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The Donald Trump administration is yet to decide the fate of the ongoing projects under MCC. 

Issuing a press statement, the US Embassy in Kathmandu said:  “In February 2025, the Secretary of State approved a specific exception to the 90-day pause on US foreign assistance for the MCC Nepal Compact, while the US government review on US foreign assistance continues.” 

Under this exception, the MCC Nepal Compact is authorized to continue with full implementation. MCC and the US mission in Nepal continue to engage stakeholders in support of a constructive outcome of the review, the statement said.

The US. Embassy added MCC is working closely with the Ministry of Finance and MCA-Nepal to ensure that the activities undertaken or initiated under the compact, including potential new obligations, are aligned with US and Nepal’s priorities and ensure transparency, sound governance, effective delivery, and prudent risk management.

The US Embassy also reaffirmed America’s commitment to its bilateral relationship with Nepal and supporting the Nepali people through efforts that promote prosperity and long-term economic resilience. 

The invention of the printing press by German inventor Johannes Gutenberg in the mid-15th century revolutionized the mass distribution of knowledge and information, significantly transforming the practice of politics. More than five centuries later, we are witnessing a similar technological upheaval with the explosive rise of generative artificial intelligence (AI), which is reshaping every sphere of society, including politics and democracy, at an even greater and more profound scale. While the Gutenberg press enabled the spread of knowledge, generative AI can not only disseminate information but also produce vast volumes of text, video, audio and images without human input. 

However, unlike previous communication technologies of the past 500 years, AI is a double-edged sword for democracy. Used responsibly, it can strengthen democratic systems. Misused, it could seriously undermine them. The impact of AI on democracy is complex and multifaceted. When harnessed properly, AI can enhance civic engagement, voter education, governance, election transparency and integrity. Democratic governments can use AI to solicit public input on policy matters or gather feedback during decision-making processes. Around the world, AI is transforming election campaigns and automating electoral procedures. In Nepal, the government could use AI-enabled platforms to gather public feedback on its proposed AI policies and regulations. AI can also serve as a tool to combat fake news, disinformation and misinformation which undermine democratic institutions and erode public trust. Moreover, AI has the potential to reduce election costs for both the state and political parties, minimizing the influence of money and muscle in shaping voting behavior.

At the same time,  AI also presents serious threats to democracy. Deep fakes, AI-generated content that convincingly mimics real people and events, are already blurring the lines between truth and fake.  In Nepal, a flood of AI-generated misinformation is spreading across social media, targeting politicians and political parties, and eroding public trust in the political system. Unfortunately, there has been little research or public debate on this issue, even as malicious actors continue to exploit these tools to manipulate opinion.

There is no concrete data yet on the extent of misinformation and disinformation in Nepal’s 2017 and 2022 elections. However, it is clear that these issues will significantly affect future polls. Candidates with greater financial and technological resources are likely to benefit disproportionately. This will widen the gap between the powerful and the under-resourced.

In the recent 2024 and 2025 elections in countries like India, the US, Germany and across South Asia, AI-generated false content was widely circulated to influence voters. While high levels of digital literacy in some of these democracies may have mitigated the impact, countries like Nepal, with lower digital literacy, remain highly vulnerable to such tactics. Additionally, Nepal faces the risk of Foreign Information Manipulation and Interference (FIMI), as observed in recent elections in India, the US and Taiwan, due to its geopolitical factors and the preference of big powers over one party over other to advance their strategic interests. Some signs of FIMI were observed during the debate over the Millennium Challenge Corporation (MCC) between 2019 and 2022. However, this remains to be independently verified.

Due to low digital literacy, many in Nepal are unable to recognize AI-generated fake content which shapes public opinion and even influences top politicians. For instance, senior leader Bam Dev Gautam once called on Prime Minister KP Sharma Oli to resign based on a fake video. In such a context, AI is more likely to exacerbate democratic vulnerabilities unless strong regulation is put in place. 

