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At a moment when public trust hinges on economic credibility, Dr. Wagle, the Finance Minister must channel political capital into disciplined, second‑generation economic reforms that convert momentum into measurable prosperity.

Opportunities and Challenges

The appointment of Dr. Swarnim Wagle as Nepal’s Finance Minister represents a rare convergence of intellectual rigor and executive authority. For decades, Nepal has struggled to reconcile reformist aspirations with the inertia of governance. Now, with the Minister Dr. Wagle at the helm, the country stands at a curious juncture: the possibility of translating classy economic theory into disciplined statecraft. The Minister Dr Wagle transition from academic strategist and one of the architects of the Rastriya Swatantra Party’s electoral success to steward of the national treasury has generated profound expectations. The public anticipates not just rhetoric but a decisive break from stagnation, a moment when inclusive microeconomic development can finally be aligned with sustained macroeconomic growth. With the backing of a near two-thirds majority, the Minister Dr. Wagle faces the formidable challenge of converting political momentum into frameworks for industrialization, job creation, reliable connectivity development and technological advancement. If pursued with rigor, this era could propel Nepal beyond the Least Developed Country category, elevate per capita income toward USD 3,000, expand GDP to USD 100 billion, and generate over a million jobs with the RSP 1.0 era. The stakes are immense, and the opportunity historic.

The blossoming tenure of Minister Dr. Wagle reflects a commendable reformist zeal, signaled by the swift repeal of obsolete legislation. However, for this momentum to transcend mere symbolism, it must be anchored in rigorous, data-driven diagnostics. Rushing to dismantle or overhaul administrative arms, such as revenue research agency, without a prior longitudinal evaluation of their functional efficacy risks replicating the institutional failures of previous time. Authentic economic statecraft demands that Nepal move beyond the anecdotal, narrative-heavy advisory reports that have historically dominated the policy landscape. Instead, the Minister Dr Wagle must prioritize a comprehensive assessment of three decades of liberal economic policy and a decade of federalism to provide a legitimate evidentiary foundation for second-generation reforms.

This systemic modernization must extend to the Ministry’s allied agencies including Customs, the Internal Revenue Department, SEBON, Auditor General, Financial Comptroller and the Nepal Rastra Bank, etc., whose rigid, transactional modalities have devolved into bureaucratic bottlenecks, operation barriers and popularized as rent-seeking hubs. Such institutional stagnation has precipitated a stark deindustrialization; as the service sector expands to 62%, the industrial and agricultural sectors continue to contract, with industrial capacity languishing at 44.5%. This structural misalignment is mirrored in a consumption-heavy budgetary framework where recurrent expenditures consistently consume nearly two-thirds of national resources, leaving a disproportionately small fraction for capital formation.

The persistent fiscal crisis is further exacerbated by extreme expenditure seasonality, where 35% of the annual budget is often exhausted in the final month (Ashad), yielding substandard infrastructure and inflated logistical overheads. In the 2081/82 BS period, federal outlays of NRs1.523 trillion significantly outpaced an aggregate revenue of NRs 1.178 trillion, with capital investment restricted to a meager 14.6%. Breaking this cycle of stagnation requires a Herculean overhaul of public revenue governance and a strategic pivot toward merit-based resource allocation. By enhancing banking efficiency and reducing lending costs for micro-enterprises, the government can finally nurture a competitive domestic industrial base, transitioning the nation from an import-dependent economy to one characterized by sustainable, internally driven growth.

Harnessing Endowments, Leveraging Technology

Second-generation reforms must rest on the principle that sustainable GDP growth is inseparable from the quality of human capital. Investments in education, healthcare, connectivity, domestic tourism, agriculture, and public security are essential to broadening the middle class while institutionalizing a safety net for the disenfranchised. Externally, mobilizing diaspora capital through streamlined conduits and project-specific banks tailored for Non-Resident Nepali investment will be critical. Restoring private-sector confidence after recent political unrest requires legislative protections and treasury policies that prioritize investment security. Yet the state must avoid pampering private actors into dependency on subsidies and incentives. By fast-tracking national pride projects such as the Budhigandaki Hydropower, roads network and the Naumure Multipurpose Project of Dang, using modern resource mapping and input-output analysis, the Minister Dr. Wagle can move beyond the uninspired methodologies of the past. The Minister Dr Wagle’s success will depend on remaining focused on high-value targets that can finally deliver Nepal’s long-awaited developmental horizon.

