs Agreement to Receive ADB Loan,” The Himalayan Times, January 17, 2024. Retrieved from https://thehimalayantimes.com/business/govt-signsagreement-to-receives-adb-loan.

123 Ibid

124 Ibid 125 Ibid

Ibid 127 Ibid

128 “Russia agrees to compensate families of Nepalis killed in war against Ukraine,” accessed March 5, 2024, Republica, February 16, 2024. Retrieved from https://myrepublica.nagariknetwork.com/news/russiaagrees-to-compensate-families-of-nepalis-killed-in-waragainst-ukraine/#/google_vignette.

129 “Saud Requests Russian Official to Stop Recruiting Nepalis into Russian Army,” The Kathmandu Post, January 20, 2024. Retrieved from https:// kathmandupost.com/national/2024/01/20/saudrequests-russian-official-to-stop-recruiting-nepalis-intorussian-army. 130

Ibid

to MidJanuary 2024)”, Department of Customs, https://www. customs.gov.np/page/fts-fy-208081

Ibid

Ibid

Ibid

Ibid

162 “Economic Survey 2022/23”, Ministry of Finance, 2024.

Current Macroeconomic and Financial SituationTables (Based on Annual data of 2022/23). https:// www.nrb.org.np/red/current-macroeconomicand- financial-situation-tables-based-on-three-monthsdata- of-2023-24/current-macroeconomic-situationtables- based-on-three-months-data-of-2080-81-2/ 165 Situation Report on Nepal’s Agrifood Systems, Feed the Future, February, 2024.

Kumar, “Nepal suffers another winter drought,” Nepali Times, Janurary

2024. 186 “What Another Dry Winter Means for Nepal,”

Republica, February 24, 2024. 187 Ramesh Kumar, “Nepal suffers another winter drought,” Nepali Times, Janurary 17, 2024.

188 “What Another Dry Winter Means for Nepal,” My Republica, February 24, 2024.

189 Dirgha Upadhyay, “Paddy production falls in west Nepal,” Nepali Times, December 23, 2023. https:// nepalitimes.com/news/paddy-production-falls-in-westnepal

190 Tanka Dhakal, "Nepal Farmers Face Another Year of ‘Agricultural Drought’, Threatening Food Security," Relief Web, February 13, 2024.

191 “What Another Dry Winter Means for Nepal,” My Republica, February 24, 2024.

192 Ramesh Kumar, “Nepal suffers another winter drought,” Nepali Times, Janurary 17, 2024.

193 Tanka Dhakal, "Nepal Farmers Face Another Year of ‘Agricultural Drought’, Threatening Food Security," Relief Web, February 13, 2024.

194 “Paddy production touches record level of 5.7M tonnes,” The Rising Nepal, January 9, 2024.

195 Ibid.

196 Ibid.

197 Ibid.

198 “Government's commendable paddy purchase plan,” My Republica, December 20, 2023.

199 Ibid.

200 Ibid..

201 Sonam Lama Hyolmo, "Indigenous Gurung farmers revive climate-resilient millet in Nepal," Mongabay, January 1, 2024

202

203 Ibid.

204 Anita Gautam, Niranjan Pudasaini, Indra Prasad Paudel, Bishnu Bhushal, and Bharat Bhandari. "Revalorizing Millet: A Case of Foxtail Millet Rescue and Promotion in Kaski, Nepal," Millets in Nepal 2023, 2024.

205 Ibid.

206 Ibid.

207 Sonam Lama Hyolmo, "Indigenous Gurung farmers revive climate-resilient millet in Nepal," Mongabay, January 1, 2024; Anita Gautam, Niranjan Pudasaini, Indra Prasad Paudel, Bishnu Bhushal, and Bharat Bhandari. "Revalorizing Millet: A Case of Foxtail Millet Rescue and Promotion in Kaski, Nepal," Millets in Nepal 2023, 2024.

208 Sonam Lama Hyolmo, "Indigenous Gurung farmers revive climate-resilient millet in Nepal," Mongabay, January 1, 2024.

209 “Troubled Dairy Farmers Seek Government Support,” The Kathmandu Post, March 2, 2024.

210 “Govt and agitating milk farmers reach five-point agreement.” My Republica, March 3, 2024.

211 “Dairy Farmers Unhappy with ‘One-sided’ Payment Deal,” The Kathmandu Post, March 4, 2024.

212 Ibid.

213 Ibid.

214 “Govt and agitating milk farmers reach five-point agreement.” My Republica, March 3, 2024.

215 “Troubled Dairy Farmers Seek Government Support,” The Kathmandu Post, March 2, 2024.

216 “Dairy Farmers Unhappy with ‘One-sided’ Payment Deal,” The Kathmandu Post, March 4, 2024; “Govt and agitating milk farmers reach five-point agreement,” My Republica, March 3, 2024.

217 Ibid.

218 “Cases of African swine fever detected in five districts including Kathmandu,” My Republica, February 9, 2024.

219 Ibid.

220 P. Sunar, “Swine flu and pneumonia infections increasing in Kathmandu Valley,” My Republica, December 19, 2023.

221 “Heifer International and FruitPunch AI Launch Artificial Intelligence Challenge in Nepal to Improve Data Access for Women Farmers,” Heifer International, January 30, 2024.

222 Ibid.

223 “Heifer International and FruitPunch AI Empower Nepal’s Women Farmers with AI,” Jumpstart Team, February 5, 2024.

224 Ibid.

225 “What Another Dry Winter Means for Nepal,: My Republica, February 24, 2024.

226 Dirgha Upadhyay, “Paddy production falls in west Nepal,” Nepali Times, December 23, 2023. https:// nepalitimes.com/news/paddy-production-falls-in-westnepal

227 Dirgha Upadhyay, “Paddy production falls in west Nepal,” Nepali Times, December 23, 2023. https:// nepalitimes.com/news/paddy-production-falls-in-westnepal

228 Tikaram Adhikari and Nirman Shrestha, “Irrigation for rural development,” The Kathmandu Post, August 1, 2023.

229 Ministry of Agriculture and Livestock Development, United Nations Development Programme, and Food and Agriculture Organization of the United Nations, “Integrating Climate Change Adaptation into Agriculture Sector Planning of Nepal,” Ministry of Agriculture and Livestock Development, 2019.

230 Sonam Lama Hyolmo, "Indigenous Gurung farmers revive climate-resilient millet in Nepal," Mongabay, January 1, 2024.

231 Ibid.

232 Ibid.

233 Ibid.

234 “Govt and agitating milk farmers reach five-point agreement.” My Republica, March 3, 2024.

235 “Nepal’s ghee export flourish, reach five countries,” My Republica, October 26, 2023.

236

Ministry of Finance. “Economic Survey 2022/23,” Government of Nepal. May 28, 2023. https:// www.mof.gov.np/site/publication-detail/3248

237 Ibid

238 Ibid

239

Ministry of Education, Science, and Technology. “School Education Sector Plan, 2022/23-2031/32 (Bs 2079-2089),” Government of Nepal, 2022. https://moest. gov.np/upload_file/files/post/1668690227_1997409338_ Nepal%20School%20Education%20Sector%20Plan%20 final%202022%20.pdf

240

Ministry of Finance. “Budget Statement of Fiscal year 2080/81,” Government of Nepal. May,

2023. https://www.mof.gov.np/uploads/document/ file/1686554933_1685371031_Budget_Sppech_2080-81_ Final.pdf

241 “तततततत तततततततततत तततत तत तततततततत तततत ततततततत,” Tribhuvan University, February 23, 2024. https://tu.edu.np/news/387

242 “Prof. Dr Baral appointed as VC of Tribhuvan University,” myRepublica. February 22, 2024. https:// myrepublica.nagariknetwork.com/news/baral-appointedvice-chancellor-of-tribhuvan-university/

243 “Prime Minister Dahal’s favourite becomes TU vice-chancellor,” The Kathmandu Post, February 22, 2024. https://kathmandupost.com/national/2024/02/22/ keshar-jung-baral-appointed-tribhuvan-university-s-vicechancellor

244 Ibid.

245 “Education Committee directs government to reconsider shortlist for TU vice-chancellor,” Setopati, February 12, 2024. https://en.setopati.com/ political/162569

246 “Private school ownership major contention in school education bill,” The Kathmandu Post, December 25, 2023. https://kathmandupost.com/ national/2023/12/25/private-school-ownership-majorcontention-in-school-education-bill

247 Ibid.

248 Ibid

249 “School education bill favours existing private schools,” The Kathmandu Post, September 14, 2023. https://kathmandupost.com/national/2023/09/14/ school-education-bill-favours-existing-private-schools

250 “Japan hands over classroom building to Shree Himalaya Secondary School in Sankhuwasabha District,” Embassy of Japan in Nepal, February 29, 2024. https:// www.np.emb-japan.go.jp/itpr_ja/11_000001_00962.html

251 Ibid.

252 Kikuta Yutaka."Building resilience against disaster”, The Kathmandu Post, February 1, 2024. https:// kathmandupost.com/columns/2023/04/24/buildingresilience-against-disasters.