Deliberations are underway across the world about AI governance and regulation. While the European Union, Germany and the United Kingdom have made some progress, even their approaches are struggling to keep pace with the rapid evolution of AI. In 2024, the United Nations emphasized the need for a global AI regulatory body. A UN report noted that if AI-related risks grow more severe and concentrated, the world may need a stronger international institution with monitoring, enforcement and accountability powers.

Nepal is still in the early stages of AI governance. Even though AI adoption in sectors like health, education and governance is increasing, the unchecked use of AI for spreading misinformation has been a concerning issue for the country. Although the government has drafted the National Artificial Intelligence Policy, 2025, public awareness has remained low. Feedback from stakeholders has also been mixed. The policy envisions establishing a National AI Council, AI Regulatory Body and an AI Excellence Center.  However, there has been delay in preparing legal and institutional frameworks to set up these institutions. Moreover, the draft policy misses some crucial aspects of AI regulation.

Globally, companies like Microsoft, Amazon and Google dominate the market for cloud computing resources used to train and deploy AI models. In Nepal, AI systems are likely to be controlled either by government agencies or by corporate entities close to power. In this context, time has come to discuss the idea of publicly-owned AI, developed and managed for the collective good. We must also begin discussions on creating a democratic, robust and transparent institution to govern AI in the national interest.

To make this a reality, the government must invest in AI capacity-building, including training human resources capable of leading AI governance. To reduce the harms and maximize the benefits of AI in democratic systems, state institutions must act now. In particular, the Election Commission should develop specific policies and infrastructure to safeguard upcoming elections from AI-enabled threats and malign actors seeking to erode democracy.

China has established the International Organization for Mediation (IOMed), marking it the world’s first intergovernmental legal body dedicated to resolving international disputes through mediation. The signing ceremony, held last week in Hong Kong, saw the participation of Nepal’s Foreign Minister Arzu Rana Deuba, alongside around 400 high-level representatives from 85 countries spanning Asia, Africa, Latin America and Europe.

Designed to function similarly to the International Court of Justice and the Permanent Court of Arbitration in The Hague, IOMed is positioned as a potential alternative to the World Trade Organization (WTO). China has actively encouraged Nepal to join the organization at the earliest. During a sideline meeting at the event, Chinese Foreign Minister Wang Yi expressed his hope that Nepal would soon become a member, emphasizing the opportunity to jointly contribute to enhancing global governance.

While Minister Deuba did not offer any commitment to being a member-state, Nepal’s participation in the event is meaningful. Observers say it signals that Nepal could join the Chinese initiative in future. 

According to Xinhua, China’s state-run news agency, Wang Yi noted that more than 80 countries and nearly 20 international organizations sent representatives to the ceremony. He highlighted that this strong turnout demonstrates broad international support for mediation as a dispute-resolution mechanism, one that aligns with the interests of developing countries and adheres to the principles of the UN Charter.

The organization operates across three key areas. First, it provides mediation services for disputes between states, submitted by mutual consent. Official documents explain that such disputes must not be excluded by a concerned state through a formal declaration, nor may they involve a third state without its prior approval.

Second, IOMed facilitates mediation for commercial or investment disputes between a state (or an international organization) and private entities from another state, again requiring mutual consent. Third, it offers mediation for disputes arising from international commercial relationships between private parties.

China began laying the groundwork for IOMed in 2022, collaborating with like-minded nations to issue a joint statement. From South Asia, Sri Lanka and Pakistan are among the founding members, alongside Algeria, Belarus, Cambodia, Cameroon, China, Côte d’Ivoire, Djibouti, Equatorial Guinea, Ethiopia, Gabon, Indonesia, Laos, Madagascar, Serbia, Sudan, Thailand and Zimbabwe.

The organization promotes mediation as a flexible, cost-effective and efficient means of resolving disputes, emphasizing a party-driven approach. Chu Kar-kin, a member of the Chinese Association of Hong Kong and Macao Studies, in an interview with The Global Times, described IOMed as a “new chapter in global dispute resolution,” underscoring its role in fostering peaceful and harmonious settlements.

