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Tuesday October 20th, 2026

Nepal: Himalayan country in crisis

COVAX arrival in Nepal – Image courtesy UNICEF

ECONOMYNEXT – South Asian countries should have adopted a common regional strategy to combat the spread of coronavirus in the region, says Indian journalist Suhasini Haidar.

Speaking at a webinar on ‘Nepal:  Himalayan Country in Crisis?’, Haidar said that even though the South Asian Association for Regional Cooperation (SAARC) countries met via a video conference in March 2020 to discuss the matter, there has been no follow through.

Haidar, who is the Diplomatic Editor of the Hindu Newspaper said, the region ‘started right, but the greatest sorrow is that South Asian countries, then, failed to plan adequately.’

The region, particularly those countries that share borders should have acted fast to secure their geographic region. Diplomacy alone is not adequate, commitment by the leadership is necessary to ensure all people are vaccinated the webinar heard.

A fully vaccinated South Asia would have been able to ride the second wave of the coronavirus better, Haidar added, stating that there would have been fewer lives lost.   Instead, leaders of the countries were, during that first wave in early 2020 complacent, busy directing the attention of the people to the rapid spread of the virus in other, more developed countries.

Haidar states that South Asian nations did not do their homework; India, for instance, failed to even make a ballpark estimate of the vaccines required to combat the spread within the country.

Joining Haidar in the discussion organised by the Friedrich Nauman Foundation for Freedom (FNF) on June 29 were Gagan Thapa, a Member of the Nepali Parliament, Dr. Dhawal Shamesher Rana, Mayor of Nepalgunj Sub Metropolitan city and Vice President and General Secretary of the Rashtriya Prajantantra Party.  The panel was moderated by Dr.  Bishal Dhakal, Physician, Columnist and Social Entrepreneur.  Bettina Stark-Watzinger, a Member of the German Federal Parliament the Bundestag and Board Member of FNF was the Keynote Speaker.  Associated with the discussion was Nepal’s Consul General in Germany, Ram Pratap Thapa.

The aftermath of the pandemic clearly indicates that all South Asian countries will be equally affected on the economic front, from migrant workers to tourism.  Haidar points out that this state of vulnerability should have been the reason for the region to act as one unit.  Covid, she said, has shown ‘there are no borders’ and insular attitudes do not work.

In Nepal, as in Sri Lanka, a major issue of concern is the dearth of sufficient vaccines to go around.   Says Gagan Thapa, the need of the hour is not oxygen concentrators, Oximeters or PPE’s but vaccinations.  Nepal may feel secure being wedged between two world powers, India, and China, but under the current situation that has been of no use. Neither SAARC nor the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) have been structurally functional during periods of normalcy and therefore cannot be relied upon now, he pointed out.

Nepal, says Dr. Dhawal Shamesher Rana received a gift of a million doses of the AstraZeneca vaccine from India.  However, with the Indian government later deciding that their citizens are a priority, and abandoning the donation of vaccines to other, less advantaged countries, Nepalese find themselves in a quandary.  Rana claims that the Nepalese government is now set to purchase vaccines from China, adding that a proposal by a not-for-profit organisation, the Himani Trust to facilitate the Johnson vaccines through the United States had not been accepted by the Nepalese government.  The Trust has since approached the Local government authority of Nepalgunj, the city he is Mayor of, and has received approval, though Rana says he is not expecting a positive outcome.

It was the Sub-Metropolitan city of Nepalgunj that had to first battle the coronavirus in that country.
As the pandemic spread in developed countries, Nepalese were lulled into a ‘false hope and confidence’ the country was resilient to the virus.  But within days of the first patient testing positive, there were twenty-three others, he added.

Nepalgunj shares a border with India and is close to the latter’s Uttar Pradesh industrial region.  The lockdowns saw large-scale migration of citizens between the two countries, heading towards their respective homes.  Rana says the initial agreement of setting up quarantine centers at the border for these workers was not successful.  Efforts to ease the travails of these travel weary workers took time, with every approval sought having to wend its way through the various levels of government.  When Cabinet sanction was finally granted, often, the ground realities had changed.

Thapa states that early on in the pandemic, his party had registered a motion of urgent public importance in the Parliament to identify gaps and challenges and a strategy to manage the situation. However, that had been to no avail, he alleges.