253 Ibid.

254 “National Assembly endorses Bill to establish Dashrath Chand Health Science University,” myRepublica, February 12, 2024. https://myrepublica.nagariknetwork. com/news/national-assembly-endorses-bill-to-establishdashrath-chand-health-science-university/

255 “National Assembly approves establishment of Dashrath Chand Health Science University,” Khabarhub, February 12, 2024. https://english.khabarhub. com/2024/12/340422/

256 Ibid.

257 Binod Ghimire. Nepal fails yet again to achieve total literacy target, “The Kathmandu Post, February 04, 2024. https://kathmandupost.com/national/2023/01/14/ nepal-fails-yet-again-to-achieve-total-literacy-target

258 Ibid.

259 Katuwal, Jyotee. “Public schools are turning empty in Karnali Province,” The Kathmandu Post, February 17, 2024. https://kathmandupost.com/ national/2024/02/17/public-schools-are-turning-emptyin-karnali-province

260 Ibid

261 " ततततततततततत तततत : ततततततत त ततततततततत, तततततत त तततत तत ततततततततततत तततततततततत |” Edukhabar, February 10, 2024. https://www.edukhabar. com/news/15851

262 Govt Revises School Textbook Printing Policy, Empowering Janak Education Material Center, Collegenp, February 23, 2024. https://www.collegenp.com/news/ govt-revises-school-textbook-printing-policy-empoweringjanak-education-material-center/

263 Education ministry mulling two intakes a year. “The Himalayan Times”. March 31, 2024. https:// thehimalayantimes.com/kathmandu/education-ministrymulling-two-intakes-a-year

264 Updated List of Colleges in Nepal Affiliated with Foreign Universities. “Collegenp”. February 25, 2024. https://www.collegenp.com/article/updated-list-ofcolleges-in-nepal-affiliated-with-foreign-universities/

265 “Current Macroeconomic and Financial Situation–based on six-months data of FY 2023/24,” Nepal Rastra Bank. 2024. https://www.nrb.org.np/category/currentmacroeconomic-situation/?department=red&fy=207980&subcategory=annual

266 “Monthly Operational Report for the Month of Falgun, 2080”, Nepal Electricity Authority, March 2024

267 “Half Yearly Budget Review Report 2080/81”, Ministry of Finance, Government of Nepal, May, 2023. https://mof.gov.np/site/publication-detail/3249

268 Ibid

269 “Monthly Operational Report for the Month of Falgun, 2080”, Nepal Electricity Authority, March 2024

270 Ibid

271 “Nepal Electricity Consumption: Total”, CEIC Data, July 2023

272 Arjun Poudel, "As air in Kathmandu Valley deteriorates to hazardous level, patients of respiratory illness rise", The Kathmandu Post, 2024

273 ibid

274 ibid

275 "Tackling worsening air pollution in Kathmandu Valley", My Republica , February 21, 2024.

276 Arjun Baral, Sunil Chimariya, and Kamal Raj Gosai, "Mapping of Vehicular Emission of Ring Road Kathmandu, Nepal and Its Impact on Human Health", International Journal For Multidisciplinary Research 5 (6) (2023).

277 ibid

278 Shristi Kafle, "Can Nepal’s new wildlife rules

balance development and conservation?", The Third Pole, February 9, 2024.

279 ibid

280 ibid

281 ibid

282 “Gas and fertilizer produced from solid waste in Birendranagar", My Republica, Janurary 4, 2024.

283 Ibid

284 “Birendranagar to produce organic fertilizer, biogas from garbage,” My Republica, March 12, 2024.

285 Subhash Yadav, “Biogas plant comes up in Karnali, Nepal,” iamrenew, January 30, 2024; “Birendranagar to produce organic fertilizer, bio-gas from garbage,” My Republica, March 12, 2024.

286 “Karnali's first and only big biogas plant produces energy and organic fertilizer,” My Republica, Janurary 29, 2024.

287 “Nepal: South Asia Subregional Economic Cooperation Power System Expansion Project,” 2024, Asian Development Bank, accessed March 8, 2024, https://www.adb.org/projects/44219-014/main#projectpds.

288 ibid

289 “Nepal: South Asia Subregional Economic Cooperation Power System Expansion Project,” 2024, Asian Development Bank, accessed March 8, 2024, https://www.adb.org/projects/44219-014/main#projectpds.

290 Patrick Jowett, Nepal seeking consultants for power system expansion, including solar, February 19, 2024, https://www.pv-magazine.com/2024/02/19/ nepal-seeking-consultants-for-power-system-expansionincluding-solar.

291 “Nepal: South Asia Subregional Economic Cooperation Power System Expansion Project,” 2024, Asian Development Bank, accessed March 8, 2024, https://www.adb.org/projects/44219-014/main#projectpds.

292 Republica, "Electricity deal between Nepal and Bangladesh stalls over rate disagreement, albeit talks progress positively on power trade." My Republica , February 25, 2024.

293 Republica, "Electricity deal between Nepal and Bangladesh stalls over rate disagreement, albeit talks progress positively on power trade." My Republica , February 25, 2024.

294 Ibid

295 Ibid

296 Prithvi Man Shrestha, "Nepal proposes tariff for electricity export to Bangladesh." The Kathmandu Post, February 6, 2024.

297 Sumit Bajracharya, “Nepal’s largest hydroelectric plant to add 1,061 MW to the national grid”, Tractebel Engie, March 2024, https://tractebel-engie.be/en/news/2024/nepal-s-largest-

hydroelectric-plant-to-add-1-061-mw-to-the-national-grid

298 Sumit Bajracharya, “Nepal’s largest hydroelectric plant to add 1,061 MW to the national grid”, Tractebel Engie, March 2024, https://tractebel-engie.be/en/news/2024/nepal-s-largesthydroelectric-plant-to-add-1-061-mw-to-the-national-grid

299 “Contract Agreement Finalized for 1063-Megawatt Upper Arun Hydropower Project Consultation”, Nepal Energy Forum, February 2024, http://www.nepalenergyforum.com/contract-agreementfinalized-for-1063-megawatt-upper-arun-hydropowerproject-consultatio/

300 Ibid

301 “NEA decides to sign PPA with small hydropower projects of up to 10 MW”, My Republica, February 2024, https://myrepublica.nagariknetwork.com/news/neadecides-to-sign-ppa-with-small-hydropower-projects-ofup-to-10-mw/

302 “About SAPDC”, SJVN Arun-3 Power Development Company (P.) Ltd., Accessed March 2024, https://www.sapdc.com.np/

303 “Arun III Hydel Project Reaches 70% Completion Milestone”, Nepal Energy Forum, February 2024, http://www.nepalenergyforum.com/arun-iii-hydelproject-reaches-70-completion-milestone/

304 “Arun-3 Hydropower Project”, NS Energy, Accessed in April 2024

https://www.nsenergybusiness.com/projects/arun-3hydropower-project/

305 “Govt makes it mandatory for gasoline stations receiving new operating license to have EV charging units”, My Republica, January 2024, https://myrepublica.nagariknetwork.com/news/gasolinestations-receiving-new-operating-license-must-havecharging-units-to-recharge-evs/#/google_vignette

306 “16th five-year plan to have separate chapter on climate change”, My Republica, February 2024, https://myrepublica.nagariknetwork.com/news/climatechange-to-be-a-separate-chapter-in-16th-plan/#/google_ vignette

307 Rastriya Samachar Samiti, “Bill related to renewable energy to be presented in parliament within month: Minister Basnet”, Nepal News, January 2024, https://nepalnews.com/s/business/bill-related-torenewable-energy-to-be-presented-in-parliament-withinmonth-minister-basnet

308 Urja Khabar, “Renewable Energy and Energy Efficiency Bill' will be tabled in Parliament within a month: Basnet”, Urja Khabar, January 2024, https://www.urjakhabar.com/en/news/2701883188#

309 “World Bank and ADB team up to support hydro development in Nepal”, The International Journal on Hydropower and Dams, February 2024, https://www.hydropower-dams.com/news/world-bankand-adb-team-up-to-support-hydro-development-in-

nepal/

310 Binita Shah Khadka, “ADB and World Bank Join Forces for Sustainable Development of Nepal’s Hydropower Sector”, Asian Development Bank, December 2023,

https://www.adb.org/news/adb-world-bank-join-forcessustainable-development-nepal-hydropower-sector

311 Ganesh Karki, “Private Sector Ready for Power Trade,” Independent Power Producers’ Association –Nepal, Accessed on April 4, 2024. https://www.ippan.org. np/4054

312 Hanaa Singer-Hamdy, “The 16th Plan Is pivotal in steering Nepal Towards a Prosperous Future”, Spotlight Nepal, January 31, 2024.