Chinese Foreign Minister Wang reiterated China’s longstanding commitment to resolving differences through mutual understanding, dialogue and win-win cooperation.

Tian Feilong, a law professor at Minzu University of China, told Global Times that IOMed reflects China’s traditional legal culture, which prioritizes consensus and reconciliation over adversarial litigation. This approach, he argued, strengthens international cooperation and social capital, distinguishing it from Western legal mechanisms rooted in confrontation.

He further noted that IOMed embodies the spirit of internationalism and the vision of a "community with a shared future for mankind," reinforcing rule-of-law principles in global governance. By championing mediation, China seeks to offer a more collaborative and inclusive model for resolving international disputes, aligning with its broader diplomatic philosophy.

Seventeen years ago, on this day, then Home Minister Krishna Prasad Sitaula was negotiating with King Gyanendra Shah to ensure a smooth transition from monarchy to republic. The following day—May 29, 2008—the first meeting of the Constituent Assembly (CA) decided to abolish Nepal’s 249-year-old monarchy.

Since then much water has flowed under the Bagmati bridge, yet royalist forces are now mobilizing for what they call a “decisive movement” to restore the monarchy and Hindu state. Meanwhile, republican forces are preparing to celebrate Jestha 15 (May 29) as Republic Day, showcasing their strength. With royalist groups gearing up for a “final showdown” and the CPN-UML-led republican camp vowing to counter them, there are fears of potential violence in Kathmandu.

On Tuesday, top royalist leaders met with a group of editors to assure their upcoming protests would remain peaceful and non-violent. Rastriya Prajatantra Party (RPP) Chairperson Rajendra Lingden said: “Our Kathmandu-centric protests, beginning May 29, will be a form of civil disobedience—peaceful and non-violent.” He also urged the press to objectively monitor their protests to ensure accountability if violence erupts.

The previous royalist protest in Kathmandu on March 28 had turned violent, resulting in two deaths, vandalism of businesses, and an arson attack on Annapurna Media Network. Royalist forces blame government agencies for the violence.

Lingden also criticized Prime Minister KP Sharma Oli’s recent call to his cadres to “seize Kathmandu Valley for a few hours,” on May 29, warning that such remarks could incite unrest. The RPP chairman was joined by veteran royalist leaders Kamal Thapa, Navaraj Subedi, and Keshar Bahadur Bista. They all emphasized their commitment to peaceful protest while demanding their constitutionally protected right to protest. 

There is growing curiosity about the scale, influence, and sustainability of the royalist movement. Why are they so confident this time? Kamal Thapa, chairman of Rastriya Prajatantra Party-Nepal, said: “After 2006, this is the first time all parties and groups advocating for monarchy and a Hindu state have united.” He claimed 45 parties and factions—led by Panchayat-era leader Subedi—have joined the movement, capitalizing on what they see as the most favorable political climate in 17 years. The upcoming royalist protest follows a series of consultations with former king Gyanendra, who has increasingly encouraged supporters through public statements. Recently, he held a luncheon meeting with senior royalist leaders to discuss the movement. Those who met him reported unusual confidence from Gyanendra about the monarchy's possible revival.

Asked how royalists plan to achieve their goals—including constitutional amendments requiring a two-thirds parliamentary majority—Thapa responded: “Our strategy is mass mobilization, pressuring the political establishment to negotiate.” He argued the same method was adopted during the political changes of 1990 and 2006.

However, government and major political parties are in no mood to talk with the royalist forces stating that those who will go against the constitution will be punished. Thapa said while the 2015 Constitution permits peaceful advocacy, the government is amending laws to criminalize pro-monarchy and Hindu-state agendas. 

