Current Financial Situation of Nepal

Kathmandu, Nepal: Nepal’s economy shows mixed financial signals as it heads into 2026 with strong external reserves but weak domestic growth and spending challenges. 📈 Economic Highlights Foreign exchange reserves have surged to record levels, exceeding Rs 3.2 trillion, enough to cover more than a year’s import bill — a sign of strong remittance inflows and external sector surplus. Balance of payments and current account remain in surplus, supported by rising remittances and stable export–import dynamics. Inflation is unusually low (around 1–1.6%), reflecting weak domestic demand rather than strong price stability. 📉 Challenges & Risks Despite large reserves, private investment and economic activity remain sluggish, with low spending by both government and the private sector. Economists warn of “recession-like” conditions with high liquidity but little productive investment. Government budget execution has been slow, with reports that revenue targets are not being met, and planned spending is being trimmed mid-year due to weak capacity to absorb funds. Some public institutions continue to incur heavy losses, adding pressure on government finances and reducing efficiency. 📊 Broader Context Analysts point out that while Nepal’s external account looks healthy, the long-term growth outlook depends on boosting domestic investment, improving budget execution, and addressing structural weaknesses in the economy. Continued political uncertainty could further hamper confidence and private sector engagement. Overall: the economy stands at a crossroads — strong external buffers but limited growth drivers internally, requiring policy focus on investment, public spending efficiency, and economic diversification.