313 Jiban Basnet, “The dilemma persists in PPP even after three decades”, Nepal Infrastructure, August 2022, https://nepalinfrastructure.com/8142/

314 “NPC targets to generate 11,769 MW of electricity in next five years”, My Republica, December 23, 2023.

https://myrepublica.nagariknetwork.com/news/npctargets-to-generate-11-769-mw-of-electricity-in-next-fiveyears/

315 “FACTSHEET: NEPAL HYDROPOWER DEVELOPMENT PROGRAM”, USAID, Accessed on April 4 2024,

https://www.usaid.gov/nepal/document/factsheet-nepalhydropower-development-program#:~:text=With%20 over%2090%25%20of%20the%20

country%E2%80%99s%20total%20electricity,future%20 because%20of%20the%20scale%20of%20its%20potential

316 “Agreement Signed between SoE, KU and AEPC for Green Hydrogen Project”, School of Engineering Kathmandu University, Accessed March 2024

https://ku.edu.np/news-app/agreement-signedbetween-soe-ku-and-aepc-for-green-hydrogenproject?tags=Green%20Hydrogen%20Project&search site_name=kusoe&show_on_home=0

317 “Green hydrogen laws needed”, My Republica, February 2024, https://myrepublica.nagariknetwork.com/news/greenhydrogen-laws-needed/#/google_vignette

318 “Government mulls removing hydro capacity restrictions”, The Kathmandu Post, January 2024, https://kathmandupost.com/national/2024/01/23/ government-mulls-removing-hydro-capacity-restrictions

319 Ibid

320 Ibid

321 Ibid

322 Ministry of Finance. “Economic Survey 2022/23,” Government of Nepal. May 28, 2023. https:// www.mof. gov.np/site/publication-detail/3248

323 Ibid.

324 Ibid.

325 Ibid.

326 Ibid.

327 Ministry of Health and Population. “Nepal Health Fact Sheets 2023,” Government of Nepal, November 2023. https://publichealthupdate.com/number-of-healthfacilities-in-nepal-2/

328 “National measles-rubella vaccination drive launched,” Radio Nepal, February 25, 2024. https:// onlineradionepal.gov.np/en/2024/02/25/372854.html

329 Ibid.

330 Arjun Poudel, “Urban areas at greater risk of deadly diseases outbreaks than remote villages, “ the Kathmandu Post, February 24, 2024. https:// kathmandupost.com/health/2024/02/24/urban-areas-atgreater-risk-of-deadly-diseases-outbreaks-than-remotevillages

331 Ibid.

332 Ibid.

333 “Neonatal treatment package falls short for tertiary hospitals: Report,” The Kathmandu Post, February 8, 2024. https://kathmandupost.com/health/2024/02/08/ neonatal-treatment-package-falls-short-for-tertiaryhospitals-report; Nepal health Research Council. “An Analysis of Expenditure at NICU in Tertiary Care Centers in Nepal,” Government of Nepal. https://nhrc.gov.np/ projects/an-analysis-of-expenditure-at-nicu-in-tertiarycare-centers-in-nepal/

334 “Neonatal treatment package falls short for tertiary hospitals: Report,” The Kathmandu Post, February 8, 2024. https://kathmandupost.com/health/2024/02/08/ neonatal-treatment-package-falls-short-for-tertiaryhospitals-report

335 Nepal health Research Council. “An Analysis of Expenditure at NICU in Tertiary Care Centers in Nepal,” Government of Nepal. https://nhrc.gov.np/projects/ananalysis-of-expenditure-at-nicu-in-tertiary-care-centers-innepal/

336 Arjun Poudel, “Nepal’s health sector under the budget knife,” the Kathmandu Post, February 19, 2024. https://kathmandupost.com/health/2024/02/19/nepal-shealth-sector-under-the-budget-knife

337 “USMLE Program Statement on Notification of Invalidated Exam Scores,” USMLE. January 31, 2024. https://usmle.org/usmle-program-statement-notificationinvalidated-exam-scores; Robertson, Rachel. “USMLE Scores for Nepali Docs Will Remain Invalidated, Judge Rules” Medpage Today. February 21, 2024. https://www. medpagetoday.com/special-reports/exclusives/108841

338 “USMLE Program Statement on Notification of Invalidated Exam Scores,” USMLE. January 31, 2024. https://usmle.org/usmle-program-statement-notificationinvalidated-exam-scores

339 Arjun Poudel, “Nearly half of MBBS and BDS graduates fail licensing exams, The Kathmandu Post. February 3, 2024. https://kathmandupost.com/ health/2024/02/03/nearly-half-of-mbbs-and-bds-

graduates-fail-licensing-exams

340 Ibid; Arjun Poudel, “Majority of MBBS and BDS graduates unfit to practise medicine,“ The Kathmandu Post, September 26, 2022. https://tkpo.st/3Cjv6fD

341 Arjun Poudel, “Sharp rise in sexually transmitted diseases among female sex workers in Pokhara,” the Kathmandu Post, February 7, 2024. https:// kathmandupost.com/health/2024/02/07/sharp-rise-insexually-transmitted-diseases-among-female-sex-workersin-pokhara

342 Ibid.

343 Ibid.

344 Ibid.

345 James D. Johnston, Scott C. Collingwood, James D. LeCheminant, Neil E. Peterson, Paul R. Reynolds, Juan A. Arroyo, Andrew J. South, et al., “Personal Exposure to Fine Particulate Air Pollution among Brick Workers in Nepal.” Atmosphere 14, no. 12, December 2, 2023. https://doi.org/10.3390/atmos14121783.

346 Ibid.

347 Ibid.

348 Christie Allen, “Life and Breath: Interdisciplinary BYU team travels to Nepal to study health effects of air pollution,” BYU News. February 21, 2024. https://news. byu.edu/byu-team-of-nursing-public-health-engineeringstudents-faculty-travels-to-nepal-to-study-health-effectsof-air-pollution

349 Arjun Poudel, “As air in Kathmandu Valley deteriorates to hazardous level, patients of respiratory illness rise,” The Kathmandu Post, February 15, 2024. https://kathmandupost.com/health/2024/02/15/as-airin-kathmandu-valley-deteriorates-to-hazardous-levelpatients-of-respiratory-illness-rise

350 “Most Polluted Major City Ranking” IQAir, Accessed on February 22, 2024. https://www.iqair.com/ world-air-quality-ranking

351 Ibid.

352 Arjun Poudel, “As air in Kathmandu Valley deteriorates to hazardous level, patients of respiratory illness rise,” The Kathmandu Post, February 15, 2024. https://kathmandupost.com/health/2024/02/15/as-airin-kathmandu-valley-deteriorates-to-hazardous-levelpatients-of-respiratory-illness-rise

353 Prajwol Nepal, Anup Subedee, Henish Shakya, Sanjaya Poudel, Supriya Joshi, Kshitij Karki, Deepak Bajracharya, et al., “Protocol for a Randomized Controlled Trial on Community Education and Surveillance on Antibiotics Use among Young Children in Nepal.”

Contemporary Clinical Trials Communications 34 (August): 101177. August 2023. https://doi.org/10.1016/j. conctc.2023.101177

354 “Report reveals 65 percent of patients in Nepal given antibiotics without prescription,” The Kathmandu Post, January 27, 2024. https://kathmandupost.com/ health/2024/01/27/report-reveals-65-percent-of-

patients-in-nepal-given-antibiotics-without-prescription

355 Ibid.

356 Ibid.

357 Arjun Poudel, “Different drugs, identical names. Nepal’s regulatory body is clueless,” The Kathmandu Post, February 22, 2024. https://kathmandupost.com/ health/2024/02/22/different-drugs-identical-namesnepal-s-regulatory-body-is-clueless

358 Ibid.

359 Department od Drug Administration, “Urgent Notice Regarding Drug Recall,” Government of Nepal, February 20, 2024. https://www.dda.gov.np/information/ CIRCULAR

360 Arjun Poudel, “Different drugs, identical names. Nepal’s regulatory body is clueless,” The Kathmandu Post, February 22, 2024. https://kathmandupost.com/ health/2024/02/22/different-drugs-identical-namesnepal-s-regulatory-body-is-clueless

361 Department od Drug Administration, “Urgent Notice Regarding Drug Recall,” Government of Nepal, January 28, 2024. https://www.dda.gov.np/information/

CIRCULAR

362 “DDA orders recall of substandard paracetamol from market,” The Kathmandu Post, January 30, 2024. https://kathmandupost.com/health/2024/01/30/ddaorders-recall-of-substandard-paracetamol-from-market 363 Ibid.