Despite the show of unity, internal coordination remains unclear, particularly regarding leadership of the May 29 protest. RPP leaders admit that the psychological impact of March 28 violence has dampened morale of party cadres and monarchy supporters alike, which could potentially reduce the May 29 turnout. The government has filed cases against 61 individuals, including RPP leaders Rabindra Mishra, Dhawal Shumsher Rana, and protest “commander” Durga Prasai in connection to the March 28 violence. 

Still, royalist parties have vowed to continue their peaceful movement until their demands are met, but major parties remain unlikely to compromise. Their core demands include: restoration of the monarchy, reinstatement of Nepal as a Hindu state, and abolition of federalism.

Despite their call for restoration of the monarchy, not all royalist parties appear keen on putting Gyanendra back on the throne. Thapa said: “If there is a consensus among the political parties, Hridayendra (grandson of Gyanendra) could be king.”

With limited street power and minimal parliamentary influence, the royalist movement faces dim prospects. This time, the push seems driven by Gyanendra’s pressure rather than genuine momentum. The overall tone of Tuesda’'s interaction with editors revealed royalists’ persistent fear of another March 28-like violence, casting doubt on their ability to sustain a peaceful campaign.

The growing public support for the reinstatement of the monarchy and Hindu state reflects the failure of the current political system to meet people’s expectations in the aftermath of big political changes. It signals that the dramatic political changes between 2006 and 2015 have failed to deliver on the promises of stability, inclusion and economic opportunity. In less than a decade, Nepal transitioned from a monarchy to a federal democratic republic, from a Hindu kingdom to a secular state, and from an exclusionary to an inclusive governance framework. These changes raised hopes that democratic transformation would lead to economic progress and political stability. But nearly a decade later, those expectations have largely remained unfulfilled. The resulting disillusionment has opened the door for royalist forces to re-enter the political stage to advance their long-standing agendas. 

Departure from the past

While royalist protests are not new, recent developments mark a significant departure from the past. On March 9, former King Gyanendra returned to Kathmandu after a week-long vacation in Pokhara. An estimated 14,000 people gathered to welcome him at the airport—likely the largest pro-monarchy rally since the monarchy was abolished in 2008. This show of support alarmed mainstream political parties, especially in light of the rising unrest seen in other South Asian countries mainly like Bangladesh and Sri Lanka.  For the first time, major political parties see treating the royalist movement as a serious threat. On March 28, a large pro-monarchy demonstration in Kathmandu turned violent, resulting in two deaths and extensive property damage. The government responded with a crackdown, arresting several leaders of the movement. Although this initially weakened the protest, royalists have since regrouped and announced an indefinite protest in Kathmandu from May 29.

Why is the call for monarchy growing?

There are multiple reasons behind the growing surge of pro-Monarchy protests.

First, although all governments formed after the 2015 constitution came through free and fair elections, meeting the basic criterion for democratic legitimacy, they have failed to deliver governance, economic development and public services. Corruption, inefficiency and lack of accountability have disillusioned voters. Though the system has electoral legitimacy, it lacks performance legitimacy which is equally important for the sustainability of any political system.

There is growing disappointment with the key leaders of major political parties who were once admired for their role in bringing democracy. Many now see them as entrenched in power, having dominated politics for over three decades without delivering meaningful changes. After the promulgation of the constitution in 2015, the public hoped that political parties would reform, become more democratic internally, and respond better to people’s needs. 

However, those hopes were dashed. 

The 2022 election signaled a public desire for alternatives to traditional political forces. New parties and some independent candidates emerged with unexpected success. For instance, the Rastriya Swatantra Party (RSP) became the fourth largest party in parliament with a platform focused on governance reform. In Kathmandu and Dharan, independent candidates won the mayoral race, defeating the common candidates of major political parties. Similarly, developments were seen in the Tarai-Madhesh region where new forces gained ground. However, these new parties could not form a government due to insufficient parliamentary numbers.  Feeling threatened, the traditional parties began consolidating power to resist these emerging forces. In July 2024, two largest parties in parliament, Nepali Congress (NC) and CPN-UML, formed a coalition government, promising political stability and development. However, the alliance has already become unpopular due to its failure to deliver on those promises.

