Nepal’s geographic and climatic conditions deliver the finest quality coffee, and so far Gulmi, Nuwakot, Lalitpur, Kavre, Palpa, Syangja, Kaski and Sidhupalchok have been <a href="https://archive.nepalitimes.com/article/Nepali-Times-Buzz/Bean-there,271">traditionally famous for beans</a>.&nbsp; Now, even eastern Nepal is proving itself to have the ideal conditions for coffee plantation. In the village of Simma in the Arun Valley, men are mixing fresh soil, women and children pack saplings into plastic sacks, and men water coffee plants under the hot sun. After four years of careful planning by Lakpa Nurbu Sherpa of Ekuwa Makalu Ward 3, who is the founder of the non-profit NPO Nepal, the coffee farm is finally seeing substantial growth.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230902040932_82d14dd212d800e7c02b56394e5fd25235f34a6d91f732464c58ad8144a0e683.jpg" data-media-id="editor_1" data-image-id="20230902040932_82d14dd212d800e7c02b56394e5fd25235f34a6d91f732464c58ad8144a0e683" data-rendition-name="original" width="4032" height="3024" loading="lazy" alt="Coffee in eastern Nepal"> </figure>  It was only five months ago that Sherpa and Chun Bahadur Rai, an agricultural officer based in Bhaktapur and a local, introduced the coffee plant to farmers from Simma and other neighbouring villages.&nbsp; Locals were enthusiastic about the cash crop, and Makalu Ward 3 officer Badri Bahadur Rai convinced them that a coffee farm can support local incomes even as the productivity of cardamom drops. Cardamom has been one of the highest income sources for residents in the Sankhuwasabha district for over two decades. But after 25 lucrative years, the <a href="https://www.youtube.com/watch?v=1GDknKlenWg&amp;t=1s">crops are reaching the end of their lifespan</a> and suffering from fungal and pest diseases. Nepal’s cardamom production has declined by an estimated 20% since 2021, and export is down by 30%. Simma resident Karna Bahadur Gurung was earning Rs100,000 for every 40kg of cardamom he sold until recently. Farmers now get only one-fourth of that amount. “Few people still have cardamom, but I see the fields are all dying,” notes Gurung. “It was unreal for everybody to get so much money from cardamom, nothing else can pay us that much.” Cardamom crops also reduce the fertility of the soil, and it can take decades for it to be viable again. Still, Gurung hopes to plant cardamom again once the soil has recovered. While the profit has significantly decreased, cardamom remains the largest income source for many in this region below Makalu, the world’s fifth highest mountain. The hope is that coffee can remedy the income gap caused by the decline of cardamom. The global organic coffee market is expected to continue to grow rapidly and reach an estimated $20-30 billion by 2030. Nepal has been slow to adopt coffee compared to other countries, but <a href="https://archive.nepalitimes.com/article/Nepali-Times-Buzz/Nepali-specialty-coffee,4106">domestic and international demand for organic coffee has risen</a>.&nbsp; Nepal’s coffee export reached an all-time high in 2021-2022 at Rs117 million. There is a lot of potential for Nepal to grow its organic coffee industry even more, and Lakpa Nurbu Sherpa is bringing this crop to rural Sankhuwasabha.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230902040944_3f675e98b9ce994db370bada114a37af40e3e8aeccfeac693a3a7fc5b569256e.jpg" data-media-id="editor_4" data-image-id="20230902040944_3f675e98b9ce994db370bada114a37af40e3e8aeccfeac693a3a7fc5b569256e" data-rendition-name="original" width="2048" height="1536" loading="lazy" alt="Coffee in eastern Nepal"> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230902040948_6dddab6ec8fa3c21ae36bbf1b9393cb53c7f6292158cbdac0b57f34fdd4c1e26.jpg" data-media-id="editor_5" data-image-id="20230902040948_6dddab6ec8fa3c21ae36bbf1b9393cb53c7f6292158cbdac0b57f34fdd4c1e26" data-rendition-name="original" width="2048" height="1536" loading="lazy" alt="Coffee in eastern Nepal"> </figure>  Sherpa is also involved in school and health clinic initiatives in the Makalu region, and was looking for income sources to substitute cardamom. He wanted to see if coffee trees could thrive in the area after having seen them in Pokhara and Solu Khumbu. Sherpa’s <a href="https://www.nepalitimes.com/here-now/the-himalayan-odyssey">trekking</a> clients were also interested in tasting Nepal’s local organic coffee while visiting the country and he was made aware of the large foreign market for local flavours.