Accessibility links

Nepal’s Political Crisis Paralyzes Economy

  • Aru Pande

Five years after Nepal abolished the monarchy and become a democratic republic, the Himalayan country remains at the center of a political crisis, with elections now postponed to November. The political instability has affected Nepal's economy and people's faith in the country's future.

It’s nearly 5 p.m. and Sunil Lamichhane has yet to make a sale at his new clothing store in downtown Kathmandu. The retailer says Nepal’s political turmoil and its effect on the local economy means less money in people’s pockets for a new shirt or shoes.

“It has directly affected our fashion store. Because fashion comes in third, in terms of priorities, after food and shelter,” he said.

Since the end of the 10-year Maoist insurgency in 2006, the inclusion of the former rebels in the government in 2007 and the abolishment of the monarchy in 2008 - Nepal has been hit with one political crisis after another.

The country has been without a parliament for more than a year, after major political parties missed yet another deadline to write a constitution and reach a consensus on the structure of the government.

The political paralysis has not only hit day-to-day life in Nepal, it’s also deeply affected people’s confidence in their government. A recent poll found that if Constituent Assembly elections were to be held tomorrow, more than 50 percent of the people would not know who to vote for.

Nepali Times editor Kunda Dixit said although it may be optimistic to think that a country can go from civil war to peace and monarchy to republic in a few years without any problems, political leaders have squandered key opportunities to define a new state structure that would lead to stability, development and economic growth.

“Directly in the domestic economy, the fact that politicians cannot agree has led to the third year in a row where we haven’t had a full budget, which has an impact on everything, on infrastructure, on salaries, on long term projects,” he said.

He said the only reason Nepal’s economy has not collapsed was because of the more than $4 billion in remittances sent home by Nepalis working abroad - roughly 22 percent of the country’s gross domestic product.

Deepak Pandey is one of Nepal’s young people who are now considering leaving the country for work.

Frequent strikes called by political parties have made it harder for students to attend classes at his institute. He said many have a difficult time finding a job in Nepal once they finish their education.

“The youth are not feeling secure inside the country due to this instability. They feel like there is no point in even working hard,” he said.

For now, he and other Nepalis look to the November 19 election of a new 491-member Constituent Assembly in the hope that political parties can put aside their differences, come up with a constitution and put the future of their country first.

It’s a hope also shared by neighboring economic giants India and China, who fear any instability in the former Himalayan kingdom could spill over the border.