364 Arjun Poudel, “Different drugs, identical names. Nepal’s regulatory body is clueless,” The Kathmandu Post, February 22, 2024. https://kathmandupost.com/ health/2024/02/22/different-drugs-identical-namesnepal-s-regulatory-body-is-clueless

365 Department od Drug Administration, “Urgent Notice Regarding Drug Recall,” Government of Nepal, January 28, 2024. https://www.dda.gov.np/information/ CIRCULAR

366 Ministry of Health and Population. “Nepal National Health Accounts 2018/19 – 2019/20,” Government of Nepal. 2023. https://mohp.gov.np/ uploads/Reports/Nepal%20National%20Health%20 Accounts%202018_19-2019_20.pdf

367 Melkamu Alemayehu, Banchlay Addis, and Tsega Hagos, “Out-of-pocket Health Expenditure and Associated Factors Among Patients With Hypertension in Debre-Tabor Comphrensive Specialized Hospital, South Gondar Zone, Northwest Ethiopia, 2020.” Frontiers in Public Health 11 (May 4, 2023). https://doi.org/10.3389/ fpubh.2023.1014364

368 “PM Dahal instructs NDL to immediately commence drug manufacturing,” The Himalayan Times, January 14, 2024. https://thehimalayantimes.com/nepal/ pm-dahal-instructs-ndl-to-immediately-commence-drugmanufacturing

369 Posh Raj Pandey, “Preparation of Nepal’s Pharmaceutical Sector in the Face of LDC Graduation,”

South Asia Watch on Trade Economics and Environment, July 26, 2022. https://sawtee.org/Featured_Events/jul-262022-Presentation.pdf

370 “Responding to least developed countries’ special needs in intellectual property,” World Trade Agreement. https://www.wto.org/english/tratop_e/ trips_e/ldc_e.htm

371 Ministry of Industry, Commerce, and Supplies. “Nepal Trade Information Portal,” Government of Nepal. Accessed on: February 29, 2024. https://nepaltradeportal. gov.np/

372 Investment Board Nepal. “Health Sector Profile,” Government of Nepal, 2017. https://ibn.gov.np/wpcontent/uploads/2020/04/Health-Sector-Profile.pdf

373 Shailendra Sigdel, Akihiko Ozaki, Rachana Dhakal, Bishwas Pradhan, and Tetsuya Tanimoto, “Medical Education in Nepal: Impact and Challenges of the COVID-19 Pandemic.” Academic Medicine: Journal of the Association of American Medical Colleges. March 2021. https://doi.org/10.1097/ACM.0000000000003888.

374 “Nepali youths flocking abroad for medical studies,” The Kathmandu Post, May 25, 2023. https:// kathmandupost.com/health/2023/05/25/nepali-youthsflocking-abroad-for-medical-studies

375 Ministry of Industry, Commerce, and Supplies. “Nepal Trade Information Portal,” Government of Nepal. Accessed on: February 29, 2024. https://nepaltradeportal. gov.np/

376 Telecommunication Indicators. 18 September-17 October, 2023, MIS Report. Nepal Telecommunications Authority. Accessed February 24, 2023. https://www. nta.gov.np/uploads/contents/Telecommunication%20 Insight%20Asoj-2080.pdf

377 Ibid

378 Ibid

379 Ibid

380 “Current Macroeconomic and Financial Situation (based on six months of data)”, Nepal Rastra Bank. https://www.nrb.org.np/category/currentmacroeconomic-situation/?department=red&fy=208081&subcategory=six-months

381 Telecommunication Indicators. 18 September-17 October, 2023, MIS Report. Nepal Telecommunications Authority. Accessed February 24, 2023. https://www. nta.gov.np/uploads/contents/Telecommunication%20 Insight%20Asoj-2080.pdf

382 Telecommunication Indicators. 18 September-17 October, 2023, MIS Report. Nepal Telecommunications Authority. Accessed February 24, 2023. https://www. nta.gov.np/uploads/contents/Telecommunication%20 Insight%20Asoj-2080.pdf

383 “TikTok officially requests the government to reverse the ban”, Nepali Telecom, 12 February 2024, https://www.nepalitelecom.com/2024/02/tiktok-

officially-requests-the-government-to-reverse-the-ban. html

384 Ibid

385 Ibid

386 “TikTok in commitment letter to Nepal, says ready to follow Nepal’s laws,” Online Khabar, February 13, 2024. https://english.onlinekhabar.com/tiktok-incommitment-letter-to-nepal-says-ready-to-follow-nepalslaws.html

387 “Government open to rethinking TikTok ban: Prime Minister Dahal,” The Kathmandu Post, December 4, 2023. https://kathmandupost.com/national/2023/12/04/ government-open-to-rethinking-tiktok-ban-primeminister-dahal

388 “NTA seeks clarification from internet service providers for allowing the operation of TikTok”, Republica, 24 February 2024, https://myrepublica. nagariknetwork.com/news/nta-seeks-clarification-frominternet-service-providers-for-allowing-the-operation-oftiktok/?categoryId=blog

389 “Nepal Telecom to provide free WiFi at airports across Nepal”, Nepali Telecom, 23 February 2024, https:// www.nepalitelecom.com/ntc-free-wifi-service-at-34airports-across-nepal

390 Ibid

391 Ibid

392 Ibid

393 “Nepal Telecom launches FTTH Fiber internet in Rajpur, Dang,” Nepali Telecom, February 27, 2024. https://www.nepalitelecom.com/2024/02/nepal-telecomlaunches-ftth-fiber-internet-in-rajpur-dang.html

394 Ibid

395 Ibid

396 “Cross-Border Payment Begins Between Nepal and India,” Nepali telecom, February 29, 2024. https:// www.nepalitelecom.com/cross-border-transactionsrevolutionary-upi-nepal

397 Ibid.

398 “eSewa launches cross-border payment enabling Indian citizens to pay in Nepal: Find steps,” Nepali Times, March 1, 2024. https://www.nepalitelecom.com/esewalaunches-cross-border-qr-payment-for-indian-citizens

399 Prasain, Krishna. “India launched Quick Response code two weeks ago. Nepal still discussing details,” The Kathmandu Post, March 13, 2024. https:// kathmandupost.com/money/2024/03/13/indialaunched-quick-response-code-two-weeks-ago-nepal-stilldiscussing-details

400 Ministry of Communications. “Amendment in existing KYC instructions for issuing mobile connections to citizens of Nepal and Bhutan visiting India,” Government of India, February 19, 2024. https://dot.gov.in/ accessservices/amendment-existing-kyc-instructionsissuing-mobile-connections-citizens-nepal-and

401 Ibid

402 Ibid

403 Ibid.

404 “NAS-IT Elevating Nepal’s Tech Profile as the 17th Member of APICTA,” NAS-IT, December 11, 2023. https://nasit.org.np/nas-it-elevating-nepals-tech-profileas-the-17th-member-of-apicta/

405 “NAS-IT joins Asia-Pacific ICT Alliance (APICTA) as 17th Member Economy”, Tech Lekh, 14 December 2023, https://techlekh.com/nas-it-joins-apicta/

406 Ibid

407 Ibid

408 “Unleashing IT: Advancing Nepal’s Digital Economy”, Institute for Integrated Development Studies (IIDS), July 2023, https://iids.org.np/images/ publications/15c4487b777dcf3239cd6af6dd15c2c1.pdf

409 “Unleashing IT: Advancing Nepal’s Digital Economy”, Institute for Integrated Development Studies (IIDS), July 2023, https://iids.org.np/images/ publications/15c4487b777dcf3239cd6af6dd15c2c1.pdf

410 Ibid

411 Ibid

412 “Speedtest Global Index”, Ookla, January 2024, https://www.speedtest.net/global-index/nepal

413 “Human Resources Crunch Engulfs Nepali IT Sector,” The HRM, July 31, 2022. https://thehrmnepal. com/report/human-resources-crunch-engulfs-nepali-itsector/

414 “Economic Survey of Nepal 2079/80. Ministry of Finance”, Government of Nepal. Kathmandu, 2023. PDF, https://www.mof.gov.np/uploads/document/ file/1687415151_Economic%20Survey%207980.pdf

415 “World Bank supports fiscal and growth reforms and better provincial and local roads in Nepal”, The World Bank, February 29, 2024, https://www.worldbank.org/en/news/ press-release/2024/02/29/world-banksupports-growth-reforms-and-better-roads-innepal#:~:text=WASHINGTON%2C%20February%20 29%2C%202024%20–,maintenance%20of%20 Nepal%27s%20provincial%20and