Second, there was a hope that major political changes would open up economic opportunities for the people. However, those expectations have largely gone unmet, and instead, the country’s economy has further stagnated. While moderate economic growth might have helped support the transition to a republic, the economy has failed to gain momentum. Many believe that the federal structure further strained the nation’s resources, adding pressure to an already fragile economy. Though economy is not a determinant factor in any democracy, it does play a vital role to cement democratic values. 

One of the most pressing issues is the failure to create sufficient job opportunities within the country. As a result, large numbers of Nepalis are going abroad to seek jobs and quality education. Domestic universities, weakened by political interference, have seen a sharp decline in quality. Key sectors of the economy—agriculture, manufacturing and tourism—are underperforming. 

Third, after the adoption of the new constitution in 2015, people hoped that the chronic political instability that has plagued the country since 1990 would finally come to an end. It was widely believed that with political freedom secured, future governments would focus on social and economic development. But instead of evolving in line with the constitution, political parties continued to engage in power struggles, internal factionalism and the politicization of state institutions.  The focus is still on changing governments rather than improving governance. They are putting blame on the current electoral system stating that it would not allow a single-party majority. In a diverse country like Nepal,  we cannot and should not remove the Proportional Representation (PR) system.  But people are not convinced, especially since parties have failed to maintain stable governments even when holding majorities. This persistent instability has bred anger, disillusionment and frustration among the people. As a result, more are now willing to consider undemocratic alternatives, reflected in the growing support for pro-monarchy forces. 

Way forward for parties

This growing support for royalist forces reflects the deepening unpopularity of the major political parties. Former King Gyanendra, who had remained largely silent for years, has recently become more vocal about his intent to return to power, adding to the pressure on these parties.  Over the past few months, Nepal has witnessed an increasingly stark divide between pro-monarchy and pro-republic sentiments, something not seen since the abolition of monarchy in 2008. In response, the current government led by the first and second largest parties in parliament have taken a suppressive approach to deal with pro-Monarchy protests. Rather than resorting to repression, mainstream political parties must focus on delivering real results and addressing public grievances. This is the only suitable way to restore public trust and safeguard the existing political system. Miserable political and economic performances of the successive governments after 2015 or even earlier is the time factor behind the current scenario. Instead of delving into conspiracy theories,  deliver on the promises of stability, inclusion and economic opportunity. 

Pokhara International Airport was in the spotlight this week. China CAMC Engineering, the contractor responsible for building the airport, has strongly rejected a report prepared by a subcommittee of the Public Accounts Committee (PAC), which alleges serious irregularities in the airport’s construction. 

The Chinese state-owned company called the report inaccurate and lacking in professional, objective analysis. Despite this reservation from the Chinese firm, the PAC has decided to forward the report to the Commission for the Investigation of Abuse of Authority (CIAA).

The CIAA now faces the task of investigating the case, using the PAC report as a reference. Several corruption complaints in the airport’s construction have already been registered. However, public confidence in the CIAA remains shaky, with many accusing the constitutional body of selective investigations and of operating under executive influence. 

The report has also sparked political divisions. CPN-UML leader and former civil aviation minister, Yogesh Bhattarai, raised doubts about its findings of the report, while subcommittee chair, Rajendra Lingden, accused the Chinese company of undermining Nepal’s sovereignty through its public response. Disagreements like this have become almost routine when issues involving China, India or the United States arise—whether it’s the Belt and Road Initiative or the Millennium Challenge Corporation—exposing the deep influence foreign powers hold over Nepal’s political parties.

Meanwhile, royalist forces are preparing to launch what they call a “powerful movement” starting May 29. Their demands include restoring the monarchy, declaring Nepal a Hindu state and scrapping the federal structure—a direct challenge to the current federal republican system. It remains to be seen whether the government will engage with the protesters through dialogue or resort to force, as it did during the March 28 royalist demonstrations that turned violent.