&nbsp; He was also concerned that everyone in the village was migrating abroad for work, and was exploring ways to increase local income sources. He planted the first coffee seeds in Simma four years ago, and watched them grow into trees within a year. It was clear that Makalu’s soil and climate are ideal for a sustainable coffee farm. Sherpa approached the mayor with a proposal to develop a larger nursery, and the local government gave Rs400,000 for the project. Other villages are seeking similar alternatives: Uwa is beginning an orange farm, and Ulling is looking at honey production. Last month, as the monsoon rains arrived, Simma residents of all ages were packing fresh soil and tree saplings into small plastic nursery bags to be distributed to households. Both young and old helped each other, reflecting the richness of community bond here that is vital for the coffee project to succeed.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230902040944_d386153e932fa31ca723e1e9c393cf09bfcc279d2fc7d721f8c159dc7c87f2aa.jpg" data-media-id="editor_7" data-image-id="20230902040944_d386153e932fa31ca723e1e9c393cf09bfcc279d2fc7d721f8c159dc7c87f2aa" data-rendition-name="original" width="4032" height="3024" loading="lazy" alt="Coffee in eastern Nepal"> </figure>  There has been little top-down oversight of this project. There is trust and confidence that residents will put care and effort into nurturing their coffee plantation. Generational knowledge of farming, collective energy, and a deep concern for the future of their home and children is critical to the success of this project. Locals are cautiously optimistic. Says Karna Bahadur Gurung: “We still do not know how the new coffee plants will fare, no one else has done it in our area before. We must be patient and care for the trees first.”&nbsp; Hanna Wells is a Fulbright scholar researching the impact of the Kosi Highway project on traditional livelihoods in Makalu Municipality.

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Make way for Makalu Coffee

Coffee connoisseurs are touting the Third Wave of the beverage: moving beyond the coffee-shop culture epitomised by Starbucks to one that values knowledge of the cherries and beans from the plant to the cup, served up via independent cafés.Like craft beers and boutique hotels, specialty coffee is sweeping the world. In Nepal, however, the Nepal Tea and Coffee Development Board continues to label all coffee ‘The Himalayan Specialty’ without first doing a proper quality check, which is misleading consumers and risks leaving local producers shut out of global markets. But an increasing number of growers in Nepal are waking up to smell the coffee.<center><iframe src="https://www.youtube.com/embed/kdf4A98loE8" width="560" height="315" frameborder="0" allowfullscreen="allowfullscreen" data-mce-fragment="1"></iframe></center>“I am continuously hunting for the best coffee origins in Nepal,” says Q-grader Nima Tenzing Sherpa of <a href="http://www.lekalicoffee.com/" target="blank">Lekali Coffee Estate</a>, who believes producing Specialty-grade beans is the only future for Nepal’s coffee industry. “The potential is there, but the perspective of farmers towards coffee needs upgrading because they are the first one handling the cherries.”Nepal’s geographic and climatic conditions are ideal for growing the finest quality coffee beans: shaded hills situated between 1,000m and 2,000m with both ample sunlight and rain. Farmers have been quick to recognise the potential of this global beverage: 32,186 of them in 41 districts are now growing coffee.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221104141132/636515329c7e80680e02c1a0jpeg.jpg" alt=""/>Lekali coffee estateProducing Specialty-grade coffee starts with selectively picking the red cherries, then storing the green beans away from moisture. Experts like Raj Kumar Banjara <a href="http://himalayanarabica.com/" target="blank">Himalayan Arabica Coffee</a>, which has been Speciality-certified, says currently there are weaknesses all along the supply chain.Banjara is Nepal’s first ‘Q-grader’, certified by the <a href="https://sca.coffee/" target="blank">Specialty Coffee Association of America</a> to rank Speciality Arabica coffee, and says that without more such growers and laboratories to quality test them, Nepal’s coffee will continue struggle for consistency. The effects of climate change have added another complication to that quest.According to Sanat Raj Thala, roaster and brewer of Coffee Time:“If the whole process of producing and packaging of Nepali coffee was done with more scientific research and stricter standards, not only international but domestic markets would be able to enjoy its own product.”