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On 8 Sept 2025, thousands of youths descended onto the streets of Kathmandu to protest years of systemic corruption, widening inequality between the political class and ordinary citizens, limited opportunities, and the growing distance between young people and state authority. The controversial decision by the KP Oli-led coalition government to ban 26 social media platforms served as the immediate trigger, but the protests reflected much deeper and long-standing dissatisfaction with the state.

Shortly after the ban, hashtags such as #NepoKids and #NepoBaby began trending on TikTok and called for street protests. The movement had no single leader, no party flag, no formal guidelines, and was expected to remain peaceful and non-violent, as most protesters were teenagers and many of them in school uniforms. However, the demonstration did not unfold as anticipated. Protesters breached the first police barricades near Everest Hotel in New Baneshwor and advanced toward the main gate of the Federal Parliament, where some attempted to climb the gate. The government failed to control the protest and responded with extreme brutality, killing 19 individuals that day.

In the evening, Oli convened a cabinet meeting. Home Minister Ramesh Lekhak resigned, and the government announced the withdrawal of the social media ban, but it failed to anticipate or manage the consequences for the following day.

Despite the curfew, the situation worsened dramatically the next day. From early morning, angry protesters moved with a different intensity than the previous day. Government buildings and state institutions were vandalized and set on fire. Politicians and their properties were targeted, and amid the chaos, thousands of prisoners escaped from prisons. By the afternoon, Oli submitted his resignation to the President, but by then the situation was already out of control, with massive national losses. Following his resignation, Oli was evacuated by the Nepal Army to a safe location amid ongoing attacks and threats against political figures.

From that night onward, the Army took control of security across Kathmandu and other areas to restore law and order, enforce the curfew, and stabilize the country during the power vacuum. This continued until an interim government was formed under former Chief Justice Sushila Karki on Sept 12, with the mandate to hold elections on March 5.

The movement ended with a heavy human toll, massive economic losses, and several days of national crisis. Despite these costs, it opened space for intense intra-party debate, especially among younger members of major traditional parties who began demanding immediate leadership change and grassroots-level reform.

Nepali Congress: Revolt to reform

Nepali Congress (NC), the country’s oldest democratic party and a key player in the pre-protest coalition government with CPN-UML, faced immediate backlash. Its headquarters and leaders were attacked, and internal conflicts between the establishment faction led by Sher Bahadur Deuba and the reformist faction led by Gagan Thapa and Bishwa Prakash Sharma intensified.

Soon after the uprising, Thapa and Sharma issued a joint statement and video message acknowledging the GenZ movement, admitting their party’s repeated failures to understand citizens’ demands despite being in power multiple times. Reformist leaders feared not only for the party’s future but also for their own political relevance. They strongly demanded party reform, generational handover, and serious reflection on past mistakes to build a “New Congress.”

The party faced two main options: proceed to elections under the existing leadership, as favored by the establishment faction, or pursue reform through a regular or special convention, the core demand of the reformists.

As internal tussles continued, the reformist faction began collecting petitions from party representatives nationwide under Article 17(2) of the party statute, which mandates a Special General Convention if at least 40 percent of delegates submit a written request citing specific reasons. Meanwhile, the establishment faction pushed for the restoration of the dissolved House of Representatives. Deep disagreements gradually pushed the party into prolonged internal turmoil.

On Oct 14, Sher Bahadur Deuba appeared at a Central Committee meeting after recovering from injuries sustained during a mob attack on the second day of the protests. He called for party unity amid national unrest, condemned organized violence, and acknowledged GenZ demands for good governance. He pledged to hand over party leadership after the 15th General Convention and temporarily stepped aside as party president, appointing Vice-president Purna Bahadur Khadka as acting president.

Despite expectations that Deuba’s move would ease tensions, divisions only deepened. The establishment faction opposed holding a convention before the March 5 elections, arguing it would disrupt preparations, while reformists insisted that pre-election change was essential to address youth demands. The Thapa–Sharma faction strengthened its position by securing support from more than 50 percent of convention delegates for a special convention, while establishment leaders focused on restoring the dissolved House.

On Dec 1, after two months of heated debate, the Central Working Committee announced the 15th General Convention for Jan 10–12 in Kathmandu, a move widely seen as an attempt to sideline the demand for a special convention. Reformists warned that if the regular convention failed to proceed, a special convention would be unavoidable. On Jan 2, the convention was postponed until after the elections, citing logistical challenges and campaign priorities. In response, the reformist faction rejected the delay and began preparations for a special convention.

On Jan 8, the Thapa-Sharma faction officially announced a Special Convention for Jan 11-12 at Bhrikutimandap, despite strong opposition from the establishment. The convention opened with enthusiasm and hopes for a “New Congress.” Thapa and Sharma presented political and organizational proposals outlining their vision for party transformation. Meanwhile, fears of a party split grew as candidate selection, which was scheduled for Jan 20, remained stalled. Organizers claimed 56 percent delegate participation, though the official list was never released.

The establishment faction dismissed the convention as illegitimate and unconstitutional. On Jan 14, the Deuba faction expelled Thapa, Sharma, and Farmullah Mansoor for five years, removing their general membership. This marked the third major split in Nepali Congress’s history since 1950. In response, representatives at Bhrikutimandap formed a new Central Working Committee under Thapa’s leadership until the next regular convention.