Leaders from the Rastriya Prajatantra Party told ApEx that they are preparing to bring thousands of people into the streets of Kathmandu. Former King Gyanendra Shah is said to be backing the campaign, including providing financial support for logistics.

Royalist groups have been reaching out to leaders and cadres within the major parties who may sympathize with their cause, especially those who support the idea of a Hindu state if not the monarchy itself. They approached the Rastriya Swatantra Party (RSP) seeking support. But the RSP reportedly refused to join the movement. The royalists are also reaching out to civil society figures, intellectuals and especially young people, a demographic that largely did not experience Gyanendra’s direct rule.

Compared to previous efforts, the royalists are now employing a broader strategy to rally public support. Still, there are growing fears that the protests could again turn violent. Veteran leftist leader Narayan Man Bijukchhe went so far as to suggest that the movement could escalate into “a war” if India or the United States were perceived as backing efforts to restore the monarchy.

In other developments, the long-running tug-of-war between the Nepali Congress and CPN-UML over the appointment of Nepal Rastra Bank’s governor has ended with Bishwo Poudel taking the helm. Prime Minister KP Sharma Oli reportedly agreed to the appointment after NC President Sher Bahadur Deuba threatened to pull out of the coalition. While Poudel has a strong educational background and extensive experience in national and international institutions, his close ties with the NC—he ran as the party’s candidate in the 2022 elections—have drawn criticism. The appointment may have helped stabilize the coalition for now, though. 

Senior leader of CPN (Maoist Center), Janardan Sharma, met NC President Deuba this week, and Deuba also held a phone conversation with Maoist Chairman Pushpa Kamal Dahal. NC leaders have been quick to tell the media that there are no problems within the ruling alliance. Yet discontent lingers, particularly from the camp of senior leader Shekhar Koirala, whose supporters continue to express dissatisfaction with the government’s performance.

To highlight the impact of climate change in Nepal and other Himalayan nations, the government recently organized the Sagarmatha Sambaad, a high-level climate dialogue. But the event fell short of expectations. Heads of government were absent, and the event was criticized for prioritizing ruling party leaders and cadres over subject matter experts. Media access was blocked, hampering independent reporting. International media outlets also largely ignored the event. 

Former President Bidya Devi Bhandari is making an official visit to China. The trip is seen as politically significant, as she appears to be actively re-engaging in politics. During her presidency, Bhandari cultivated close ties with Chinese leaders and played a key role in pushing forward several of China’s strategic interests in Nepal. Senior UML leaders will accompany her, and speculation is growing that China may quietly support her return to party leadership.

Regionally, India-Pakistan tensions have prompted a diplomatic response. Leaders from India’s ruling Bharatiya Janata Party are visiting Kathmandu, where they plan to meet with political leaders, civil society figures and journalists as part of a broader outreach strategy likely aimed at countering other international influences in Nepal’s shifting political landscape.

The teachers’ protest has finally come to an end after a deal brokered by the newly appointed Minister for Education, Raghuji Pant. Former Education Minister Bidya Bhattarai had resigned earlier, citing health reasons, though many believe her departure was due to disagreements with Prime Minister KP Sharma Oli.

Under the nine-point agreement, some of the teachers’ demands have been met, while others will require legal amendments. The government has breathed a sigh of relief, as ruling leaders feared the movement could be politicized—particularly by the main opposition, CPN (Maoist Center)—and used against them.

Meanwhile, royalist leaders Kamal Thapa, Keshar Bahadur Bista, Rajendra Lingden, and Navaraj Subedi have united, setting aside personal differences. However, the pro-monarchy movement has already lost momentum following the violent protests on March 28. Despite their attempts to rally supporters, the royalist campaign is unlikely to regain traction anytime soon. Their focus has now shifted to securing the release of arrested leaders, including Rabindra Mishra. The government is under pressure to free Mishra and is expected to do so soon.