<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221104141132/636515339c7e80680e02c1a1jpeg.jpg" alt="">Thala does concede that it will take time for local consumers, used to instant coffee heavy on milk and sugar, to appreciate the Specialty coffee flavour. <a href="http://nepalitimes.com/article/business/Gagan-Pradhan-and-Himalayan-Java,1076" target="blank">Coffee culture</a> is still young in Nepal though the country counts more than 1,200 cafés today. Converting the nation of tea devotees to coffee lovers is a major challenge, which would have obvious impact on the tea industry.Another hurdle making local producers bitter is a burgeoning black market in lower-quality Indian coffee beans that undercut the Nepali beans. All these challenges will need to be overcome if Nepal’s product is to become part of the global, highly profitable, Third Wave of coffee.<center><iframe src="https://www.youtube.com/embed/0MDlDf-53q0" width="560" height="315" frameborder="0" allowfullscreen="allowfullscreen" data-mce-fragment="1"></iframe></center><h2>What is the Third Wave?</h2>First Wave: Profit-driven, mass marketing, air tight containers and instant coffee. Consumption of coffee worldwide starts growing.Second Wave: Artisan-driven, origin and roasting style become important, epitomised by Starbucks and espresso.Third Wave: Characteristics of the beverage take centre stage: origin of the beans, consistent processing techniques and roasting style. Independent coffee shops demonstrate craftsmanship and knowledge of coffee beans from plant to the cup, promoting ethics and transparency.<h2>The Coffee University</h2>It has been less than two months since <a href="http://unicaffe.illy.com/" target="blank">Università Del Caffé</a> inaugurated its 28th branch, and first in Nepal. Yet, it has already completed three Coffee Expert and Coffee Lovers course. The Italian coffee university located at the <a href="http://silvermountain.edu.np/index.php?p1=fullwidth_school&amp;p2=20&amp;mid=15" target="blank">Silver Mountain School of Hotel Management</a>, is dedicated to upgrading Nepalis’ knowledge of coffee, starting from the coffee plantations to the processing right up to training baristas.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221104141132/636515359c7e80680e02c1a2jpeg.jpg" alt="">Ryan ChangThe university offers four courses: Coffee Lovers is for those who seek knowledge about the types of beans and their origins. Coffee Expert, including two days of internship, is beginner-friendly, while Master Barista includes tastings. Tailored Consultancy is offered as a customised workshop for those with unique needs.According to Moreno Faina, director of Università Del Caffé,what sets the institution apart is its scientific laboratories, research and intensive field works. “The results are translated to fit the understanding and knowledge level of the Nepali market,” says Faina.With a café-like ambience showcasing various brewing equipment, coffee cups and coffee from Illy, the founding brand of the university, this little hub is a great place to start a conversation about coffee over a cup of coffee.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221104141132/636515379c7e80680e02c1a3jpeg.jpg" alt=""> Coffee flowers are white, small and fragrant.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221104141132/636515389c7e80680e02c1a4jpeg.jpg" alt=""> The plant starts bearing cherries after 3-5 years of plantation.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221104141132/6365153a9c7e80680e02c1a5jpeg.jpg" alt=""> Cherries are sun-dried or wet-processed for pulping.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221104141132/6365153c9c7e80680e02c1a6jpeg.jpg" alt=""> Pulped seeds are fermented, washed and dried again.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221104141132/6365153e9c7e80680e02c1a7jpeg.jpg" alt=""> After the outer layer is removed, beans are graded and sorted.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221104141136/636515409c7e80680e02c1a8jpeg.jpg" alt=""> Green beans are roasted to achieve various chemical properties.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221104141136/636515429c7e80680e02c1a9jpeg.jpg" alt=""> Roasted beans are grounded right before brewing for best results.<h2>Who is a Q-Grader?</h2>A Licensed Q-Grader is a highly trained and calibrated coffee expert who professionally grades Specialty Arabica coffee under Specialty Coffee Association of America protocols. They are authentic on tasting, cupping and evaluating coffee quality very objectively.Raj Kumar Banjara, Nepal’s first Q-Grader who recently returned from China after renewal of his license.