All three panelists agreed that there are governance issues in their respective countries in the fight against the pandemic.

As Rana pointed out the Federal and Union structures of government failed in effectively managing the pandemic, especially when the first wave hit.  There was confusion regarding responsibility between the tiers of government, inadequate funding, and ambiguity about protocols.  However, the second wave had been managed better, and coordination between the Federal and Union governments had improved as was the funding.

Recalls Haidar, some hospitals in India had a short supply of oxygen but were running at capacity, while others that had enough stocks of oxygen had fewer patients, during the height of India’s first wave.  Attempts to transport oxygen across States ran into snags, with each State staking a priority.   There was, she says a ‘breakdown in the relationship between the Federal and State governments.’    Sadly, in some instances even though patients were admitted to hospitals, they had succumbed to the virus, owing to the non-availability of oxygen at those institutions.

There must be better rapport between ‘the State and the Center’ she points out, adding that this is also the reason for the shortage of vaccines.  As well, the Central government had gone ahead with conducting elections in five different States and permitted the Kumbh Mela festival.

Thapa concurs.  “It’s not about the quantity and size, but the quality of governance that is important.’   Describing the government’s actions to the pandemic as being reactive rather than proactive, Thapa pointed out that the time the motion was presented to parliament, the country had the resources to invest and stockpile the tools to fight the pandemic.  Instead, he claims the Nepali government discarded scientific findings and misinformed and misled the people into believing they would not fall prey to the virus.

The Federal government, he said has been unable to hold meaningful discussions and partner with other actors.  There was no clarifying of roles he said, alluding to the failure of the Federal structure of governance.   Nepal transitioned into a Federal Democratic form of governance in 2008, abolishing its 240-year-old monarchy.   Such failures have resulted in misgivings about the federal form of governance, he added.

Similar lapses, says Haidar resulted in the second wave in India, and questions are asked as to why the government had failed to see it coming.

Amidst all the heartache, despair, and lives lost she explained there was humanity.  Families keeping vigil outside hospitals where relatives were battling the virus received food from volunteers who had banded together to help.  Those who had recovered from the virus returned to the hospitals to donate plasma when doctors believed that was a solution.  Tents were erected outside hospitals where patients could, while waiting for admission, get oxygen.

Journalists too were fielding requests from members of the public who were seeking assistance to get hospital admissions or a bed and even oxygen.  This had resulted in a former journalist together with several other volunteers setting up a combined central room in Gurgaon, a city on the outskirts of Delhi.  Through WhatsApp, the group had been able to inform people where beds, oxygen etc., were available.

It is easier said than done, says Rana, to ask that borders be shut. But ‘it’s inhumane not to allow Indians and Nepalese cross the border to get home.  In some cases, villages are divided between the two countries.’   Here again, there was help from volunteers to help feed those in quarantine.

The only two factories supplying oxygen are located within his locality, explained Rana, adding that during the crisis, oxygen had to be sent to other cities and even India. As well, many patients from other districts sought hospital admission in Nepalgunj; for several it was too late, having tried other remedies before seeking medical intervention.   Such patients had accounted for more than 50 percent of deaths.

While making legislative interventions, Thapa had simultaneously supported the local authorities cope with the dire situation; most important was partnering with the local government in setting up fully staffed isolation centres with 25 beds.  These are to be converted to post Covid-management centres at a future date.  Volunteers and other stakeholders had been mobilized to provide proper information to the public and counter disinformation.   While ensuring the basics such as masks were readily available, the ‘health at home’ initiative ensured that only those in urgent need of hospitalisation were admitted; others were cared for and counselled at home, thus reducing congestion in overcrowded hospitals.  Such efforts also help health workers who put in long hours ministering to the sick.

The pandemic, states Rana, has set the tone, and Nepal should prioritise being prepared to face any crisis whether it is in the health sector, political, or any other.   Political leaders must learn to put aside differences and work together; agreements between nations must be implemented, and not limited to just talk.  The issue at hand is post-Covid economic recovery.   National leaders must consider common solutions that would protect the GDP, perhaps issuance of joint visas to workers, ways of boosting tourism.  It is important to be cognizant of the fact that ‘when one is hit, all get hit.’