A parliamentary sub-committee led by Rajendra Lingden has submitted its report to the Public Accounts Committee (PAC), revealing an alleged embezzlement of approximately Rs 10bn during the construction of Pokhara International Airport. However, further investigation is unlikely, given the involvement of top leaders. While the PAC may issue directives to the government and the Commission for Investigation of Abuse of Authority (CIAA), the strong nexus between politicians and bureaucrats means the report will likely be ignored. Some politicians have already begun highlighting flaws in the report, likely to shield high-ranking figures from scrutiny.

Former Prime Minister Baburam Bhattarai visited India to attend a party event and used the opportunity to meet old friends, including former Indian ambassadors to Nepal and Indian Defense Minister Rajnath Singh. His media remarks suggest he sought to dissuade India from supporting any pro-monarchy movement in Nepal. “There was no open discussion about the current coalition, but my sense is that India holds an inconsistent stance—neither comfortable with the current government nor seeing a viable alternative,” Bhattarai told the media. During his India trip, he primarily engaged with former Indian ambassadors who favor Nepal’s existing political system.

Nepali Congress (NC) General Secretary Gagan Kumar Thapa has continued his criticism of the government, accusing ministers of inefficiency. Meanwhile, there has been some progress in shortlisting the candidates for the two transitional justice bodies—the Truth and Reconciliation Commission (TRC) and the Commission on the Investigation of Enforced Disappeared Persons. However, the top three leaders—KP Sharma Oli, Sher Bahadur Deuba, and Pushpa Kamal Dahal—have yet to finalize appointments. A closer look at the shortlist suggests the commissions may lack subject-matter experts, raising doubts about their effectiveness.

On the possibility of government changes, NC President Deuba reaffirmed that the current coalition remains stable. Speaking to reporters upon his return from Thailand, Deuba said that the alliance would last until the next elections. Encouraged by his remarks, Prime Minister Oli called Deuba’s statement a serious blow to those attempting to topple the government. He also told the party lawmakers that the two parties—UML and NC—will handle the government duties amicably. However, growing frustrations within the ruling coalition and Maoist Chairman Dahal’s public statements have fueled speculation about an impending crisis. Remarks by senior NC leaders, including Shekhar Koirala, Thapa, and Bishwa Prakash Sharma, have further muddled the government’s future. A recent report highlighted how the NC’s contradictory positions are contributing to perceptions of political instability.

Ruling parties have yet to agree on the appointment of the Nepal Rastra Bank governor, drawing widespread criticism. The delay sends a troubling signal that such unresolved issues could eventually lead to a government collapse. President Ramchandra Paudel is set to present the government’s policy and program on Friday (May 2), which will be followed by the unveiling of the annual budget. It remains to be seen whether the NC and UML can cooperate on budgetary matters, as past experience suggests such discussions often sow discord within coalitions.

Both the NC and UML have launched campaigns to expand their membership bases. NC leaders report a lack of enthusiasm among local cadres to renew active memberships—a worrying sign. Meanwhile, the UML aims to increase its membership to 750,000 within a year. However, both parties face challenges in attracting new members.

Preparations are underway for the Sagarmatha Sambad, scheduled for May 16–18. The government has branded this as a global dialogue to highlight the impact of climate change on Nepal’s Himalayan region. The Sambad Secretariat has invited over 300 guests, including several heads of government.

The coalition government of the Nepali Congress and CPN-UML, which came to power with the promise of stability, has failed to deliver on its mission. Now, it has become almost a daily mantra for Prime Minister KP Sharma Oli and NC President Sher Bahadur Deuba to assure the public that their coalition remains intact. Every day, Prime Minister Oli seeks reassurance from his colleague Deuba that there is no threat to the government’s survival.