Riding coffee’s Third Wave

The monsoon has got bad press because Nepal’s tourism operators actively told visitors to avoid <a href="https://nepalitimes.com/opinion/managing-the-monsoon?%2F">the rainy season</a>. It is time to change that. The reason can be found right here in the vast alpine meadows of Central Nepal where this time of year you can walk on velvet grass of pastures abloom with delicate pink, red and yellow flowers as the mist rolls up the valley. There is no sound except the hum of bumble bees. &nbsp;&nbsp; There are dozens of places across high Nepal called Chaurikharka, which means yak pasture. But this particular Chaurikharka in Rukum East located at an altitude of 4,000m stands out for its serene beauty, rustic charm and bucolic setting. There is just the occasional chime of <a href="https://nepalitimes.com/here-now/when-yaks-go-so-does-culture">yak bells</a> in the distance, and the sharp whistle of herders corralling sheep. &nbsp;&nbsp; The grass shoots are so fragile that one hesitates to step on them, the rounded ridges appear and quickly vanish in waves of mist. With the<a href="https://nepalitimes.com/here-now/before-the-next-monsoon"> arrival of monsoon</a>, these meadows are a soothing shade of green dotted with millions of <a href="https://nepalitimes.com/review/the-anatomy-of-a-flower?%2F=">multi-coloured flowers</a>. Until very recently, it took a week or so to hike up to places like Chaurikharka, but with the expansion of the road network even to these far-flung mountains in the lap of Dhaulagiri, they are much more accessible. It is just a three-hour uphill from the Mid-Hill Highway on the border between Baglung and Rukum East.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16.jpg" data-media-id="editor_4" data-image-id="20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16" data-rendition-name="original" width="2048" height="1365" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Purists would say that such easy access devalues the sanctity of these remote high meadows, but it also means more people will be moved to treasure the experience, appreciate <a href="https://nepalitimes.com/banner/natures-fragile-gift-to-nepal">the value of nature </a>so they can take steps to protect it.&nbsp; To be sure, the <a href="https://nepalitimes.com/here-now/deadly-monsoon-in-nepal-turns-deadlier">monsoon season can be challenging for road travel</a>. The roads are rough even at the best of times, and in the monsoon they become muddy and treacherous, often blocked by<a href="https://nepalitimes.com/news/monsoon-deluge-in-nepal"> landslides</a>. But that could be precisely the kind of adventure that the more intrepid visitors crave. Improved road connectivity has already made Chaurikharka and places like Badimallika &nbsp;and other sacred lakes in the mountains of western Nepal popular with domestic tourists. What is driving this traffic is the urge to go to exotic new places and share videos and selfies on social media. Several of Nepal’s travel vloggers have visited Chaurikharka and popularised the place, enticing followers on TikTok or YouTube to retrace their footsteps. But even as they become more popular, these fragile and once-remote places should be protected from over-tourism.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446.jpg" data-media-id="editor_8" data-image-id="20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446" data-rendition-name="original" width="1083" height="699" loading="lazy" alt="Visit Nepal in the monsoon NT"> </figure>  <h2>INCREASING FOOTFALL</h2> Chaurikharka is located in Bhume Rural Municipality of East Rukum, near the scenic valley of Dhorpatan in Baglung district. Even in the <a href="https://nepalitimes.com/banner/monsoon-culture">middle of the monsoon</a>, there is a steady stream of Nepali hikers trooping to these high pastures – especially during festival days like Saune Sankranti which this year was on 17 July and actually marks the auspicious beginning of the monsoon here. “This year the rains have not been as heavy and there have been some clear mornings when we could see everything from Dhaulagiri to Machapuchre,” says Khageswar Bhandari, who trekked up here from the road. “The flowers, the greenery and the snowy mountain views make this an incredibly unique place.”&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9.jpg" data-media-id="editor_10" data-image-id="20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9" data-rendition-name="original" width="2048" height="1152" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Chaurikharka is worthwhile to get to in any season, but it has a different charm during the monsoon. Word has spread and because it is now easy to get to from Baglung or even Pokhara, people have been flocking here.&nbsp; “Holidays and Saturdays see the largest crowds, with up to 500 visitors every day,” says ward chair Mankaji Pun of Bhume.&nbsp; There was a time not too long ago when local herders brought sheep, goats, cows, buffaloes, horses, and mules to graze here during the monsoon. Although there are still livestock around, animals have been replaced by visitors taking selfies. Read also: <a href="https://nepalitimes.com/here-now/the-monsoon-and-nature-s-arithmetic">The monsoon, and nature’s arithmetic</a>, Tom Robertson Ward Chair Pun says infrastructure development is his main priority. A foot trail to Chaurikharka was built last year by the Tourism Division Office in Kohalpur, but access via the Raniwas-Koipa road section still remains challenging.&nbsp; “If we get more budget, we can improve the road and facilities to make Chaurikharka the main tourist attraction of this region,” says Bhume Municipality Chair Hom Prakash Shrestha. “After that, we hope to promote Chaurikharka as a top tourist spot.”&nbsp; Economic activity is also picking up with the arrival of visitors, but there seems to be a need to manage the makeshift sheds made of corrugated sheets that spoil the beauty of the place. Tea shops and lodges are also available but facilities are basic. Kuldeep Neupane took a three-day trip from Ghorahi in Dang to visit Chaurikharka recently, and says: “This is an ideal trip to make a quick getaway and let nature recharge your mind and body. And it is much more fun with a tent, to watch the sunrise over the Himalaya or the mist blowing in.”