‘Political ideologies must be set aside’ agrees Thapa and administrations must strive to ensure functionality.  Better understanding between India and Nepal is essential.   And if lockdowns are necessary, for instance, there must be a basis for that decision.  People lose trust if the directives are applied differently for the privileged in society.   Have lockdowns helped prevent the spread of the virus, he asked, alleging that all stakeholders such as local and state governments are not consulted.  Instead, the Chief District Officer (CDO) makes decisions without consultations.’  Employment and education must also be considered.

The coronavirus pandemic says Haidar highlighted the importance of changing priorities.  Nations cannot act in isolation and must recognise their inter-dependency.  Just like the EU or the Central Asian bloc, strong regionalisation is the answer.   It is, she says imperative that nations see issues as everybody’s problem, and not in isolation, and act as one body. (Colombo/July05/2021)

Sri Lanka’s Sampath Bank, David Pieris Automobiles launch vehicle financing partnership

ECONOMYNEXT – Sri Lanka’s Sampath Bank and David Pieris Automobiles are partnering to offer customers preferential vehicle financing and ownership benefits.

Under the collaboration, customers purchasing vehicles through David Pieris Automobiles will receive a 0.5 percentage point reduction on published vehicle lease interest rates, subject to terms and conditions.

They will also have access to vehicle insurance premium loans with no interest if settled within two months, along with Sampath Bank credit cards that carry no joining fee and offer 0% interest instalment plans for insurance payments for up to 12 months.

David Pieris Automobiles, the four-wheeler sales arm of the David Pieris Group and distributor of GWM brands including HAVAL, TANK and ORA, as well as BAIC models, will provide additional customer benefits including free vehicle registration and a third labour-free vehicle service.

The two companies said the partnership reflects a shared commitment to meeting evolving mobility needs through accessible financing and automotive solutions. (Colombo/Oct20/2026)

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Sri Lanka’s Access Engineering drops S Asia logistics hub project, expects Rs1.45bn recovery

ECONOMYNEXT — Sri Lanka’s Access Engineering PLC said shareholders have agreed not to proceed with the South Asia Commercial and Logistics Hub project, following an initial corporate disclosure made in April 2023.

The parties have agreed to enter into a settlement agreement for the orderly termination of the project and all related agreements.

Under the planned settlement arrangements, Access Engineering anticipates recovering approximately 1.453 billion rupees from its total investment of roughly 1.762 billion rupees.

“The decision was made in view of changes in external circumstances, including adjustments to the project’s implementation environment and timetable, together with the respective commercial considerations of the parties,” Managing Director Rohana Fernando said in a filing to the Colombo Stock Exchange.

Access Engineering holds a 15 percent shareholding in South Asia Commercial and Logistics Hub Limited.

Under the settlement terms, the company expects to receive 3.286 million US dollars (equivalent to approximately 1.087 billion rupees) as its proportionate share of the settlement refund.

It will also receive approximately 365 million rupees representing its share of available distributable funds, based on an indicative exchange rate of 331 rupees per US dollar.

In its audited consolidated financial statements for the year ended March 31, 2026, the group had already recognized its share of losses amounting to approximately 387 million rupees, leaving the carrying value of the investment at roughly 1.38 billion rupees.

“Based on the anticipated settlement proceeds and the carrying value of the investment, no further material financial loss is presently anticipated in the Group’s consolidated financial statements,” Fernando said.

However, because the investment is carried at cost in the company’s separate financial statements, Access Engineering expects to recognize a company-level loss of approximately 310 million rupees.

The company noted that the final figures remain subject to the exchange rates applicable on actual transaction or payment dates, final settlement arrangements, and applicable accounting adjustments. (Colombo/Oct20/2026)

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Sri Lanka rupee weaker at 331.75/90 to US dollar spot, bond yields higher

ECONOMYNEXT – Sri Lanka’s rupee was quoted at 331.75/90 to the US dollar in the spot market on Tuesday, weaker from 331.60/70 the previous day, while bond yields were quoted higher, dealers said.

A bond maturing on 15.09.2029 was quoted at 11.10/30 percent, up from 11.10/25 percent.

A bond maturing on 01.08.2030 was quoted at 11.65/70 percent, up from 11.50/60 percent.