416 “Provincial and Local Roads Improvement Program - Phase 1”, The World Bank, February 29, 2024, https://projects.worldbank.org/en/projects-operations/ project-detail/P171836

417 “World Bank approves $200m to support fiscal and growth reforms, and develop provincial, local roads in Nepal”, Business360, March 1, 2024, https://www.b360nepal.com/detail/21959/world-bankapproves-200m-to-support-fiscal-and-growth-reformsand-develop-provincial-local-roads-in-nepal-2024Mar-01-636300

418 “Second Fiscal Policy for Growth, Recovery and Resilience Development Policy Credit”, The World Bank, February 29, 2024, https://projects.worldbank.org/en/projects-operations/

project-detail/P176498

419 “World Bank providing Nepal with credit of $200 million for fiscal and growth reforms and better provincial and local roads”, myRepublica, March 1, 2024, https://myrepublica.nagariknetwork.com/news/worldbank-providing-nepal-with-credit-of-200-million-for-fiscaland-growth-reforms-and-better-provincial-and-localroads/#/google_vignette

420 “India to extend financial package of 75 million dollars for reconstruction of infrastructure in earthquakeaffected Nepal”, All India Radio, January 5, 2024, https://newsonair.gov.in/Main-News-Details. aspx?id=474582#:~:text=External%20Affairs%20 Minister%20D.r%20S,Dr.

421 “India to provide USD 75 million to Nepal for reconstruction efforts in earthquake-hit areas: EAM Jaishankar”, The Indian Express, January 5, 2024, https://indianexpress.com/article/world/india-to-provideusd-75-million-to-nepal-for-reconstruction-efforts-inearthquake-hit-areas-eam-jaishankar-9096188/ 422 Laskar, Rezaul. “India commits $75 million for rebuilding earthquake-hit infrastructure in Nepal”, Hindustan Times, January 6, 2024, https://www.hindustantimes.com/india-news/indiacommits-75-million-for-rebuilding-earthquake-hitinfrastructure-in-nepal-101704516756042.html

423 “BFIs invest Rs 32.74 billion in home loans during mid-July and mid-January”, myRepublica, February 11, 2024, https://myrepublica.nagariknetwork.com/news/bfisinvest-rs-32-74-billion-in-home-loans-during-mid-julyand-mid-january/#/google_vignette

424 “Monetary policy for 2023/24”, Nepal Rastra Bank, July 2023, https://www.nrb.org.np/contents/uploads/2023/08/ Monetary-policy-in-English-2023_24-Full-text.pdf

425 “Nepal Rastra Bank, Monetary Policy 2080-81 Midterm Review, 2023/24”, February 12, 2024. https://www.nrb.org.np/contents/uploads/2023/12/MP_ Review_1stQuarter_Board_Mangsir-22-FINAL.pdf

426 “India, Nepal sign MoUs for three High Impact Community Development Projects in education, health and culture sector”, Money control, February 1, 2024, https://www.moneycontrol.com/news/business/indianepal-sign-mous-for-three-high-impact-communitydevelopment-projects-in-education-health-and-culturesector-12176891.html

427 “Three projects to be developed in Nepal under Indian assistance”, Infra.com, February 2, 2024, https://infra.economictimes.indiatimes.com/amp/news/ urban-infrastructure/three-projects-to-be-developed-innepal-under-indian-assistance/107351173

428 “Nepal's Hospitality Sector Boom : Expansion of Star-Rated Hotels”, Nepal Desk, February 1, 2024, https://nepaldesk.com/news/nepals-hospitality-sector-

boom

429 Rai, Enika.“Nepal adds 20 star hotels in the past three years”, myRepublica, December 31, 2023, https://myrepublica.nagariknetwork.com/news/20-starhotels-were-added-in-three-years/#/google_vignette

430 “Nepal’s Hotel Construction Boom”, New Business Age, January 8, 2024, https://www.newbusinessage.com/MagazineArticles/ view/4208

431 Gautam, Ananda.“Koshi Province now has a road link to China with Taplejung track cut open”, The Kathmandu Post, February 21, 2024, https://kathmandupost.com/province-no-1/2024/02/21/ koshi-province-now-has-a-road-link-to-china-withtaplejung-track-cut-open#:~:text=A%20motorable%20 track%20linking%20Phungling,made%20a%20breakthrough%20on%20Tuesday

432 Ibid

433 Ibid

434 “Hero MotoCorp to set-up assembly plant in Nepal, partners CG Motors as distributor”, Express Mobility, January 22, 2024, https://www.financialexpress.com/business/expressmobility-hero-motocorp-sets-up-assembly-plant-in-nepalpartners-cg-motors-as-distributor-3371453/

435 “Hero MotoCorp to set up assembly plant in Nepal with partner CG Motors”, The Economic Times, January 22, 2024,

https://economictimes.indiatimes.com/industry/auto/ auto-news/hero-motocorp-to-set-up-assembly-plant-innepal-with-partner-cg-motors/articleshow/107056487. cms

436 Ibid

437 Dhakal, Modnath.“Informal economy in Nepal stands at 42.66% of GDP: Study”, The Rising Nepal, January 26, 2024, https://risingnepaldaily.com/ news/38098#:~:text=Kathmandu%2C%20Jan.,the%20 Fiscal%20Year%202020%2F21.

438 “Real estate sector tops informal transactions in Nepal”, myRepublica, January 26, 2024, https://myrepublica.nagariknetwork.com/news/realestate-sector-tops-informal-transactions-in-nepal/#/ google_vignette

439 “NLHAD requests govt to make license mandatory for those dealing in real estate”, myRepublica, April 8, 2023, https://myrepublica.nagariknetwork.com/news/nlhadrequests-govt-to-make-license-mandatory-to-thosedealing-with-real-estate/

440 “New houses for 1500 poor families of Gandaki”, The Rising Nepal, March 4, 2024, https://risingnepaldaily.com/news/39714

441 Ibid

442 “1500 poor families of Gandaki Province receive

new houses under Janata Aawas program”, myRepublica, March 4, 2024, https://myrepublica.nagariknetwork.com/news/1500poor-families-of-gandaki-province-receive-new-housesunder-janata-aawas-program/#/google_vignette

443 “Monthly Transaction Report”, Department of land management and archive, https://dolma.gov.np/office/dept/content/monthlytransaction-report-1706595104

444 “Innovative and Climate Resilient Irrigated Agriculture Project (ICRIAP). Department of Irrigation”, Government of Nepal, June 2017. PDF, https://dwri.gov.np/iwrmp/images/Concept_notes.pdf

445 “Nepal’s Hotel Construction Boom”, New Business Age, January 8, 2024, https://www.newbusinessage.com/MagazineArticles/ view/4208

446 Prasain, Sangam. “Nepal welcomes one million tourists, a post-Covid record”, The Kathmandu Post, December 28, 2023, https://kathmandupost.com/money/2023/12/28/ nepal-welcomes-one-million-tourists-a-post-covidrecord#:~:text=Arrivals%20crossed%20the%20 coveted%20one,connectivity%20with%20several%20 Chinese%20cities.

447 “Economic Survey of Nepal 2079/80. Ministry of Finance”, Government of Nepal. Kathmandu, 2023. PDF, https://www.mof.gov.np/uploads/document/ file/1687415151_Economic%20Survey%207980.pdf

448 Prasain, Krishana.“ Nepal will require 26 million tonnes of cement annually by 2024-25, report says”, The Kathmandu Post, May 2021, 2021, https://kathmandupost.com/money/2021/05/21/nepalwill-require-26-million-tonnes-of-cement-annually-by2024-25-report-says

449 Current Macroeconomic and Financial Situation Table Based on Six Months of Data, Nepal Rastra Bank, Accessed on February 29, 2024. https:// www.nrb.org.np/category/current-macroeconomicsituation/?department=red

450 Ibid

451 “Nepal receives FDI commitment of Rs 22.33 billion in the first half of current FY, My Republica, January 18, 2024” https://myrepublica.nagariknetwork.com/ news/nepal-receives-fdi-commitment-of-rs-22-33-billionin-first-half-of-current-fy/

452 Ministry of Culture, Tourism and Civil Aviation

.“Nepal Tourism Statistics 2022,” Government of Nepal, May 2023.

https://www.tourism.gov.np/files/NOTICE%20MANAGER_ FILES/Setting_Nepal%20Tourism%20Statistic_2022.pdf

453 Ibid

454 Ministry of Finance. “Economic Survey 2079/80,” Government of Nepal. https://www.mof.gov. np/site/publicationcategory/21

455 Ibid

456 Ibid

457 “Tourist Arrivals in Nepal Reach 10 Lakh

15 Thousand in 2023, Indian and American Visits Encouraging”, ShareSansar, January 2, 2024 https://www. sharesansar.com/newsdetail/tourist-arrivals-in-nepalreach-10-lakh-15-thousand-in-2023-indian-and-americanvisits-encouraging-2024-01-02