Second Generation Economic Reform policy must be rooted in Nepal’s unique endowments, strategically aligning comparative advantages with the linking to the power of knowledge and technology. Integrated towns/cities that connects people and places, infrastructure that fosters dense networks of trade, commerce, and identification of high-impact sectors capable of immediate import substitution are essential. Central to this shift is an energy policy that pivots from exporting raw electricity to high-value domestic end use energy. By leveraging river basins for niche agriculture, tourism and prioritizing energy-intensive industries such as data centers, crypto-mining, manufacturing and processing hubs, Nepal can transition toward a climate-resilient economy. This transformation, however, depends entirely on efficient, transparent, and predictable governance within the government. Delivering on the RSP’s electoral manifesto requires ruthless commitment to overhauling public service delivery, ensuring safety nets and public goods and services are reliable. The public expects the RSP to remain untainted by corruption, and this demands rigorous internal orientation, continuous knowledge development, and a strategic distance from excessive foreign entanglement. Leaders must remain embedded within their constituencies, maintaining transparent communication with the people who granted them their mandate.

Test of Execution

Ultimately, the success of the Minister Dr Wagle will not be measured by rhetoric but by the tangible expansion of the middle class and the clinical execution of national mega-projects. As a leading development economist, the Minister Dr. Wagle must act as a hunter of structural economic reform rather than a passenger in a stalled bureaucratic carriage. To rely on narrative driven recommendations of the past(Report from the High Level Economic Advisory Committee) would be to squander this historic moment. The path to a USD 3,000 per capita income and a USD 100 billion GDP requires ruthless commitment to data-driven policy, institutional integrity, effective governance and a social contract that finally delivers prosperity for every Nepali citizen.Nepal has waited decades for this alignment of intellectual vision and political authority. The question now is whether the Minister Dr. Wagle can seize the moment, discipline the machinery of governance, and deliver the impactful change that the present demands. If the Minister Wagle succeeds, this will not simply be a chapter in Nepal’s economic story; it will be the beginning of a new era. – The end-

Ayush R. Arjyal holds a Master’s degree in Economics, specializing in public economic planning and fiscal federalism. He is affiliated with Baya Himalaya, a Kathmandu-based policy research and development firm. The views expressed are solely authors.

Nepal's former Home Minister Ramesh Lekhak has been arrested from his Katunje-based residence in Bhaktapur on Saturday

According to a source, an arrest warrant was presented to him before taken into custody. 

He was arrested while implementing the report of the inquiry commission formed to investigate the Gen Z protest held on September 8 and 9.

A total of 77 people were killed-many of them protesters shot by police- during the protests, which also resulted in the destruction of government and private property worth billions of rupees.

ALSO READ: Nepal’s former PM KP Oli arrested following inquiry commission report

Police have also arrested former Prime Minister and CPN-UML Chairman KP Sharma Oli in the same case. 

The arrests were made shortly after a high-level meeting involving Prime Minister Balen Shah, Rastriya Swatantra Party President Rabi Lamichhane and Home Minister Sudan Gurung. 

Immediately after the meeting, Home Minister Susan Gurung directed Inspector General of Police Dan Bahadur Karki and Inspector General of Armed Police Force Raju Aryal to arrest Oli and Lekhak. 

Meanwhile, CPN-UML Secretary Mahesh Basnet has criticized the arrest of former Prime Minister KP Sharma Oli and former Home Minister Ramesh Lekhak, calling it an act of political revenge and prejudice.

In a social media post, Basnet criticized the current government led by Prime Minister Balendra Shah, particularly the appointment of Home Minister Sudan Gurung, describing it as controversial and inexperienced.

Calling for action, Basnet urged party members and supporters to participate in demonstrations to safeguard democratic values and oppose what he described as “revenge politics.” He added that further details of the protest program would be announced following a party secretariat meeting scheduled for the morning.

Police on Saturday arrested Nepal's former Prime Minister and CPN-UML Chairman KP Sharma Oli from his Gundu-based residence in Bhaktapur. 

An arrest warrant was handed over to Oli before he was taken into custody, according to SP Surys Bahadur Khadka, Chief at the District Police Range, Kathmandu.

A police team had reached his residence at 5 am today to arrest him.

Authorities said that he was detained while implementing the report of the inquiry commission formed to investigate Gen Z protests held on September 8 and 9.