Visit Nepal in the monsoon

Nepal is graduating to become a developing country on 24 November 2026 after half-century in the Least Developed Country (LDC) category. By 2030, the country hopes to transition to middle-income status.&nbsp; Everone from Prime Minister K P Oli have boasted that this is a matter of national pride, and will have a multiplier impact on trade and economy.&nbsp; But will it make any difference to the average Nepali? Not unless improved governance <a href="https://nepalitimes.com/news/why-invest-in-nepal">spurs investment and creates jobs</a>.&nbsp; Countries need to meet at least two of the three criteria in two consecutive triennial reviews to be eligible for graduation from LDC. Nepal has consistently met the thresholds for the Human Assets Index (HAI) and the Economic and Environmental Vulnerability Index (EVI) in 2015, 2018, and 2021. But Nepal was recommended for graduation before meeting the per capita <a href="https://nepalitimes.com/banner/nepals-great-income-divide">Gross National Income (GNI)</a> threshold of $1,306. “A major implication of LDC graduation is the loss of preferential market access available through Generalised System of Preferences (GSP) and other arrangements,” explains economist Sameer Khatiwada. “But over two-thirds of <a href="https://nepalitimes.com/news/nepal-doesnt-produce-its-2-biggest-export-items">Nepal’s exports</a> are to India, and the preferential market access to India is through a bilateral trade agreement. This has nothing to do with our LDC status.”  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250815060832_f5eabe7628a8cdf84f33b25d7cef3c4dc8913a26d8e5b253ea52a36e176b8a85.jpg" data-media-id="editor_3" data-image-id="20250815060832_f5eabe7628a8cdf84f33b25d7cef3c4dc8913a26d8e5b253ea52a36e176b8a85" data-rendition-name="original" width="640" height="470" loading="lazy" alt="LDC graduation "> </figure>  Furthermore, a provision under the South Asian Free Trade Area (SAFTA) allows Nepal to export to India duty-free if the items are at least 30% value-added. Nepali traders take advantage of this by re-exporting edible oils without meeting that requirement, falsely boosting Nepal’s exports.“ Following graduation from LDC, the value addition threshold might increase to 40%,” says Kalpana Khanal of the Policy Research Institute. “This is supposed to work to our advantage, because on paper value addition inherently means <a href="https://nepalitimes.com/multimedia/staying-home-to-create-jobs">job creation at home</a>.” But Nepal’s exports to other major destinations will face <a href="https://nepalitimes.com/news/nepal-and-the-us-india-tariff-tiff">tariff increases</a> with the graduation. A South Asia Watch on Trade, Economics and Environment (SWATEE) study shows that while tariff increase in the US market is relatively low (see page 5) it is considerably higher in Europe. The International Trade Centre (ITC) in a 2022 study also estimated that graduation could result in a 4.3% decline in Nepal’s projected exports, but this is excluding the impact of changes in ‘rules of origin’ provisions in preference-granting countries such as the UK and Europe.&nbsp; Nepal’s top export to these preference-granting countries is <a href="https://archive.nepalitimes.com/news.php?id=1482">carpets</a>, and will not be impacted, but other items such as textiles and apparel will be heavily affected due to higher cost of production. The impact will felt mostly by small and medium enterprises which represent the largest share of exports to LDC-specific preference-granting countries. As for the service exports, Nepal never really made use of the World Trade Organization’s LDC services waiver anyway, hence the effect will be minimal, if any. There is also concern about Nepal’s graduation at a time when the global economy is topsy-turvy, amidst <a href="https://nepalitimes.com/opinion/turning-point-in-us-india-relations">tariff wars and conflicts</a>. This affects Nepalis abroad directly and may impact <a href="https://nepalitimes.com/news/more-remittance-more-than-remittance">remittances </a>which hit $11 billion in 2024. In comparison, Nepal only received $350 million in foreign loans and grants last year.