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The price of gold has increased by Rs 300  per tola in the domestic market on Thursday. . 

According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 302, 500  per tola today. It was traded at Rs 302, 200  per tola on Monday. 

Similarly, the price of silver has increased by Rs 35 and is being traded at Rs 5, 745 per tola today.

The Nepal Stock Exchange (NEPSE) surged by 4. 15 points to close at 2, 740. 25 points on Wednesday.  

Similarly, the sensitive index dropped by 0. 70 points to close at 467. 55 points.

A total of 5,643,288-unit shares of 339 companies were traded for Rs 1. 56 billion.

Meanwhile, Asian Hydropower Limited (AHL) was the top gainer today with its price surging by 11. 42 percent.

Similarly, Dhaulagiri Laghubitta Bittiya Sanstha Limited (DLBS) was the top loser as its price fell by 11. 17  points. 

At the end of the day, the total market capitalization stood at Rs 4. 67 trillion.

The budget is the financial statement of the government and called a fiscal roadmap. It consists of two parts: revenue and expenditure. Revenue has two parts: tax and non-tax. The share of tax revenue and non-tax revenue is around 89 percent and 11 percent in Nepal. The ratio of revenue to GDP has stood at 19 percent (approx) for a decade. Revenue growth trend is decreasing since 2022-23 while the expectations of citizens are mounting. So the government is under pressure to mobilize more revenue to fulfill these expectations. The expenditure side of the budget has three components: recurrent expenditure, capital expenditure and financial provision. 

The government is formulating a deficit budget to fulfill the public expectations through external and domestic loans. The share of both types of loan is also in increasing order and exceeds 47 percent of GDP. The ratio of external and domestic loans is 53 and 47 percent respectively. Internal loan has certain restrictions with higher interest rate and short repayment period while external loan (a soft loan of sorts) has a longer repayment period, but it comes with exchange risk attached. 

Trends in Nepal

Revenue is the backbone of every government and is collected by means of tax. In Nepal, tax revenue is largely based on imports, with around 45 percent of total government revenue coming from import taxes. The external sectors of Nepal are vulnerable as the post-quake economic blockade of 2015 also shows. The revenue ratio with GDP was 21.5 percent in 2021-22, which has decreased further to 19 percent (approx). Around 40 percent of the national economy is informal. 

Around 23 percent of people are registered in the tax system but 60 percent of the taxpayers are not submitting their returns. The border with India is almost open, making it very difficult to curb smuggling. In the last 10 years, revenue growth rate stood at 12.9 percent on an average. What’s worrying is that during the last five years, revenue growth rate decreased to 8.7 percent, due to a weak demand in the economy. 

Meanwhile, the expenditure side of the government is increasing. The expectations of the people are increasing. To fulfill these expectations, the government is formulating a large deficit budget with around seven percent of the GDP. The expenditure of the budget has mainly three components: recurrent expenditure, capital expenditure and financial provision. In the last 10 years, the ratio of these components was 66.8 percent, 19 percent and 14.2 percent, respectively. In the previous FY (2025-26), the ratios of recurrent expenditure, capital expenditure and financial provision was 63.2 percent, 19 percent and 22 percent. These data indicate that the ratios of financial provision as well as recurrent expenditure are increasing while the capital expenditure, which is directly related to the general public, marginal people in particular, is decreasing. 

Debt management is emerging as a critical concern. A decade ago, the ratio of public debt with GDP was 22 percent; now it’s around 47 percent. In the previous fiscal year, 35 percent of total revenue collection and 24 percent of budget expedite have been used for debt servicing. For the current fiscal year, 21 percent of the budget is allocated to it. The ratio of capital budget is decreasing per year. Some amount of fiscal transfer provided by the federal government for provincial and local governments under recurrent expenditure is capital in nature. 

All this shows that the burden of public debt in Nepal is growing at an alarming rate. Social security expenses, which fall under recurrent expenditure, are also increasing the burden on the government. Over the last 10 years, the proportion of people covered by government social security schemes has increased from 7.8 percent to 12.4 percent, while government expenditure on social security has risen from 8.7 percent to 16.2 percent of the total budget. 

Trends in neighboring countries

The Indian budget consists of two parts: Revenue budget and capital budget. Revenue budget comprises revenue receipts and revenue expenditure. Revenue receipts, which consists of income that is not payable, comes under two heads: tax and non-tax revenue. The ratio of revenue to GDP is around 12 percent. Day to day current expenditure comes in revenue expenditure head. Salaries, interest payments on debt, and grants to the states are included under revenue expenditure. The other parts of the Indian budget is the Capital budget also divided in two parts: Capital recipients and Capital expenditure. 

