Two Months in Review: Reform, Resistance, and Engagement

As Nepal navigates a critical moment for its economy and governance, here’s a quick round-up of my key engagements, reflections, and stances over the past two months, from the national budget to broader institutional reform.

🗓️ On Thursday, May 29, 2025, the Government of Nepal announced a total budget of Rs. 1.96 trillion for the upcoming fiscal year. While the overall size may seem aligned with macroeconomic projections, key concerns remain regarding realism, execution, and accountability.

🔹 Budget Size and Macroeconomic Alignment

• The National Statistics Office projects GDP (at consumer prices) to reach Rs. 61.07 trillion, with real growth rate of 4.61%.

• With projected currency appreciation (5.5%) and inflation, nominal GDP could expand by 11–11.5%, crossing Rs. 66 trillion.

• Given these projections, the budget size of Rs. 1.96 trillion is not inherently overambitious. But credibility hinges on execution and past experiences suggest otherwise.

Lets look at the trends:

🔹 Persistent Gaps in Budget Execution

• Historically, Nepal has only utilized around 80% of its budget on average, even during periods of political stability and a relatively conducive environment for implementation.

• Recent example underscores this pattern: as of May 28, 2025, only Rs. 1.23 trillion had been spent from the previous fiscal year’s Rs. 1.86 trillion allocation.

• Nepal’s record doesn’t indicate an expenditure capacity above an average of Rs. 1.50 trillion.

🔹 Mounting Fiscal Pressure

• Foreign grants (ODA) are declining, reducing Nepal’s concessional financing options.

• Tax revenue remains limited and uneven, failing to keep pace with rising expenditure.

• As a result, to meet the expenditure target, government needs to borrow nearly Rs. 600 billion.

• Heavy reliance on loans without structural reforms risks deepening the debt burden without real development outcomes.

🔹 RSP continues to raise a critical question: Does the state have the capacity to deliver what it promises? It advocates for smarter spending, effective delivery, and strong oversight not just larger budgets financed through borrowing.

The current deadlock in Parliament is not political theater. It is a matter of principle. It is about confronting a deeper crisis; the erosion of public trust in state institutions.

RSP continues to take a firm stand demanding accountability in the wake of the visit visa scandal.

Question persists: Why hasn’t RSP given into the agreement between Maoists and the ruling party.

🔹 RSP’s stand is clear:

• RSP and I have taken a principled stand: we will not allow Parliament to proceed as usual while such serious allegations remain unaddressed.

• We demand the formation of a high-level independent or judicial investigation committee to uncover the full extent of this scandal.

• We refuse to let Parliament operate under a cloud of suspicion and denial.

• Until the government shows a willingness to come clean, resuming business-as-usual would be a betrayal of public expectation.

Whether in Kathmandu or abroad, the message is clear: Nepalis are ready for change and they are watching closely. These engagements are not just symbolic; they are strategic. By broadening the dialogue and deepening our connections, we lay the groundwork for long-term collaboration, strengthening our shared vision and keeping the spirit of national unity alive.

1. I traveled to Leicester from London to attend the inaugural convention of the RSP Foreign Nepali Liaison Department. Grateful for the opportunity to engage with our well-wishers and supporters in the area.

2. I had the pleasure to engage in the program of Nepali Contact Forum India held in Miraroad, Mumbai, India.

For more on my interaction:

Nepal Rastra Bank’s recent amendment to the Foreign Investment and Foreign Loan Management Regulations (2078), allowing IT companies to invest up to USD 1 million abroad is more than a technical update. It marks a long-overdue action for the broader reform agenda that I have championed for decades: opening Nepal’s economy to the world, enabling global competitiveness, and empowering emerging sectors like IT to scale beyond borders.

@swarnimwagle_official

नेपालमा डिजिटल उद्योगहरुको सम्भावना.

For years, I have emphasized that digitization and IT are central to Nepal’s growth strategy. (More on this on my previous newsletter: New Source of Growth: Modern Tradeable Services)

Restrictive capital account policies are misaligned with the demands of a modern, export-oriented economy. I have advocated for a pragmatic and risk-calibrated approach to liberalizing outward investment for knowledge-based sectors like IT.

Under my chairmanship at IIDS, our research on the digitization of Nepal highlighted the urgency of enabling our tech ecosystem to connect with global markets.

I’m encouraged to see policy a movement in that direction and confident that this is only the beginning of bigger opportunities for Nepal’s innovators.

• This newsletter is prepared by The Office of Swarnim Wagle, MP.