A total of 77 people were killed-many of them protesters shot by police- during the protests, which also resulted in the destruction of government and private property worth billions of rupees.

The move follows the Cabinet decision taken on Friday to immediately implement the commission's recommendations. 

Government spokesperson and Minister for Education, Science and Technology Sasmit Pokharel had said that the first Cabinet meeting held under the headship of  Prime Minister Balendra Shah in Singha Durbar on Friday had decided to implement the issues recommended by the inquiry commission.

The meeting had also decided to form a study committee to examine issues pertaining to the security mechanisms involving individuals and bodies named in the report and act in accordance with the recommendations submitted by the committee, and to direct the concerned bodies to promptly act on the recommendations made by the commission in the case of others.

Following the decision, Home Minister Sudhan Gurung directed Inspector General of Police Dan Bahadur Karki and Inspector General of Armed Police Force Raju Aryal to arrest UML Chairman Oli and Nepali Congress leader Ramesh Lekhak.

ALSO READ: Nepal’s former Home Minister Ramesh Lekhak detained

Meanwhile, UML Secretary Mahesh Basnet has criticized the arrest of former Prime Minister KP Sharma Oli and former Home Minister Ramesh Lekhak, calling it an act of political revenge and prejudice.

In a social media post, Basnet criticized the current government led by Prime Minister Balendra Shah, particularly the appointment of Home Minister Sudan Gurung, describing it as controversial and inexperienced.

Calling for action, Basnet urged party members and supporters to participate in demonstrations to safeguard democratic values and oppose what he described as “revenge politics.” He added that further details of the protest program would be announced following a party secretariat meeting scheduled for the morning.

Meanwhile, taking to Facebook, a social media platform, Home Minister Gurung said that the actions were guided by law and not driven by revenge.

He clarified that the arrest was made following the recommendation of the inquiry commission formed to investigate the Gen Z protests held on September 8 and 9.

"No one is above the law. This is not revenge against anyone. It is just the beginning of justice", Minister Gurung stated.

He also expressed confidence that the country will now take a new course.

Major countries including India, China, and the United States have congratulated Prime Minister Balendra Shah on being sworn in as the Prime Minister of Nepal.

Indian Prime Minister Narendra Modi extended warm congratulations, stating: “Your appointment reflects the trust reposed in your leadership by the people of Nepal. I look forward to working closely with you to take India–Nepal friendship and cooperation to even greater heights for the mutual benefit of our two peoples.”

Similarly, the United States extended its congratulations to Prime Minister Shah and his new government. In a statement, the Bureau of South and Central Asian Affairs said that the United States looks forward to working with Nepal to advance mutual prosperity and regional stability.

Chinese Premier Li Qiang also sent a congratulatory message, noting that China and Nepal are traditional neighboring countries connected by mountains and rivers. He expressed that the Chinese government supports Nepal’s governance and reaffirmed China’s continued support in safeguarding Nepal’s independence, sovereignty, and territorial integrity.

Premier Li further stated his willingness to work with Prime Minister Shah to advance high-level China–Nepal cooperation under the Belt and Road Initiative, deepen collaboration across various sectors, and promote the China–Nepal strategic partnership characterized by long-term friendship aimed at development and prosperity.

A spokesperson for China’s Foreign Ministry also extended congratulations to Prime Minister Shah and expressed readiness to work with Nepal’s new government to strengthen traditional friendship and practical cooperation.

Similarly, Japanese Prime Minister Sanae Takaichi extended her congratulations to Prime Minister Shah. In her letter, she expressed her intention to work together to enhance bilateral relations between Japan and Nepal.

British Ambassador to Nepal Rob Fenn also congratulated Prime Minister Shah. He stated that as the new government sets its priorities, the United Kingdom looks forward to collaborating with Nepal on economic growth, youth employment, climate resilience, and other shared interests.

The European Union also extended its congratulations. EU spokesperson Anaouar El Anouni stated that the EU looks forward to further developing its longstanding relations with Nepal and supporting the government in implementing its development priorities.

Swiss Ambassador to Nepal Danielle Meuwly, in her message, said: “We look forward to deepening cooperation between Switzerland and Nepal, and to further strengthening the longstanding friendship, goodwill, and mutual trust that bind our two countries.” She added, “We extend our best wishes for a successful tenure as you pursue the aspirations of the people of Nepal, advancing peace, development, and prosperity.”