A bond maturing on 01.12.2031 was quoted at 11.90/12.00 percent.

A bond maturing on 15.01.2033 was quoted at 12.25/35 percent, up from 12.25/30 percent.

A bond maturing on 15.06.2034 was quoted at 12.50/55 percent, up from 12.40/50 percent.

The telegraphic transfer rate for the dollar was 327.10 buying, 336.10 selling; the euro was 364.3987 buying, 378.1795 selling; pound was 434.5676 buying, 448.6760 selling.

On the Colombo Stock Exchange the All Share Price Index was down 0.09 percent, or 18.32 points, at 20,041; while the S&P SL20 was broadly unchanged at 5,701. (Colombo/Oct20/2026)

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Global financial markets face rising risks from AI, bond yields, and cyberattacks: IMF

Financial markets have remained resilient amid solid economic growth and strong corporate earnings, while financial conditions have been relatively accommodative. However, there is no room for complacency.

Three key risks have been increasing, each with the potential for broader implications: an artificial intelligence-driven market correction, a sharper rise in sovereign bond yields, and cyberattacks.

Vulnerabilities beneath the surface could determine how damaging the manifestation of these risks would be, as we detail in the latest Global Financial Stability Report. An AI market correction could trigger broad deleveraging across asset classes. A bond yield shock could reprice assets and reduce the collateral value of bonds in financial transactions. A cyberattack could disrupt critical operations and weaken confidence. High borrowing, scarce liquidity, and tighter links across markets could amplify the impact into broader financial stress.

Heavy reliance on AI

AI has become an important support for the global economy and financial markets, as discussed in the World Economic Outlook. Investment in data centers, semiconductors, and related infrastructure has spurred economic activity, while companies driving the AI boom have delivered exceptional earnings growth. But faltering AI investment and profitability could challenge optimistic expectations and trigger a correction in asset prices linked to the AI industry.

Growing leverage could be a catalyst for such a correction. Hyperscalers, as the largest data center operators are known, are borrowing more and more, while investors have been leveraging to invest in AI stocks. Circular financing arrangements in the AI sector, involving equity and debt flows between AI firms, suggest that stress at key companies receiving investment could lower revenue forecasts and investment valuations, which in turn would weaken the value of the accumulated debt in those deals. Our review of 14 such transactions since 2023 found about $300 billion in equity investments and $650 billion in debt, in exchange for $1.4 trillion in future revenue commitments.

Government debt risks

Sovereign bond yields have risen amid renewed inflation pressures from higher energy prices, fiscal concerns, and, in some cases, stronger-than-expected economic growth. It may be the case that bond yields are moving back toward the levels seen before the global financial crisis, when growth and inflation were higher than in the 2010s. At the same time, risks of adverse feedback loops related to higher fiscal imbalances and leveraged trades in bond markets are increasing. In addition, as central banks have been reducing their balance sheets, greater reliance on price-sensitive investors could contribute to further yield volatility.

As government bonds underpin the global financial system, the consequences of higher sovereign yields could extend well beyond public debt. Higher yields could further raise discount rates and depress valuations across other assets, including those that are AI-related, while reducing the value of bonds used as collateral.

Cyberattacks

As finance becomes more digital and interconnected, cyber disruptions have emerged as a growing source of systemic risk. A major incident could disrupt payments, trading, access to deposits, or other critical financial services. The danger is particularly acute if an attack affects a major financial institution, payment system, cloud provider, or software platform, allowing disruption to spread through an increasingly interconnected financial system.

Importantly, cyber threats can be hard to contain. In more than 70 percent of reported cases so far this year, software providers had almost no time to patch vulnerabilities before attackers exploited them. That’s more than double the share in 2021, when providers typically had close to 300 days to fix vulnerabilities. Frontier AI models could accelerate both attacks and defenses, increasing the importance of cyber resilience, incident reporting, crisis preparedness, and oversight of critical third-party providers.

Financial fault lines

Underlying vulnerabilities could amplify the impact of these three risks into systemic events.

Although global banks, the core of the financial system, remain resilient overall under our adverse stress scenario, there could be weak links. Banks with 22 percent of global banking assets would emerge with post-stress capital ratios below regulatory limits, an increase from 18 percent a year ago. Moreover, the links of such banks with nonbank financial intermediaries are deepening, creating additional channels for transmitting stress.