For instance, upon returning from a tour of Thailand, Deuba told reporters that there were no problems within the coalition. Prime Minister Oli has since been using this statement as a reference point to claim that his government is moving ahead smoothly. The two leaders are meeting frequently, but that does not necessarily mean that everything is fine. Tensions could be gradually building between the two parties. A frequently asked question among the media is about the longevity of the government. This has created a public perception that the coalition could collapse anytime, even though it may not happen immediately. It has shaped a widespread belief that even a government formed by the two largest parties has failed to convey a message of political stability.

Amidst this uncertainty, Prime Minister Oli and Deuba held a one-on-one meeting on April 26, although neither side has disclosed what actually transpired. Rumors of government change last week prompted Deuba to call Oli and assure him that the NC’s support remains firm. However, their failure to effectively handle contentious issues has fueled doubts about the coalition’s future. Past examples show how even minor issues have triggered the fall of governments. For instance, it took a long time for the two parties to agree on removing Kulman Ghising from the post of executive director of the Nepal Electricity Authority. A more recent example is the delayed appointment of the Governor of Nepal Rastra Bank due to differences between the NC and UML.

Above all, internal dynamics within the NC pose a major threat to the coalition. The decision to form an alliance with the UML was made without prior discussions in the party; it was largely driven by Deuba and his spouse, Arzu Rana Deuba, who currently serves as the Minister for Foreign Affairs. As a result, many senior NC leaders do not fully own the decision, and two distinct camps have emerged within the party. Leaders such as Purna Bahadur Khadka, NP Saud and Prakash Sharan Mahat favored continuing the coalition with the Maoists and would prefer forming a new government led by the NC. Just a few days ago, Khadka said, “I have told Prime Minister Oli to mend ways and improve the government’s performance.”

Meanwhile, leaders like Shekhar Koirala, Gagan Kumar Thapa and Bishwa Prakash Sharma are positioning themselves as populist figures aspiring to lead the party. Rather than offering unconditional support to the coalition, they view national issues through the lens of their personal political ambitions. For example, they have demanded that the government address the teachers’ demands, even though fulfilling them may not be feasible. At a public event this week, Thapa warned that the party would leave the government if it had to compromise on fundamental party principles.

Furthermore, Koirala and Thapa—both aspiring to become party president and future prime ministers—are working to prevent Deuba from becoming prime minister again. They fear that Deuba could use state power during the party leadership selection process to favor his loyalists. They believe that if the current coalition collapses, it would weaken Deuba’s chances of returning as prime minister. For some time, efforts have been underway to change the NC parliamentary party leader, but Koirala and Thapa themselves are not aligned, viewing each other as competitors for the party presidency—something that strategically benefits Deuba. In addition, there is speculation that some NC leaders are under pressure from India to break the alliance with the UML.

Adding to the complexity, CPN (Maoist Center) Chairman Pushpa Kamal Dahal has reportedly conveyed to senior NC leaders that he is ready to support Deuba as prime minister until the next election, gradually winning over a section of the NC leadership. Deuba’s phone call to Dahal before his departure for Thailand also raised eyebrows within the UML. Previously, Deuba had publicly emphasized that the NC should lead the government, given its emergence as the largest party in the 2022 elections. However, Dahal had refused to support the NC’s claim and instead aligned with the UML to form the government.

Within the NC, there is growing criticism that the coalition between the two largest parties has failed to deliver on its promises. For example, although the two parties had agreed to initiate the process of amending the constitution, they have yet to take any steps. Senior NC leaders say that Prime Minister Oli’s failure to address the country’s pressing issues is fueling public frustration, which has tarnished the party’s image. One NC leader remarked, “We do not feel comfortable staying on in the government with the UML.”

Despite repeated assurances from Deuba, UML and Oli remain uncertain about the NC’s continued support. UML leaders say external forces are actively working to destabilize the government, and at some point, the NC might withdraw its support and form a new alliance with the Maoists, sidelining the UML. This week, Oli also stated that he would not compromise on every issue just to remain in power.