458 “Current Macroeconomic and Financial situation (Based on four months data of FY 2023/24)”, Nepal Rastra Bank, November 10, 2023 https://www.nrb.org.np/category/currentmacroeconomic-situation/?department=red&fy=208081&subcategory=four-months

459 “More than 79,000 foreign tourists visit Nepal in January”, Rastriya Samachar Samiti, February 1, 2024 https://www.nepalnews.com/s/travel-and-tourism/morethan-79-000-foreign-tourists-visit-nepal-in-january 460 “The 1950 Treaty”, The Kathmandu Post, July 27, 2017. https://kathmandupost.com/opinion/2017/07/12/ the-1950-treaty

461 “Tourist Arrivals in Nepal Reach 10 Lakh

15 Thousand in 2023, Indian and American Visits Encouraging”, Share Sansar, January 2, 2024. https://www.sharesansar.com/newsdetail/tourist-arrivalsin-nepal-reach-10-lakh-15-thousand-in-2023-indian-andamerican-visits-encouraging-2024-01-02

462 “Nepal Tourism Statistics 2019”, Government of Nepal Ministry of Culture, Tourism and Civil Aviation, May 2023. https://www.tourism.gov.np/files/NOTICE%20 MANAGER_FILES/Setting_Nepal%20Tourism%20 Statistic_2022.pdf

463 “Tourist Arrivals in Nepal Reach 10 Lakh

15 Thousand in 2023, Indian and American Visits Encouraging”, Share Sansar, January 2, 2024.

https://www.sharesansar.com/newsdetail/tourist-arrivalsin-nepal-reach-10-lakh-15-thousand-in-2023-indian-andamerican-visits-encouraging-2024-01-02

464 ibid

465 “Current Macroeconomic and Financial situation

(Based on six months data of FY 2023/24)”, Nepal Rastra Bank, November 10, 2023

https://www.nrb.org.np/category/currentmacroeconomic-situation/?department=red&fy=208081&subcategory=six-months

466 Ibid

467 Ibid

468 Ibid

469 Ibid

470 “About 3,500 tourists visit Upper Mustang, govt collects Rs 230 million in revenue from tourists.”My Republica, January 17, 2024.

https://myrepublica.nagariknetwork.com/news/about-3500-tourists-visit-upper-mustang-govt-collects-about-rs230-million-revenue/

471 Sara Pahari, “Shinta Mani Mustang: A Himalayan oasis named among Nat Geo's best new hotels for 2024”. My Republica, February 1, 2024.

https://myrepublica.nagariknetwork.com/news/shintamani-mustang-a-himalayan-oasis-named-among-nat-geos-best-new-hotels-for-2024/

472 Lilit Marcus, “Nepal to require all Mount Everest climbers to use a tracking chip”. CNN Travel, February 29, 2024.

https://edition.cnn.com/travel/nepal-mount-everestclimbers-tracking-chip/index.html

473 Sangam Prasain, “Nepal Airlines seeks $1 billion financing from global lenders”, The Kathmandu Post, January 24, 2024. https://kathmandupost.com/ money/2024/01/24/nepal-airlines-seeks-1-billionfinancing-from-global-lenders

474 Ibid

475 Ibid

476 Ibid

477 Enika Rai, “Nepal sees a boom in hotel construction”, My Republica, February 26, 2024. https://myrepublica.nagariknetwork.com/news/hotelconstruction-booms-in-nepal-as-hopes-rise-for-increasedtourism/

478 Nepal Stock Exchange (NEPSE), Accessed on March 28, 2024. https://nepalstock.com/

479 DoI extends service hours to 7 days a week for enhanced visa processing.” My Republica, February 13, 2024. https://myrepublica.nagariknetwork.com/ news/doi-extends-service-hours-to-7-days-a-week-forenhanced-visa-processing/

480 Ibid

481 Ibid

482 “Himalaya Airlines becomes IOSA registered operator”. The Kathmandu Post, January 10, 2024. https://kathmandupost.com/money/2024/01/10/ himalaya-airlines-becomes-iosa-registered-operator

483 Ibid

484 “Nepal Tourism Decade 2023-2032 : Tourism Sector Hopes to Set New Milestones in the Next Decade”, the HRM, January 30, 2023. https://thehrmnepal.com/report/nepal-tourism-decade2023-2032-tourism-sector-hopes-to-set-new-milestonesin-the-next-decade/

485 Ibid

486 “Bagmati Province begin visit year 2024”, Tourism Mail, January 2, 2024. https://www.tourismmail. com/news/detail/103344

487 “Bharatpur Visit Year 2024 to be launched on March 1”, Tourism Mail, January 26, 2024. https://www. tourismmail.com/news/detail/103486/ 488 Ibid

489 Bishnu Bibek, “Bharatpur Tourism Year: Will it hold diverse appeal for tourists?”, Khabarhub, December 22, 2023. https://english.khabarhub.

com/2023/22/331660/

490 Ibid

491 “DoI introduces online route permits for tourists visiting restricted areas''. My Republica, February 25, 2024.

https://myrepublica.nagariknetwork.com/news/doiintroduces-online-route-permits-for-tourists-visitingrestricted-areas/

492 “Government sets new provisions for traveling abroad on a visit visa”. The Kathmandu Post, January 23, 2024.

https://kathmandupost.com/national/2024/01/23/ government-sets-new-provisions-for-travelling-abroadon-visit-visa

493 “Groups, fixtures confirmed for ICC Men’s T20 World Cup 2024”. ICC News. January 5, 2024. https:// www.icc-cricket.com/news/groups-fixtures-confirmed-foricc-men-s-t20-world-cup-2024

494 “Wellness Tourism Global Market Report 2024”, The Business Research Company, Accessed on Feb 29, 2024.

https://www.thebusinessresearchcompany.com/report/ wellness-tourism-global-market-report

495 “Nepal Rastra Bank, Current Macroeconomic and Financial Situation of Nepal Based on Six Months data Ending Mid-January, 2023/24”, February 06, 2024. https://www.nrb.org.np/contents/uploads/2024/02/ Current-Macroeconomic-and-Financial-Situation-EnglishBased-on-Six-Months-data-of-2023.24-1.pdf

496 “Nepse Alpha Earnings Scoreboard”, nepsealpha, accessed 28 February, 2024, https://nepsealpha.com

497 Ibid

498 Ibid

499 Ibid

500 Ibid

501 “Nepal Rastra Bank, Monetary Policy 2080-81 Midterm Review, 2023/24”, February 12, 2024.

502 “Banking and Financial Statistics, Nepal Rastra Bank”, February 7, 2024

https://www.nrb.org.np/contents/uploads/2024/02/ Poush_2080_Publish-2.pdf

503 “Banks look for reducing interest rates further citing excessive loanable funds with them” , My Republica, January 10, 2024

https://myrepublica.nagariknetwork.com/news/bankslook-for-reducing-interest-rates-further-citing-excessiveloanable-funds-with-them/

504 Ibid

505 Ibid

506 “Loans from banks and financial institutions to private sector increases by Rs 192.64 billion till midJanuary”, My Republica, February 7 , 2024

https://myrepublica.nagariknetwork.com/news/loans-

from-banks-and-financial-institutions-to-private-sectorincreases-by-rs-192-64-billion-till-mid-january/#/google_ vignette

507 Ibid

508 Ibid

509 Ibid

510 “Lower House endorses Anti Money Laundering and Business Promotion Bill”, My Republica, February 8, 2024

https://myrepublica.nagariknetwork.com/news/lowerhouse-endorses-anti-money-laundering-and-businesspromotion-bill/

511 Ibid

512 Ibid

513 “Annual Report, Financial Intelligence Unit, Nepal Rastra Bank 2022/23”, January 23, 2024

https://www.nrb.org.np/contents/uploads/2024/01/FIUNepal-Annual-Report-2022.23-1.pdf

514 “Complaints related to suspicious banking transactions up by two folds in fiscal year 2022/23”, My Republica, January 24, 2024

https://myrepublica.nagariknetwork.com/news/ complaints-related-to-suspicious-banking-transactionsup-by-two-folds-in-fiscal-year-2022-23/

515 Ibid

516 “NRB to regulate cooperatives with transactions above Rs 500 million”, My Republica, February 8, 2024

https://myrepublica.nagariknetwork.com/news/nrb-toregulate-cooperatives-with-transactions-above-rs-500million/

517 Ibid

518 Ibid

519 Ibid

520 “Current Macroeconomic and Financial Situation of Nepal Based on Six Months Data Ending Mid-January, 2023/24)”, Nepal Rastra Bank. February 6, 2024.