Beyond banking, pension funds and insurers have steadily increased allocations to illiquid assets and derivatives, while relying more heavily on the same asset managers. This increases the risk that at a time of stress, they could face sudden liquidity needs through margin calls and could react in similar ways—for example by selling the same assets—amplifying market moves. Some of these institutions also hold illiquid private credit, another potential amplification channel.

At the same time, as borrowers have become more leveraged, some direct-lending funds have committed to provide funding on demand. If financial conditions tighten, borrowers could draw on those facilities just as the funds that provide them could be facing their own liquidity pressures. Such dynamics could further reduce credit to companies that need it most, with consequences for the broader economy.

In emerging and developing economies, bond yields have also risen, although their spreads compared with their advanced economy peers remain fairly compressed. However, recent global shocks have diminished buffers, thereby increasing external vulnerabilities and reducing their ability to absorb stress.

Policies to safeguard

With government debt high, inflation pressures re-emerging, and higher borrowing costs, policymakers have much less room to support the economy following shocks than in the past.

We see three priorities for action:

-Debt needs to be put on a sustainable path.
– Leverage and liquidity mismatches in AI, private credit, and other nonbank financial sectors should be limited, including through sectoral capital and concentration requirements on banks’ exposures to these sectors.
– Cyber defense capabilities need to be strengthened, for example through better incident reporting and resilience testing among financial institutions.
Emerging and developing economies should also rebuild buffers while financial conditions remain accommodative. Proactive policies are the best way to prepare as risks are rising.

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Sri Lanka rupee closes weaker at 331.60/70 to US dollar spot, bond yields higher

ECONOMYNEXT – Sri Lanka’s rupee closed at 331.60/770 to the US dollar in the spot market on Monday, weaker from 331.25/35 the previous day, while bond yields closed higher, dealers said.

A bond maturing on 15.09.2029 closed at 11.10/25 percent, up from 11.05/15 percent.

A bond maturing on 01.08.2030 closed at 11.50/60 percent, up from 11.40/50 percent.

A bond maturing on 15.10.2030 closed at 11.65/75 percent, up from 11.50/55 percent.

A bond maturing on 01.02.2031 closed at 11.75/80 percent, up from 11.55/65 percent.

A bond maturing on 15.12.2032 closed at 11.90/12.10 percent, up from 11.80/90 percent.

A bond maturing on 15.01.2033 closed at 12.25/30 percent, up from 11.95/12.05 percent.

A bond maturing on 15.06.2034 closed at 12.40/50 percent, up from 12.20/25 percent. (Colombo/Oct19/2026)

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Sri Lanka shares close down on Monday; ASPI falls 0.62-pct

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed down on Monday, CSE data showed, with the benchmark All Share Price Index falling 0.62 percent.

The ASPI was down 125.63 points at 20,059.42, while the more liquid S&P SL20 was down 0.51 percent, or 29.36 points, at 5,709.47.

Raynal Wickremeratne, Head of Research and Strategy at NDB Securities, noted that market turnover remained low, with local sentiment reflecting the recent volatility and declines across regional Asian markets.

Positive contributors to the ASPI were Watawala Plantations (up 2.43 percent at 46.40 rupees), Richard Pieris and Company (up 1.54 percent at 26.40 rupees), Ceylon Cold Stores (up 0.62 percent at 122.00 rupees), and Commercial Bank of Ceylon (up 0.13 percent at 198.25 rupees).

Dialog Axiata (down 2.27 percent at 43.00 rupees), Overseas Realty (Ceylon) (down 2.00 percent at 49.00 rupees), John Keells Holdings (down 1.67 percent at 17.70 rupees), Hemas Holdings (down 1.29 percent at 30.50 rupees), and Hatton National Bank (down 0.79 percent at 375.00 rupees) were top negative contributors.

Market turnover was 680.32 million rupees. The banking sector led turnover with 188.71 million rupees, followed by capital goods with 177.78 million rupees.

Crossings were recorded in Seylan Bank for 98 million rupees and John Keells Holdings for 26 million rupees. (Colombo/Oct19/2026)

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