Kathmandu. The election has given a clear majority to the Rastriya Swatantra Party (RSP). At the same time, along with the country’s political discourse, the economic sector is also beginning to focus on new expectations.
A stable government is an important achievement for a country that has been entangled in a cycle of political instability for a long time. For this reason, the mandate is seen by many as a possible beginning of economic reform and policy stability.
The last three decades have been marked by continuous instability in Nepal’s political history. The series of government changes was so rapid that long-term economic plans could not be effectively implemented.
The lack of policy continuity weakened the investment climate, while large development projects were repeatedly subjected to political tug-of-war. This is the reason why sectors such as industry expansion, production growth and export promotion could not move forward as expected. Although the economic growth rate has been encouraging at times, its base has not been structurally strong.
Nepal’s current economic structure also reflects this problem. A large part of the economy is dependent on remittances from foreign employment, while the manufacturing and export sectors are weak. The trade deficit has been continuously expanding as the dependence on imports has increased. In such a situation, efforts to reform the economy have not been effective due to the increase in political instability. Therefore, the lack of a stable government has long been highlighted as a major impediment to economic progress.
The new mandate offers the possibility of political stability, at least for a while. It is expected that the continuous game of government formation and dissolution will come to an end if a single party government is formed. In such a situation, policy decisions can be taken with a long-term vision and development programs are likely to move forward without hindrance. The stable environment is also expected to encourage the private sector to expand investment.
Nepal’s economy is now at another critical juncture. The country is preparing to be upgraded from the category of least developed country to developing country. While this change will create new opportunities, it will also increase the pressure of competition. The need to increase production capacity and export competitiveness will be more acute as subsidized trade facilities will gradually decline. Therefore, there is a need for the new government to restructure its economic policy with a long-term vision.
Job creation is one of the most critical economic challenges of the day. Every year, a large number of young people are entering the labor market, but not enough opportunities have been created in the country. This is the reason why foreign employment has become a major option for Nepali youths. But it is becoming clear that this model cannot be a sustainable economic solution. Long-term stability of the economy is not possible without a strategy to create jobs within the country by expanding production, industry and service sector.
On the other hand, the banking system has accumulated a large amount of investable capital. However, due to policy ambiguity, administrative hassles and market uncertainties, the capital has not been able to flow to the productive sector. If the government can build a clear economic policy, a stable regulatory environment, and an investment-friendly structure, this capital can be used for industrial development and infrastructure development.
Capital market reform is also becoming an important part of the current economic agenda. In recent years, the number of investors in the capital market has increased significantly. However, questions about market management, regulatory capacity and transparency remain. The capital market can be made an important means of long-term investment mobilization if reforms are implemented to strengthen the regulatory structure, modernize and make the market technology-friendly, and protect the interests of investors.
At the same time, Nepal is also facing challenges related to the international financial system. There is growing pressure to meet international standards on financial transparency and anti-money laundering. If these reforms are not carried out in time, there is a risk that relations with international financial markets could be affected.
In this context, the biggest challenge for the government will be to use the mandate of the current majority as an opportunity for economic reforms. Stability is not a sufficient achievement in itself; It will have meaningful results only if it can be translated into policy reforms, production expansion and job creation. Otherwise, there will always be a risk that the opportunity for political stability will go beyond the expectations of the past.