Capital receipts create liabilities such as borrowing. Revenue expenditure creates assets and reduces liabilities. Investment in infrastructure like roads, railways, hospitals are allocated in these heads. The ratio of Revenue expenditure was 2.9 percent with GDP in 2021-22 found 3.1 percent in 2025-26 allocated amount being around double within five years. The public debt ratio was 61 percent in improving order and in 2025-26 reached 56.1 percent and targeted to reduce it by around 50 percent up to 2030. The ratio of revenue deficit was 6.7 percent reduced to 4.4 percent in 2025-26. 

The government policy focuses on reducing the fiscal deficit, maintaining debt sustainability, and increasing productive infrastructure expenditure for the smooth functioning of social activities. Bangladesh is one of the countries in the world with the lowest revenue-to-GDP ratio, which is below 10 percent. However, the public debt-to-GDP ratio in Bangladesh is around 32 percent, which was 28 percent in 2020. Capital expenditure accounts for around 42 percent of the national budget and about six percent of GDP. Due to a narrow tax base, a large informal economy, tax evasion, weak enforcement, administrative inefficiency, and extensive tax exemptions, revenue mobilization in Bangladesh remains weak. 

Pakistan is also a low-revenue country, with a revenue-to-GDP ratio of around 11 percent. It is a heavily indebted country. During the Covid-19 period (2020–21), the debt-to-GDP ratio reached about 87 percent, and it has remained around 80 percent in the post-covid period. The Pakistani economy faces similar challenges to Bangladesh. Around 50–60 percent of government revenue is used for debt servicing. In Pakistan, only about 1–2 percent of GDP and nearly seven percent of the total budget is allocated to capital expenditure 

Way forward 

Revenue collection in Nepal is higher than the world standard threshold of 15 percent of GDP. However, with around 40 percent of the economy being informal and nearly 60 percent of taxpayers being non-filers, there is significant potential to mobilize additional revenue by improving the efficiency and competency of revenue administration. A decreasing proportion of capital expenditure and an increasing burden of debt servicing is a serious concern. Similarly, government expenditure on social security is also increasing rapidly, creating a significant burden on the government. Public debt is in an alarming condition, having more than doubled within the last 10 years. 

As public expectations continue to rise, the government’s fiscal space is narrowing and becoming more constrained. Therefore, the only viable option is to improve administrative efficiency by increasing taxpayer compliance and gradually formalizing the informal economy. As Nepal is graduating from LDC status after November this year, the cost of external borrowing will surge. Therefore, external assistance should be used only in productive sectors based on proper cost-benefit analysis. Fiscal discipline must be maintained by reducing recurrent expenditure, properly managing social security costs, and lowering the fiscal deficit while increasing capital expenditure. Both internal and external borrowing should be limited to feasible and productive projects only. 

Nepal today stands at an important turning point. Across the country, especially among younger generations, frustration is growing against corruption, policy paralysis, and an economic system that has left Nepal heavily dependent on imports, remittances, and external vulnerabilities. The rise of reform-oriented civic voices and new political narratives reflects a deeper aspiration: people want a Nepal that is economically confident, institutionally accountable, and capable of protecting citizens from recurring crises.

Yet Nepal’s economy remains dangerously exposed to external shocks. A conflict in the Middle East immediately affects transport costs in Kathmandu. Fuel disruptions abroad suddenly increase the prices of food, medicine, and daily essentials inside Nepal. Decisions made in New Delhi or Beijing can directly influence inflation, supply chains, and market stability across the country within days.

This is not merely an economic issue—it is a strategic vulnerability.

The recent tensions involving the United States, Israel, and Iran once again exposed how fragile import-dependent economies can become during geopolitical crises. Fuel prices surged across the region, transportation costs increased sharply, and inflation spread rapidly into smaller economies like Nepal. Businesses faced uncertainty, logistics became expensive, and households immediately felt the pressure. What made the situation more alarming was the widening fuel price disparity between Nepal and India. Diesel prices in Kathmandu rose dramatically higher than corresponding prices in Delhi, despite Nepal’s overwhelming dependence on imported petroleum routed through India. This gap is particularly concerning because diesel powers transportation, agriculture, construction, and industrial activity. When diesel prices rise sharply, the cost of almost everything rises with it.

