MCA-Nepal marks the start of upgradation of 40km Dhan Khola to Lamahi section of East-West Highway

Millennium Challenge Account Nepal (MCA-Nepal) today marked the commencement of the upgrading of the 40km Dhan Khola-Lamahi section of the East-West Highway. The road upgrading and maintenance works will, for the first time in Nepal, apply Full Depth Reclamation and Superpave as modern construction methods that offer important gains in quality, durability, and sustainability, according to MCA-Nepal.
By creating a stronger and longer-lasting road surface, reusing existing asphalt materials, and reducing environmental impacts, these approaches will help deliver a more reliable and cost-effective investment over the long term, a press note issued by the MCA-Nepal reads. "The project will also widen the road to 12 meters, with a 7-meter carriageway and 2.5-meter shoulders on both sides."
Addressing the event, the Chief Minister of Lumbini Province Chet Narayan Acharya, welcomed the use of modern technologies like FDR and Superpave, which will ensure better quality and longer-lasting roads. “This is a major step forward for our province and the people who rely on this highway every day," he said, adding that the upgrading of the road section will not only make travel safer and more reliable, but also open up new opportunities for local businesspeople, farmers, and entrepreneurs.
Similarly, Charge d'Affaires ai at the US Embassy Scott Urbon said, “Today’s launch of the Dhan Khola-Lamahi road upgrade marks an important milestone in the partnership between the United States and Nepal."
Through the MCC Nepal Compact, we are investing in high-quality, durable infrastructure that will lower transportation costs, improve safety, and connect communities to markets and opportunities, he said, further adding, “This project reflects our trust in Nepal’s future and our joint dedication to sustainable economic growth.”
Speaking at the event, Joint Secretary at the Ministry of Physical Infrastructure and Transportation and MCA-Nepal Board Member Sushil Babu Dhakal expressed, “As a Board member, I am pleased to highlight that MCA-Nepal’s investments are designed to complement the Government of Nepal’s plans and programs."
This collaboration reflects our shared commitment to building resilient infrastructure and expanding economic opportunities for our communities, he said, appreciating the efforts of all involved and look forward to the timely completion of this important project.
The MCC Deputy Resident Country Director Sanjay Poudyal, on the occasion, remarked that this milestone reflects MCC’s commitment to supporting Nepal in building resilient, cost-effective infrastructure using advanced technologies that ensure long-term performance.
"The commencement of works on the Dhan Khola-Lamahi section marks a significant step in implementing the Road Maintenance Project under the MCC Nepal Compact," said MCA-Nepal Executive Director Khadga Bahadur Bisht said. "MCA-Nepal remains committed to delivering this project efficiently, transparently, and to the highest quality standards," he said, adding, “I would also like to recognise the continued support from the Government, Millennium Challenge Corporation (MCC) and our key stakeholders, the Ministry of Physical Infrastructure and Transport, the Department of Roads, and the MCA-Nepal Board.”
The Road Maintenance Project is a key component of the MCC Nepal Compact, aimed at lowering transportation costs and improving road conditions across Nepal.

Nepal-China seal 11 billion second phase Ring Road expansion deal

The long-awaited second phase of Kathmandu Ring Road expansion is going to begin following a formal agreement signed today between the Government of Nepal and the People’s Republic of China.
Under the agreement, the Chinese government will provide a grant of approximately Rs 11 billion to upgrade the 8.2-kilometer road from Kalanki to Basundhara. The project includes widening the road to eight lanes and constructing several new bridges and pedestrian overpasses, according to a press note issued by the Ministry of Physical Infrastructure, Transport, and Urban Development.
The agreement was signed at the Ministry by Minister for Physical Infrastructure, Transport, and Urban Development Sunil Lamsal and Chinese Ambassador to Nepal Zhang Maoming. This phase follows the successful completion of the first section-the Koteshwar-Kalanki stretch-which was also built with Chinese assistance, it reads.
Speaking after the ceremony, Minister Lamsal emphasized a new 'zero-delay' approach to the construction. "The government has prioritised north-south connectivity as a national goal," he said, adding, "I am personally committed to ensuring that any administrative or technical hurdles arising during implementation are resolved within 24 hours to keep the project on track."
"The agreement related to assistance under the second phase of the Ring Road expansion has been completed today," he said, adding that the assistance agreement was signed with the Chinese Ambassador to Nepal Zhang Maoming. "On behalf of the government, a commitment has been expressed to resolve any problems arising during the project’s implementation within a day and to provide necessary facilitation."
Ambassador Maoming echoed the sentiment of cooperation, stating that the project serves as a cornerstone of bilateral infrastructure ties. He added that Chinese investors are increasingly looking at Nepal's energy and transport sectors, provided the 'suitable investment environment' continues to improve.
The Department of Roads confirmed that the expansion will address previous design concerns by incorporating modern medians, streetlights, and disabled-friendly overhead bridges. With the agreement signed, a Chinese technical team is expected to arrive at the site shortly, the press note adds.

