Construction Sector Credit Crosses Rs. 232 Billion with Major Boost in Highway Projects

According to the latest Nepal Rastra Bank (NRB) sectoral credit report for August 2025, total construction sector credit has reached Rs. 232.8 billion, marking a steady expansion driven by major infrastructure and highway development projects across the country. This represents a 0.6% monthly growth, underscoring renewed momentum in Nepal’s construction and infrastructure investment after months of subdued activity.

Out of the total, heavy construction projects — such as highways, bridges, and large-scale infrastructure works — received Rs. 130.9 billion, reflecting a Rs. 2.6 billion increase in a single month. This rise aligns with the government’s ongoing capital expenditure push and the revival of several delayed public projects under the fiscal year 2025/26 budget. Meanwhile, residential construction loans fell by 2.5% to Rs. 71.3 billion, showing weaker demand for private housing and real estate amid elevated interest rates and reduced household purchasing power. Non-residential construction credit, however, rose modestly by 2.5% to Rs. 30.5 billion, mainly due to commercial property and warehouse financing.

Analysts believe this sectoral trend reflects a policy-driven revival of infrastructure-led growth, as the government channels funds into national highways, energy corridors, and urban development projects. However, they also caution that delays in budget disbursement, rising input costs, and sluggish private investment could limit sustained expansion if not addressed soon.