Years ago, fuel price differences between Nepal and India were not this extreme. Today, however, Nepal often appears trapped between external dependency and internal inefficiency. This raises a serious question: why does Nepal still lack strong economic diplomacy capable of negotiating strategic economic safeguards during global instability? Economic diplomacy is often misunderstood in Nepal as simply an extension of foreign policy. In reality, it is one of the most powerful tools modern states use to protect national economic interests. Countries aggressively negotiate trade advantages, secure energy arrangements, attract industries, expand exports, and build strategic partnerships through coordinated economic diplomacy.

Nepal, despite being strategically located between two major economies, still behaves too passively in this domain. Diplomatic missions frequently remain focused on protocol and administrative functions while economic priorities receive limited attention. Meanwhile, neighboring countries are aggressively pursuing free trade agreements, export diversification, industrial relocation opportunities, and long-term energy security arrangements.

Nepal cannot afford to remain reactive while the global economy becomes increasingly competitive and geopolitically fragmented.

The country’s relationship with India and China should therefore be approached strategically. India remains Nepal’s largest trade partner, transit route, and energy supplier. China offers opportunities for infrastructure development, technology cooperation, and market diversification. Nepal’s objective should not be to choose between the two, but to engage both with maturity and strategic clarity. A stable Nepal benefits both neighbors. Excessive inflation, prolonged economic stress, or supply disruptions inside Nepal eventually create wider regional consequences. Nepal therefore has every right to use diplomatic channels more assertively to negotiate smoother supply coordination, emergency energy cooperation, transit facilitation, and price stabilization mechanisms during global disruptions.

However, diplomacy abroad cannot succeed if governance at home remains weak.

One of Nepal’s greatest problems is not the absence of policies. The country already possesses multiple foreign policy frameworks, trade strategies, and development plans. The real problem lies in execution failure. Institutions often lack coordination, accountability, urgency, and performance measurement. Many diplomatic missions do not have dedicated economic units focused solely on trade, investment, tourism, and technology partnerships.

This institutional inertia must change.

Nepal urgently needs professional economic diplomacy teams within major diplomatic missions. Diplomatic success should no longer be measured only through ceremonial engagements. It should also be evaluated through measurable outcomes such as foreign investment attracted, export markets expanded, tourism partnerships secured, and technology cooperation initiated. The country must also modernize its economic diplomacy agenda. Traditional diplomacy focused mainly on aid and political relations is insufficient today. Nepal should actively pursue technology transfer, climate financing, renewable energy cooperation, startup ecosystem development, and cross-border electricity trade. The future global economy will increasingly revolve around technology, sustainability, and strategic supply chains. Nepal must position itself accordingly.

At the same time, domestic governance reform remains the foundation of successful economic diplomacy. Foreign investors closely observe whether a country offers policy consistency, administrative efficiency, legal predictability, and infrastructure readiness. No amount of international promotion can compensate for domestic institutional disorder. Anti-corruption reform, regulatory stability, and administrative modernization are therefore essential parts of economic diplomacy itself. In this context, Nepal should also rethink how local governance contributes to economic development. An interesting lesson can be drawn from India’s district administration model. District Collectors and District Magistrates are often expected to actively facilitate economic activity, industrial growth, and revenue mobilization within their jurisdictions.

Nepal’s district administration remains far more limited in this regard. Chief District Officers primarily focus on law and order responsibilities while economic development functions remain fragmented across agencies. Nepal could benefit from redesigning district governance so that local administrations are partly accountable for revenue enhancement, business facilitation, tourism promotion, employment generation, and industrial coordination. Such reforms could gradually create healthy competition among districts to attract investment and improve economic performance.

Nepal must also prepare for a more competitive global environment as the country graduates from Least Developed Country status. Certain preferential protections and trade advantages will gradually diminish. Nepal will require stronger legal capacity, trade negotiation expertise, and international commercial diplomacy to compete effectively. Ultimately, Nepal’s economic future will depend not only on domestic politics but on whether the country develops the confidence and competence to defend its economic interests internationally. The world is entering an era where geopolitics increasingly shapes economics. Supply chains are becoming strategic. Energy security is becoming political. Inflation is becoming globalized.

Countries that fail to negotiate proactively will repeatedly suffer external shocks.

Nepal therefore faces a defining choice. It can continue operating with reactive policies and passive diplomacy, or it can build a new model centered around strategic economic diplomacy, institutional accountability, and national economic resilience. The aspirations emerging from Nepal’s younger generation are not unrealistic. Citizens are demanding a state that functions effectively, negotiates confidently, and protects the economic dignity of its people. In the years ahead, economic diplomacy may become the difference between a Nepal that remains permanently vulnerable and a Nepal that finally becomes economically sovereign.