Japan and UNDP partner to strengthen urban resilience to climate risks in Nepal

As part of UNDP’s global 'Climate Promise' initiative, the Government of Japan and the United Nations Development Programme (UNDP) launched a new $1.296 million 'Smart Buildings and Green Infrastructure for Improved Human Security and Sustainable Development' project to strengthen urban resilience to rising climate risks in Dhangadhi Sub-Metropolitan City (DSMC).
The launch event was led by Ambassador Extraordinary and Plenipotentiary of Japan to Nepal Toru Maeda and Resident Representative of UNDP in Nepal Kyoko Yokosuka.
Nepal is warming at nearly twice the global average, with urban areas facing increasing risks, according to a press note issued by UNDP. "In Dhangadhi, temperatures frequently exceed 40°C during recurrent heatwaves from May to August," it reads, adding that rapid and unplanned urbanisation, shrinking green spaces, and limited energy-efficient infrastructure are intensifying impacts on health, livelihoods, and essential services, particularly for low-income households and outdoor workers.
Speaking at the event, Ambassador Maeda reaffirmed Japan’s commitment to advancing climate resilience in Nepal, particularly for communities most vulnerable to climate risks. He expressed hope that the project would enhance urban resilience to extreme heat in Dhangadhi through integrated urban heat management solutions. He also noted that this year marks the 70th anniversary of diplomatic relations between Japan and Nepal, and emphasised that the project would further strengthen the long-standing partnership between the two countries.
"Through this partnership, UNDP is advancing practical solutions to urban heat in Dhangadhi, including thermal retrofitting of public buildings and community infrastructure, restoring urban wetlands, and promoting nature-based cooling solutions," Yokosuka said, adding, "These approaches are designed to be scaled and replicated across cities facing similar risks."
The project will demonstrate integrated climate solutions in Dhangadhi, combining infrastructure, planning, and local capacity to address rising heat risks. It is expected to directly benefit around 4,000 people-at least half of them women-while contributing to longer-term efforts to build more inclusive and climate-resilient cities in Nepal.

Nepal’s RSP majority eases near-term political risk, policy agenda key: Fitch Ratings

The clear parliamentary majority for Nepal’s Rastriya Swatantra Party (RSP) reduces near-term political uncertainty and provides an opportunity for enhanced policy predictability and implementation of governance and economic reforms, according to a press note issued by the Fitch Ratings. "The election result should lower the risk of a prolonged coalition negotiation after severe unrest last year, reduce the chance of a recurrence of recent years’ frequent government changes and potentially boost investor sentiment over time if signals point to tangible improvements in governance and economic reform delivery," it adds.
The scale of the RSP’s victory reflects a voter mandate to break with the status quo politics of power sharing, with the Nepali Congress (NC) and the Communist Party of Nepal-Unified Marxist-Leninist (CPN-UML) losing seats. A single-party majority, subject to final certification by the Election Commission (EC), should imply a short political transition and could improve Nepal’s ability to sustain reform momentum and translate hydropower-led investment into broader-based growth.
The RSP targets average real GDP growth of about 7 percent over the next five years, raising per capita income above $3,000, which we believe is ambitious. The new government’s policy agenda will be key in determining the extent to which growth can be lifted from our current forecast of 4.5 percent in the fiscal year ending 15 July 2027.
The RSP’s manifesto and announcements indicate it is aiming for policies that would lead to productivity gains, formal job creation to curb emigration, and higher private-sector-led investment in infrastructure, agriculture, service, digital and innovative industries.
When Fitch affirmed Nepal’s ‘BB-’ rating with a Stable Outlook in November 2025, "we stated that strong, sustainable growth, enabling substantial increases in GDP per capita - potentially supported by improved governance standards and regulations conducive to private and foreign investment - could improve Nepal’s credit profile," it further reads.
However, implementation capacity could be a key risk down the road, it says, adding that Nepal’s weak government effectiveness and regulatory quality scores compared with its peers could constrain execution, for instance, if reform sequencing is unclear or governance outcomes lag behind campaign expectations. "Private investment and foreign participation are likely to hinge on measurable improvements in the business environment and accountability frameworks, alongside sustained anti-corruption enforcement under the new government."
Nepal’s ‘BB-’ rating is supported by low and highly concessional government and external debt burdens, strong external liquidity, and solid medium-term growth prospects anchored by hydropower, with resilience reinforced by successful IMF programme implementation. Constraints remain the underdeveloped economy’s exposure to external shocks and natural disasters, and weaker structural features - especially GDP per capita and governance metrics - than ‘BB’ category peers.