Current-Macroeconomic-and-Financial-Situation-EnglishBased-on-Six-Months-data-of-2023.24.pdf (nrb.org.np)

521 Ibid

522 Ibid

523 Ibid

524 “IPO Approved by SEBON”, SEBON. January 5, 2024

https://www.sebon.gov.np/ipo-approved

525 “Himalayan Reinsurance Opening 30 lakh Unit IPO shares”, Sharesansar. Nov 20,2023

Himalayan Reinsurance Opening 30 Lakh Unit IPO Shares

Issue For Nepalese Employed Abroad From Today - || ShareSansar ||

526 “34 companies waiting for SEBON’s approval to issue their primary shares of more than Rs 27.52 billion,” Republica, February 17, 2024. https://myrepublica. nagariknetwork.com/news/34-companies-waiting-forsebon-s-approval-to-issue-their-primary-shares-of-morethan-rs-27-52-billion/

527 Ibid.

528 Ibid.

529 “Regulatory measures implemented to curb uninformed trading of lock-In period shares”, Fiscal Nepal, Dec 11, 2023. https://fiscalnepal.com/2023/12/11/14663/regulatory-measures-implemented-to-curb-uninformed-trading-of-lock-in-periodshares/

530 “Greenlife Hydropower Announces Conclusion of Lock-in Period for Promoters, Project-Affected Locals, and Employee Shares on Falgun 06”, Sharesansar. Jan 16, 2024.

531 “Media Companies Preparing to Issue IPO Following Footprint of Nepal Republic Media”, Mero Lagani, Jan 24, 2024. https://eng.merolagani.com/NewsDetail.aspx?newsID=98896

532 “Initial Public Offering (IPO) Pipeline Status”, Securities Board of Nepal, accessed March 4, 2024, https://www.sebon.gov.np/uploads/2024/03/03/V1p3ivHDcSmey91I4dHUU1e5ORYF0BYXGXQjK3jM.pdf

533 “Two Companies in SEBON Pipeline to Issue IPO; Which Companies are Those?”, Sharesansar, Jun 14, 2023, https://www.sharesansar.com/newsdetail/two-companies-in-sebon-pipeline-to-issue-ipo-which-companies-arethose-2023-06-14

534 “Dish Media Network set to issue IPO to general public; SEBON adds the issue to pipeline”, Sharesansar, Jul 2020, https://www.sharesansar.com/newsdetail/dish-media-network-set-to-issue-ipo-to-general-public-sebon-adds-the-issue-topipeline

535 “Large Inter-Province Disparities in Nepalese Share Market Activity”, Share Sansar, Dec 19, 2023 https://www.sharesansar.com/newsdetail/large-inter-province-disparities-in-nepalese-share-market-activity-2023-12-19

536 “Nepal Insurance Authority expands investment opportunities for insurance companies”, Fiscal Nepal, January 9, 2024, https://www.fiscalnepal.com/2024/01/09/15132/nepal-insurance-authority-expands-investment-opportunities-for-insurancecompanies/#ixzz8VcfUO4hH

537 “NIA allows insurance companies to buy up to 15 percent shares of public companies”, My Republica, Jan 9, 2024

https://myrepublica.nagariknetwork.com/news/nia-allows-insurance-companies-to-buy-up-to-15-percent-shares-of-publiccompanies/

538 “NEA plans to fund big hydro and transmission projects through IPO”, Kathmandu Post, Jan 18, 2024

https://kathmandupost.com/national/2024/01/18/nea-plans-to-fund-big-hydro-and-transmission-projects-through-ipo

539 “NEA to Issue IPO worth Rs 60 Billion”, New Business Age, Feb 13, 2024

https://www.newbusinessage.com/MagazineArticles/view/4280

540 “AI Firm Fusemachines to list on NASDAQ Stock Exchange”, Nepali Telecom, 25 January 2024, https://www. nepalitelecom.com/ai-firm-fusemachines-nasdaq-stock-exchange

541 “Fusemachines Inc. to List on NASDAQ Through Business Combination with CSLM Acquisition Corp.”, Fuse Machines, January 23, 2024

https://fusemachines.com/press/press-release/fusemachines-to-list-on-nasdaq/

542 Ibid

543 Ibid

544 “Foreign direct investment for development: Maximizing benefits, minimizing costs,” Organisation for Economic Cooperation and Development, 2002. https://www.oecd.org/investment/investmentfordevelopment/1959815.pdf

545 Padma Mallampally & Karl P. Sauvant. “Foreign Direct Investment in Developing Countries,” Finance & Development, International Monetary Fund. March 1999.

https://www.imf.org/external/pubs/ft/fandd/1999/03/mallampa.htm

546 “Foreign direct investment for development: Maximizing benefits, minimizing costs,” Organisation for Economic Cooperation and Development, 2002.

https://www.oecd.org/investment/investmentfordevelopment/1959815.pdf

547 Economic Research Department. “Survey Report on Foreign Direct Investment in Nepal (2021/22),” Nepal Rastra Bank, September 2023.

https://www.nrb.org.np/contents/uploads/2023/09/FDI-Survey-2021-22-2.pdf

548 “Nepal receives FDI commitment of Rs 22.33 billion in first half of current FY,” Republica, January 18, 2024. https:// myrepublica.nagariknetwork.com/news/nepal-receives-fdi-commitment-of-rs-22-33-billion-in-first-half-of-current-fy/

549 Economic Research Department. “Survey Report on Foreign Direct Investment in Nepal (2021/22),” Nepal Rastra Bank, September 2023.

https://www.nrb.org.np/contents/uploads/2023/09/FDI-Survey-2021-22-2.pdf

550 “Lowered FDI threshold lures small investors,” The Kathmandu Post, January 23, 2024. https://kathmandupost.com/money/2024/01/23/lowered-fdi-threshold-lures-small-investors; “Foreign Investors Pledged Rs 20.61 Billion FDI in Five Months,” New Business Age, December 20, 2023. https://www.newbusinessage.com/Articles/ view/19777

551 “Aid management information system for Nepal”, Ministry of Finance. Retrieved from https://amis.mof.gov.np/AMPportlet/api/dashboard; “Current Macroeconomic and Financial Situation of Nepal Based on annual data of 2022/23”, Nepal Rastra Bank, Retrieved from https://www.nrb.org.np/contents/uploads/2023/08/Current-Macroeconomic-and-Financial-Situation-English-Based-on-Annualdata-of-2022.23.pdf

552 “Docking Nepal’s Economic Analysis”, NEFPort 25, July 2016. Retrieved from https://issuu.com/nepaleconomicforum/

docs/nefport_25_2016_web

553 Economic Survey, Fiscal Year 2022/23, Ministry of Finance

554 The Industrial Statistics, Department of Industries, FY 2022/23

555 November 16, 2023, Nepal Rastra Bank

556 https://www.mckinsey.com/industries/privateequity-and-principal-investors/our-insights/mckinseysprivate-markets-annual-review

557 Established itself as a limited liability company, exclusively sourcing investment from Nepali investors (NPEA).

558 Securities Board of Nepal (SEBON)

559 Policy Dialogue: Promoting Private Equity and Venture Capital Investments in Nepal, NPEA

560 “Foreign Direct Investment in Nepal”, Journal of Social Science Research, 2020, Vol. 2, No. 2, pp. 302-321

561 “Foreign direct investment (FDI)”, OECD, Accessed 25 March, 2024, https://www.oecd-ilibrary.org/finance-and-investment/ foreign-direct-investment-fdi/indicator-group/ english_9a523b18-en

562 “Govt implementing automated system for FDI approval, move aimed at facilitating foreign investors,” Republica, May 3, 2023. https://myrepublica. nagariknetwork.com/news/govt-implementingautomated-system-for-approval-of-fdi-aims-to-facilitateforeign-investors/

563 “2023 Investment Climate Statements: Nepal”, US Department of State, Accessed March 26, 2024

https://www.state.gov/reports/2023-investment-climatestatements/nepal/

564 Ibid.

565 “2023 Investment Climate Statements: Nepal”, US Department of State, Accessed March 26, 2024

https://www.state.gov/reports/2023-investment-climatestatements/nepal/

566 “Trademark bill languishes as infringement cases rise”, The Kathmandu Post, February 28, 2023 https://kathmandupost.com/money/2023/02/28/ trademark-bill-languishes-as-infringement-cases-rise 567 “Trademark bill languishes as infringement cases rise”, The Kathmandu Post, February 28, 2023 https://kathmandupost.com/money/2023/02/28/ trademark-bill-languishes-as-infringement-cases-rise 568 Ibid

569 “Middlemen rake it in while farmers and consumers suffer”, The Kathmandu Post, April 8, 2022 https://kathmandupost.com/money/2022/04/08/ middlemen-rake-it-in-while-farmers-and-consumerssuffer