&nbsp; Tourism arrivals have finally reached pre-pandemic levels, but bad publicity about pollution, poor infrastructure and bureaucratic hurdles hinder further growth. Manufacturing continues to struggle, while hydropower and the IT sector have taken off.&nbsp; “Look at data -- <a href="https://nepalitimes.com/news/tourism-needs-a-new-push">tourism arrivals</a> are up, spending is up, IT exports are up, <a href="https://nepalitimes.com/news/why-nepal-needs-to-restore-ev-tax-subsidy">EV sales </a>are up, Europe still needs 85-90 million skilled workers. We are sitting on $16 billion in cash reserves, our balance of payment, foreign exchange reserve, tax to GDP ratio, credit flow are all positive, we have to build on these factors,” says Sujeev Shakya of the Nepal Economic Forum. He adds: “Our mindset creates negativity to promote rent-seeking behaviour, but this cynicism will go away after 2026 with LDC graduation. We must deal with data, look at trends, and projects which will bring in <a href="https://nepalitimes.com/from-the-nepali-press/why-there-is-no-foreign-investment-in-nepal">international investments</a>.” Khanal agrees that investment is not dependent on<a href="https://archive.nepalitimes.com/regular-columns/backside/Nepal-not-the-least-developed-country,306"> LDC status</a>. The factors that that affect investment are policy stability, a strong legal framework, market potential and ease of doing business. She adds, “That is where our focus needs to be, and we need to retain <a href="https://nepalitimes.com/diaspora-diaries/migrant-worker-returns-to-create-work-at-home?fbclid=IwAR09xJfsClCwn8uRVAmz28CU658vdKpuyDwB_b1sNlvKtAFFnSldnA0JS2g">Nepalis with jobs at home</a> for our sustained growth.” After 2026, financing support from donors and aid agencies could be affected and Nepal will no longer be able to access Least Developed Countries Fund (LDCF) to adapt to the impacts of climate change. But the Global Environment Fund and Green Climate Fund will still be available.“ LDC status does not determine bilateral development aid, that is usually driven by broader <a href="https://nepalitimes.com/here-now/looking-beyond-two-boulders">geopolitical considerations</a>,” says Sameer Khatiwada. “The World Bank and Asian Development Bank, which provide concessional loans to Nepal, it is determined mainly by per capita income, not LDC status.” &nbsp;However, Nepal may lose some concessional terms for loans. Nepal is currently a lower-middle-income country as per the World Bank in the bracket for GNI between $1,036 and $4,045. The country is already receiving more loans than grants and in July the World Bank increased its interest rate on loans by 100% from 0.75 to 1.5%. “All this means that the impact of LDC graduation for Nepal might not be as earth-shattering as some tend to think. Countries that have recently graduated, such as Botswana and the Maldives, have shows that graduation is just a step in a country’s development path,” says Khatiwada. Sujeev Shakya also sees the glass as half full, explaining that LDC graduation is just a stepping stone if Nepal has the right policies in place. He adds, “Nepal’s biggest advantage is our<a href="https://nepalitimes.com/opinion/investing-in-people"> working age population</a> and we have investments coming in. These aided by how adaptive we are as a society are the very foundations on which Nepal will grow.”

