After a long period of political instability, the formation of a single-majority government had raised hopes for economic recovery. Yet, parallel activities within the government are creating fresh uncertainty. Recent tensions between the government and its own lawmakers have raised concerns about internal cohesion, while the handling of economic affairs suggests differences between Prime Minister Balendra Shah and Finance Minister Dr. Swarnim Wagle. The finance minister was absent when the prime minister held discussions with private-sector representatives. Likewise, the absence of the Nepal Rastra Bank governor from a discussion between the finance minister and senior central bank officials sent another troubling signal about coordination among key economic actors. Such incidents reflect a lack of institutional coordination at a time when the economy needs a unified approach. Prime Minister Shah also appeared to take the initiative to scrap taxes imposed on education and health under the Fiscal Year 2026/27 budget through social media posts. He has also held discussions with private-sector organisations without the participation of the concerned ministers. Such practices can blur institutional responsibilities and create confusion over economic policymaking. Finance Minister Dr Wagle has repeatedly assured the private sector that the government will not harass businesses. Yet, reports of police and administrative agencies conducting searches without sufficient evidence and detaining businesspeople until courts order their release have generated frustration. Such actions undermine business confidence and raise questions about the government’s ability to ensure consistent implementation of its policies.
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Nepal’s economy cannot be managed by the prime minister, finance minister or central bank in isolation. Fiscal and monetary policies are closely interconnected. From private-sector engagement and investment promotion to revenue mobilisation, credit expansion and market management, all relevant institutions must work toward common objectives. This is precisely where the government appears to be falling short. The prime minister is holding separate discussions with the private sector, the finance minister is conducting his own consultations and the central bank appears insufficiently coordinated with the political leadership. Such parallel approaches are neither desirable nor sustainable when the economy is struggling to regain momentum. The government must ensure full and effective coordination among all key actors influencing the economy. The prime minister, finance minister, Nepal Rastra Bank governor and other relevant ministers and agencies must communicate regularly, share information and pursue consistent policies. Differences are natural, but they should be resolved through institutional mechanisms rather than allowed to emerge as competing initiatives. Coordination is essential to economic confidence. Businesses and investors need predictability and consistency in government decisions. When senior leaders pursue separate approaches, the market interprets them as signs of policy uncertainty, discouraging investment and weakening economic activity.
Four months into the single-majority government, several economic indicators remain less than encouraging. Credit expansion remains sluggish despite adequate banking liquidity. Private-sector confidence has yet to recover significantly, while government capital expenditure remains weak. Policy ambiguity and poor coordination can only deepen these problems. Political stability alone is not an economic achievement. It must translate into policy certainty, institutional trust, investment and growth. Prime Minister Shah and Finance Minister Dr Wagle may differ in style and approach, but within the government they share responsibility for achieving common economic objectives. Their differences should not undermine government credibility or confuse businesses and investors. The government has a strong parliamentary mandate, but its strength should be measured not by its majority alone but by policy clarity, institutional discipline and the ability to work together. What Nepal’s economy needs now is coordination, coherence and confidence. The government should establish regular coordination among the prime minister, finance minister, Nepal Rastra Bank governor and other key economic actors. They must respect institutional responsibilities, resolve differences internally and present consistent policies to the market. Political stability has provided an opportunity. The government must now turn that stability into economic results through coordinated and coherent action.