570 Gyawali, Samita and Bhatta, Pramod. “Can Online Learning in Nepal Outlive the COVID-19 Pandemic?,” Asian Development Bank, December 3, 2021. https://blogs.adb.org/blog/can-online-learning-in-nepal-

outlive-covid-19-pandemic

571 Luk Gharti, “Challenges of Online Learning in the Post Covid-19 Era,” Research Gate, August 1-2, 2023

https://www.researchgate.net/publication/373540292_ Challenges_of_Online_Learning_in_the_Post_Covid-19_ Era_Lived_Experiences_of_Teachers_in_Remote_Nepal

572 Gyawali, Samita and Bhatta, Pramod. “Can Online Learning in Nepal Outlive the COVID-19 Pandemic?,” Asian Development Bank, December 3, 2021. https://blogs.adb.org/blog/can-online-learning-in-nepaloutlive-covid-19-pandemic

573 Babu R Dawadi, “Affordable Broadband with Software Defined IPv6 Network for Developing Rural Communities,” MDPI, November 27, 2019 https://www. mdpi.com/2571-5577/3/1/4

574 “Keep politics out of schools,” The Kathmandu Post, March 18, 2020. https://tkpo.st/38YqPfB

575 Rauniyar, Ruby. “School Education Bill brings concerns of politicization of NEB,” Republica, October 4, 2023. https://myrepublica.nagariknetwork.com/news/ school-education-bill-brings-concerns-of-politicization-ofneb/

576 Maharjan, Uttam. “Key Provisions In School Education Bill,” Rising Nepal, September 26, 2023. https:// risingnepaldaily.com/news/32932

577 “Stakeholders concerned as nearly 50 per cent students fail grade 12 exams,” Online Khabar, August 16, 2023. https://english.onlinekhabar.com/grade-12-examresult-nepal.html

578 “Gaol 4: Quality Education,” Nepal SDG Forum, Accessed on April 3, 2024. https://nepalsdgforum.org/sdfgoal/goal-4-quality-education

579 “51,637 NOC issued in 6 months,” Online Khabar, January 30, 2024. https://english.onlinekhabar. com/noc-issued-nepal-jan-2024.html

580 Ghimire, Binod. “What's behind the decline in enrolment at Kathmandu University,” The Kathmandu Post, April 16, 2023. https://kathmandupost.com/ national/2023/04/16/what-s-behind-the-decline-inenrolment-at-kathmandu-university

581 “Nepal Government Proposes Electricity Bill to Prevent Monopoly and Foster Competition in the Electricity Sector”, Nepal Energy Forum, September 6, 2023

http://www.nepalenergyforum.com/nepal-governmentproposes-electricity-bill-to-prevent-monopoly-and-fostercompetition-in-the-electricity-sector/

582 Nepal, Rabindra, and Tooraj Jamasb. 2011. “Reforming Small Electricity Systems under Political Instability: The Case of Nepal.” Energy Policy, November. https://doi.org/10.1016/j.enpol.2011.09.062

583 Rijal, Prahlad. “Nepal needs to increase investments in energy by fourfold, World Bank says,” The Kathmandu Post, September 18, 2019. https://tkpo. st/31AoJQ3

584 Ministry of Energy, Water Resources and Irrigation. “National Energy Efficiency Strategy, 2075”, Government of Nepal. 2018. https://www.moewri.gov.np/storage/listies/ May2020/national-energy-efficiency-strategy-2075-en.pdf

585 D. B. Basnyat and P. Watkiss, “Adaptation to Climate Change in the Hydroelectricity Sector in Nepal – Policy Brief,” Practical Action Consulting and Global Climate Adaptation Partnership, 2017.

586 Abijit Jirel, Tri Ratna Bajracharya, Martina M. Keitsch. “Integrating Solar PV with Pumped hydro storage in Nepal: A case study of Sisneri-Kulekhani pump storage project,” Tribhuvan University Institute of Engineering, 2022. http://conference.ioe.edu.np/publications/ioegc12/ IOEGC-12-142-12202.pdf

587 Ibid.

588 Lohani, Sunil Prasad, and Andrew Blakers. 2021. “100% Renewable Energy with Pumped-Hydro-Energy Storage in Nepal.” Clean Energy 5 (2): 243–53. https://doi. org/10.1093/ce/zkab011

589 Manoj Kumar Jha, “Brain drain phenomena in medical professionals,” Online khabar, March 24, 2024 https://english.onlinekhabar.com/brain-drain-phenomena. html

590 Ibid.

591 Pandey, Posh Raj. “Preparation of Nepal’s Pharmaceutical Sector in the Face of LDC Graduation,” South Asia Watch on Trade Economics and Environment, July 26, 2022. https://sawtee.org/Featured_Events/jul-26-2022Presentation.pdf

592 “Recalls and Drug Alert,” Department of Drug Administration. Accessed April 3, 2024. https://www.dda.gov. np/information/CIRCULAR

593 Poudel, Arjun. “Different drugs, identical names. Nepal’s regulatory body is clueless,” The Kathmandu Post, February 22, 2024. https://kathmandupost.com/ health/2024/02/22/different-drugs-identical-names-nepal-sregulatory-body-is-clueless

594 “Nepal Launches First Ever Guidelines to Improve Quality of Pharmaceutical Products and Practices,” The Medicines, Technologies, and Pharmaceutical Services (MTaPS) Program, January 17, 2024. https://www.mtapsprogram.org/ news-blog/nepal-launches-first-ever-guidelines-to-improvequality-of-pharmaceutical-products-and-practices/

595 “Nepal’s 91% of the population have access to the internet: Regulator”, onlinekhabar, July 29, 2021, https://english.onlinekhabar.com/nepals-91-of-thepopulation-have-access-to-the-internet-regulator.html

596 “Nepal Digital Service Sector Market Systems Assessment”, USAID, July, 2022, https://pdf.usaid.gov/pdf_docs/PA00ZW82.pdf

597 “2019 Digital Nepal Framework, Unlocking Nepal's Growth Potential”, Ministry of Communication and Information Technology, 2019, https://drc.gov.np/storage/backend/pages/resources/others/ D8lp6S0TBu0kqwXB7V90hB9aodF4v6qTLGzUvN7M.pdf

598 Ibid

599 “Unleashing IT: Advancing Nepal's Digital Economy”, IIDS, July, 2023, https://iids.org.np/images/ publications/15c4487b777dcf3239cd6af6dd15c2c1.pdf

600 “Natural disasters: an engineer's perspective in Nepal”, ICE Virtual Library, May 11, 2016, https://www.icevirtuallibrary.com/doi/10.1680/ jmuen.14.00018

601 Garcia,Alejandro; Paul,Nirmaljit Singh; Zelenko,Ivan.”The World Bank’s MultiCat program : using catastrophe bonds to insure against natural disaster risks” World Bank Group, http://documents.worldbank.org/curated/ en/393111507025134952/The-World-Bank-s-MultiCatprogram-using-catastrophe-bonds-to-insure-against-naturaldisaster-risks

602 “Creating Markets in Nepal, Country Private Sector Diagnostic”, November, 2018, https://www.ifc.org/content/dam/ifc/doc/mgrt/cpsd-nepal. pdf

603 “Investment and Financing Needs”, Confederation of Nepalese Industries, September, 2019, http://cnind.org/html/images/item_images/files/Investment_ and_Financing_Needs_By_CNI_and_IIDS_-_NIS2019.pdf

604 “Legal Barriers to Infra Development”, Neupane Law Associates, May 01, 2017, https://www.neupanelegal.com/news-detail/legal-barriersinfra-development-nepal.html

605 “Nepal Infrastructure Sector Assessment”, World Bank Group, 2019, https://documents1.worldbank.org/curated/ en/685161568039416684/pdf/Nepal-Infrastructure-SectorAssessment-Private-Sector-Solutions-for-SustainableInfrastructure-Development.pdf

606 “Challenging Roads”, First Steps Himalaya. January 3, 2023. https://www.firststepshimalaya.org/blog/2023/roadsin-nepal#:~:text=It%20is%20completely%20impossible%20 to,roads%20get%20worse%20and%20worse.

607 “Tourism industry has skilled human resource deficit: Survey”, Nepali Economy. Accessed on March 25, 2024. https://nepanomy.com/tourism-industry-has-skilled-humanresource-deficit-survey/

608 “Major tourism growth challenges in Nepal”, Highlights Tourism. June 26, 2023. https://highlightstourism. com/2023/06/26/major-tourism-growth-challenges-in-nepal/

609 “Need to Upgrade Tourism Infrastructure”, The Rising Nepal. January 10, 2023. https://risingnepaldaily.com/ news/21228