Not poor, but not rich

Two weeks ago, Prime Minister KP Sharma Oli announced jubilantly on social media that Nepal had achieved a historic annual growth of 81.8% in exports. He was right. Nepal’s trade did take a great leap forward compared to last year. But the dramatic rise was mainly due to processed soya bean oil.&nbsp; However, Nepal does not produce the edible oil it exports. In fact, the soya and palm oil that make up 44% of total exports are imported from Southeast Asia and South America, and simply re-exported, mostly to India.&nbsp; Under the SAFTA (South Asian Free Trade Area) Agreement, Nepal can export products to India duty-free if it has at least 30% value-added. Nepal’s traders have taken advantage of SAFTA even though the edible oils they export do not reach that value addition threshold. “The 30% value addition requirement is often only on paper,” says former commerce secretary Purushottam Ojha. “It is clear that simply packaging edible oils in Nepal does not fulfil the terms of the trade agreement.” Prime Minister Oli is aware of this, and even called Nepal’s export figures “fake” at an earlier event. The government is relying on other iffy figures to suggest that Nepal’s economy is strong and getting stronger. For example, the value of imports rose by 13.25% in 2024-25 compared to the previous fiscal year.&nbsp; Some of it was due to a jump in electric vehicle imports worth Rs 31.76 billion, but mostly it was because more wholesale soya oil was imported to be re-packaged and sold in India. The very fact that the government boasts about increased imports is an indication of how much it relies on taxing them for revenue. Touting such trade figures cannot be the basis to claim an economic rebound.&nbsp; “A jump in the value of imports can be interpreted as an increase in purchasing power, but it is not evidence of a stronger economy,” says economist Keshav Acharya. “Even though imports have increased, Nepal's domestic production and productive capacity have not improved.” Nepal Rastra Bank's semi-annual economic activity study report shows that industrial production was down in the first six months of the last fiscal year. This despite an increase in the number of new industries registered and investment commitments. Out of the Rs70.2 billion proposed foreign investment, Nepal received only Rs17.9 billion last year.&nbsp; Meanwhile, the rate of capital formation was limited to 24% last year, which is lower than the year before, suggesting that new investment, job creation and economic expansion all declined. If domestic production does not improve in relation to this year’s inflated trade figures, the outflow will put pressure on foreign exchange reserves like it did three years ago. At that time, Nepal borrowed from the IMF under its Extended Credit Facility Program to kickstart the economy.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f.jpg" data-media-id="editor_0" data-image-id="2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f" data-rendition-name="original" width="1633" height="723" loading="lazy" alt="Nepal's bubble economy NT"> <figcaption>Source: NEPAL RASTRA BANK</figcaption> </figure>  The macroeconomy is on firm footing with foreign exchange reserves at a comfortable Rs2,520 billion in May, up 23% from last year. This was largely due to remittances, and partly due to a falling NPR exchange rate. Real estate transactions and the stock market index have also been climbing as a result of government policies to revive the sector.&nbsp; However, former executive director of Nepal Rastra Bank Nar Bahadur Thapa cautions: “This is not organic growth, it is the result of deliberate policy decisions to relax rules on real estate and stock markets transactions.” In reality, the sharp rise in land prices have increased the cost of production, and excessive monetisation of the real estate has become the main source of Nepal’s economic woes. The central bank has announced a slew of new policies, shifting the terms of loan repayment for industrialists and entrepreneurs, reducing interest rates, and injecting more working capital — all designed to inject adrenaline into the real estate and stock market sectors.&nbsp; When he was governor, Mahaprasad Adhikari made several financial reforms during the latter half of his tenure to stimulate the economy, including tightening credit flow.&nbsp; By the last fiscal year, additional financial reforms had resulted in a credit expansion rate of around 8%. As the pace of credit expansion slows, real estate prices have started to fall. This is actually beneficial to the economy, because it lays the foundation for improvements in land-related entrepreneurship, production, and the construction sector. Just because real estate and the stock market transactions increase, it does not indicate an economic turnaround — especially when manufacturing and productive sector continues to languish.&nbsp; “It is foolish to believe that real estate and the stock market have magically revived our economy. Agriculture employs more than half of the population, but it is in decline. Investment in the productive sector has not increased, and job creation has not increased.” Two years ago, Nepal’s industrialists, business leaders, and political leadership predicted a recession amidst a sluggish business, declining market demand, large-scale job loss, and a shrinking real estate and share market.&nbsp; Still, the economy grew by 3.36% in fiscal year 2023/24. In fact, Nepal’s economy has grown nominally over the last two decades even when all sectors of the economy are in decline.&nbsp; Says Keshav Acharya: “The growth in trade, real estate, and the stock market are bubbles. The real economy remains stagnant.”