World Bank supports Nepal’s Clean Air and Prosperity Project to reduce air pollution from industries

The World Bank’s Board of Executive Directors has approved a $52 million credit for the Nepal Clean Air and Prosperity Project to reduce air pollution and strengthen air quality management, according to a press note issued by the multilateral lending institution.
The project will help reduce fine particulate matter (PM2.5) emissions, particularly from industrial and commercial boilers and furnaces, while strengthening national systems for air quality management. It will focus on the Kathmandu Valley, the Terai, and surrounding foothill regions where air pollution poses severe risks.
"Air pollution is not only a public health crisis but also a significant economic burden in Nepal, costing the country more than six percent of GDP each year through health costs and lost labor productivity,” said Division Director for Maldives, Nepal and Sri Lanka David Sislen. "This project aims to protect millions of people from harmful pollution by helping Nepali enterprises adopt cleaner and more efficient technologies that at the same time also lower operating costs, improve competitiveness, and support sustainable industrial growth."
Industrial emissions are projected to become the largest source of air pollution in the coming years as the country continues to industrialise, underscoring the urgency of cleaner production technologies. Through a combination of clean technology financing, incentives, and technical assistance, the project will support around 400 industrial and commercial enterprises to adopt electric boilers/furnaces, modern biomass boilers/furnaces, or advanced emission control technologies, leading to substantial air quality improvements.
"The adoption of clean technology is limited in Nepal due to a combination of high upfront investment costs, constrained access to long-term financing, and low technical capacity among enterprises,” said World Bank Senior Environmental Economist, South Asia Region Martin Heger. "This project addresses these barriers by pairing long tenor financing and targeted capital incentives with hands-on technical assistance, helping industries to transition to cleaner production."
The project will be implemented by the Department of Industry under the Ministry of Industry, Commerce and Supplies and the Department of Environment under the Ministry of Forests and Environment. Rastriya Banijya Bank will serve as the handling bank for the clean technology financing facility.
The project financing from the World Bank is complemented by a $5 million grant from the World Bank’s Resilient Asia Program, funded by the United Kingdom’s Foreign, Commonwealth and Development Office and Swiss Agency for Development and Cooperation. The project is part of the World Bank’s Regional Air Quality Management Program in the Indo-Gangetic Plains and Himalayan Foothills (IGP-HF), a global air pollution hotspot.

ADB supports Nepal’s digital transformation toward high‑impact services

The Asian Development Bank (ADB) has approved a $40 million concessional loan to help Nepal accelerate its digital transformation agenda and expand access to high‑impact digital services for citizens and businesses.
The Nepal Digital Transformation Project - the first in South Asia to be co-financed under the ADB–World Bank Full Mutual Reliance Framework (FMRF) - will strengthen the country’s data hosting and cybersecurity infrastructure to enhance government-wide digital security and resilience, along with core digital public infrastructure for modern, user‑centric services, according to a press note issued by the ADB. "It will support key initiatives such as developing an integrated citizen service portal, improving the national social registry, establishing a secure government-wide data exchange platform for safe and efficient information sharing, and digitalizing about 11 high‑impact government services, according to a press release issued by the multilateral lender."
“Digital transformation is no longer optional - it is critical for improving public service delivery and supporting Nepal’s economic development,” said ADB Country Director for Nepal Arnaud Cauchois. “The reforms supported by ADB and the World Bank will make key services easier to access, reduce waiting times and administrative barriers, and enhance transparency in government processes - helping build greater trust between citizens and public institutions.
The project will be implemented by Ministry of Communications and Information Technology. It aligns with Nepal’s Digital Nepal Framework 2.0, Sixteenth National Plan, e‑Governance Blueprint, and ADB’s country partnership strategy for Nepal, 2025–2029, which identifies digital transformation as a core crosscutting priority, the press note reads.
The FMRF is an innovative co-financing arrangement between ADB and the World Bank designed to streamline project preparation, reduce duplication, and deliver faster and more effective development support. The World Bank is the lead lender for the Nepal Digital Transformation Project, approving its $50 million concessional loan in February this year.
ADB is a leading multilateral development bank supporting inclusive, resilient, and sustainable growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, ADB is owned by 69 members - 50 from the region.

World Bank approves $50 million Digital Transformation Project

The World Bank’s Board of Executive Directors today approved $50 million in financing to boost Nepal’s digital public infrastructure and digitise public services, fundamentally changing how services are delivered to the people.
The Nepal Digital Transformation Project will invest in digital platforms including an integrated online citizen service portal and an integrated social registry; a secure government-wide data exchange; and a digital locker to manage verifiable credentials and digital wallet, according to a press note issued by the World Bank. "The project will also help digitise high-impact services including land administration with other services being added in a phased approach," it reads, adding that the project aims to boost private sector investment in the data infrastructure market by improving legal and regulatory frameworks. "To promote trust in the digital economy, the project will invest in electronic signatures, cybersecurity, and data governance."
“By investing in core digital platforms and digitalising services, this project will help deliver enhanced services to people and businesses in an inclusive and transparent manner thereby improving service delivery, public sector efficiency, and good governance,” said World Bank Division Director for Maldives, Nepal, and Sri Lanka David Sislen.
The project will be financed under a joint co-financing arrangement between the World Bank and the Asian Development Bank (ADB) under the Full Mutual Reliance Framework. The World Bank is the lead lender while the ADB will serve as the trail lender and contribute $40 million. ADB’s management is expected to present the project to their Board for consideration in March 2026.
The project will be implemented by the Ministry of Communications and Information Technology and Department of National ID and Civil Registration.