Nepal’s bubble economy

The final investigation report on the crash of a Saurya Airlines jet on 24 July 2024 at Kathmandu airport has revealed flaws in the carrier’s technical operation procedures, poor monitoring by the Civil Aviation Authority of Nepal (CAAN) and gaps in the airport’s emergency response. Eighteen people including a child were killed, and only the captain survived as the plane plunged seconds after takeoff, crashing within the airport perimeter. This was the latest in a series of aircraft accidents in previous years, and further tarnished Nepal’s already poor aviation safety record and contributed to the country being retained in the EU’s air safety list. &nbsp;&nbsp;&nbsp; The circumstances in the Saurya crash were different from the Yeti Airlines crash in Pokhara in January 2022 that killed all 72 on board, and two Tara Air crashes in February 2016 and May 2022 on approach to Jomsom that together claimed 45 lives. However, all four tragedies were a result of negligence of carriers and crew, failure to follow procedures, regulatory slackness, and overconfidence. The Saurya crash, especially, was a glaring example of how an ailing airline broke its own rules to allow passengers, including non-employees, a joy ride to Pokhara on a maintenance ferry flight. CRASH REPORT The Final Investigation Report prepared by the Aircraft Accident Investigation Commission and released on the first anniversary of the crash last week carried a long list of rules that were ignored or broken, and of regulatory failure. The first mistake was to cram spares, tools and inflammable chemicals needed for the aircraft’s C-Check in Pokhara into the cargo hold flouting its own ground handling procedures.&nbsp; There was no check-in of passengers, some of whom were not even employees – even though regulations say only flight and maintenance crew should be on board a maintenance positioning flight. Many brought their own luggage into the plane and stored it unsecured in the cabin. There was no flight attendant to give a safety briefing to passengers. The load and trim charts given to the flight crew were rough estimates, and the total takeoff weight of the plane was 18,300kg plus or minus 200 kg. That would still have been all right, but there was a glaring mistake in the speedchart Saurya pilots were using to calculate the minimum takeoff speed (known as VR), and it had been wrong ever since the 21-year-old aircraft entered service with the airline in 2017. FAULTY DATA&nbsp; The Commission probed Flight Data Recorder inputs from previous takeoffs of the Canadian-built CRJ200-LR in 2023-2024 and found that the undetected error in the speedchart had caused the plane to pitch up at an abnormal rotation rate at least 18 times on previous takeoffs.&nbsp; Any rotation rate more than 3°/sec is regarded as unusual. But on at least two occasions, this aircraft with tail number 9N-AME had rotation rates of 5.8°/sec and 5.5°/sec, the second one was when the pilot who survived was flying in March 2024.&nbsp; On this particular day, the plane’s rotation rate was 6.5°/sec, causing it to go into a deep stall soon after takeoff, the Commission report said. Essentially, the plane was not flying fast enough down the runway to take off safely.&nbsp; It is not yet clear whether excess weight, unsecured luggage, wrong centre of gravity were also factors, but relying on a faulty speedchart for the given takeoff weight, the captain flying pulled back on the yoke before the plane had reached takeoff speed and at a pitch angle that was too steep. The investigation report says the plane then went into a deep stall and started banking right with the stick shaking. At this point, the flight officer on the right hand seat is heard on the cockpit voice recorder saying: “Whoa, whoa, whoa. Sir, Sir, Sir…” It then banked left before the pilot flying turned the plane sharply to the right again in an evasive action to avoid the parking aprons of the international and domestic terminals. Had he not done so, there would have been a disaster of a much greater magnitude at Kathmandu airport that day. The plane scraped the runway with its right wingtip, collided with a container having helicopter spare parts, and plunged into a gully east of the runway, exploding in a fireball. The investigation also noted that the impact forces seemed to be survivable for some occupants. The fire trucks took unnecessarily long to reach the site even though it was inside the airport perimeter. The absence of an ICAO-standard runway strip, inadequate rescue drills, lack of training, and a blocked emergency service gate leading to the crash site were cited as other factors. &nbsp;&nbsp; <h2>Timestamp of a Disaster</h2>  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725.jpg" data-media-id="editor_0" data-image-id="20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725" data-rendition-name="original" width="778" height="826" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:10:34 - The Saurya Airlines CRJ200 on the takeoff roll from runway 02. It had a takeoff weight of about 18,300kg, but the pilot’s speedcard had a previously undetected mistake about the minimum takeoff speed. 11:10:55 -The plane with tail number 9N-AME goes into deep stall soon after takeoff because it does not have enough speed to lift its weight. The plane also has an abnormally steep nose-up attitude.&nbsp; 11:11:03 - Without enough speed to generate lift, the plane banks right, then left and right again in CCTV photos taken from the domestic apron (below). If it had not banked right, it could have hit the aprons and terminal buildings. Seen parked is Saurya’s other CRJ200 with tail number 9N-ANM.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd.jpg" data-media-id="editor_1" data-image-id="20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd" data-rendition-name="original" width="770" height="555" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:11:08 - The plane scrapes the runway with its right wingtip, and falls into the gully. The captain is thrown off the left side of the cockpit and survives. 11:11:15: Plane explodes in a fireball inside the airport perimeter. Firefighters take time to reach the site because of lack of access road and a blocked gate. Read the full investigation report <a href="https://www.tourism.gov.np/files/9N-AME%20AIC%20Final%20Report.pdf">here</a>.

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