Both factions approached the Election Commission (EC) seeking official recognition. The Thapa-Sharma faction argued that their convention followed party statutes and enjoyed majority support, while the Deuba faction insisted it was illegitimate and threatened nationwide protests if rejected. The EC later recognized Thapa’s faction as the legitimate Nepali Congress based on majority delegate support. The Deuba faction rejected the decision, alleging external interference. The matter is now before the Supreme Court, and NC is heading into the elections under Thapa’s leadership, while the establishment faction remains largely silent.

UML’s radical stance

CPN-UML adopted an antagonistic stance toward the GenZ uprising from the outset, choosing confrontation over introspection. Amid widespread turmoil and party leaders under the army protection, Shankar Pokharel called for dialogue to safeguard constitutional democracy while strongly condemning the Sept 9 vandalism.

The party appeared divided. Leaders such as Ishwar Pokhrel, Surendra Pandey, and Yogesh Bhattarai acknowledged past mistakes and called for reform, while Shankar Pokharel and Mahesh Basnet remained firm supporters of Oli. Unlike Nepali Congress, these divisions were not strictly generational.

Following Oli’s return from army protection, reformist voices gradually faded. The Oli camp’s framing of the movement as anarchic and disastrous became the official party line, accompanied by conspiracy narratives and harsh criticism of the Karki-led interim government. UML strongly pushed for parliamentary restoration.

At the Oct 15–18 Central Committee meeting, reformists urged Oli to step down. When he refused, they shifted focus to demanding a general convention to restore legitimacy. The party’s 11th General Convention was held Dec 14–16 in Bhaktapur. Despite public expectations for leadership change, Oli was re-elected for a third term, effectively closing the chapter on internal reform.

Maoist’s cosmetic adjustment

As an opposition party, CPN (Maoist Center) expressed solidarity with the Sept 8 protests and demanded the prime minister’s resignation. Despite suffering losses during the unrest, Chairman Pushpa Kamal Dahal acknowledged the youth movement and sought to position himself as adaptable and open to generational change. He accepted the interim government and focused on the upcoming elections.

On Sept 26, Dahal dissolved the party’s central and standing committees, forming a convention organizing committee with himself as coordinator. While framed as reform, internal tensions persisted. Leaders like Janardan Sharma openly criticized Dahal’s top-down approach but failed to generate substantive change. Sharma later joined Baburam Bhattarai’s Pragatisheel Loktantrik Party. Unlike in NC, there was no strong generational push for leadership change.

On Nov 5, Dahal initiated a unification of nine leftist parties, forming the Nepali Communist Party with himself as coordinator. While framed as consolidation, the move appeared more like rebranding, retaining the same leadership and political culture under a new name.

RSP: From early blunder to alternative force

The Rastriya Swatantra Party (RSP), founded in 2022 with anti-establishment rhetoric, emerged as the fourth-largest parliamentary force. While it initially supported the GenZ movement and demanded the prime minister’s resignation, its political immaturity became evident. On the second day of unrest, senior leaders focused on mobilizing pressure for Rabi Lamichhane’s release from prison, even as the country burned. That same day, more than 13,000 prisoners, including Lamichhane, escaped, triggering a national security crisis.

RSP faced widespread criticism, and leaders such as Sumana Shrestha left the party citing internal democracy concerns. Nevertheless, RSP continued to support the interim government and opposed parliamentary restoration.

Seeking to position itself as a credible alternative, RSP unified with Bibekshil Sajha on Nov 30. After Lamichhane’s release on bail on Dec 19, the party endorsed Kathmandu Mayor Balendra Shah as a prime ministerial candidate, despite controversies surrounding his role during the unrest. An agreement with the Ujjyalo Nepali Party briefly followed but later collapsed.

As elections approach, parties are contesting independently, without coalitions. While many claim to be “new” or “reformed,” the fundamental nature of Nepali politics remains largely unchanged.

Halfway through fiscal year 2025/26, the government has been compelled to confront an uncomfortable reality: ambitious plans announced at the beginning of the year are no longer financially or administratively feasible. 

The mid-term review of the fiscal budget reflects a series of downward revisions on spending, growth projections, and revenue targets. This highlights the persistent structural weaknesses of Nepal’s public finance management.

Budget size trimmed by Rs 275bn

The finance ministry has trimmed the budget for the current fiscal year by 14.04 percent. Then Finance Minister Bishnu Prasad Paudel had brought a budget of Rs 1,964.11bn in mid-May last year. However, with revenue shortfalls and sluggish expenditure performance, the government has now slashed the allocation by Rs 275.78bn, bringing the revised budget size down to Rs 1,688.32bn.

The reduction is a tacit admission that the government overestimated both its ability to mobilize resources and its capacity to spend effectively. Despite the cut, Minister for Finance Rameshore Prasad Khanal insisted that the budget has not technically been reduced. “The budget remains Rs 1,964bn. If any government body can spend that amount, the originally estimated resources will be made available,” he argued. 

He, however, pointed to the Rs 130bn deficit in the government treasury as the reason for tighter controls.

Chronic problem of slow capital spending

One of the most worrying indicators in the mid-term review is the dismal performance of capital expenditure. As of Feb 10, only 14.98 percent of the capital budget had been spent. This is an alarmingly low figure for a country desperate for infrastructure development.

The government had originally allocated Rs 407.88bn for development projects. This allocation has now been reduced by 40.35 percent to Rs 243.30bn by suspending funding for projects deemed unprepared or unproductive.

The mid-term review has identified lack of project preparedness, difficulties in land acquisition, complications related to forest clearance, and damage caused to infrastructure during the GenZ protests of Sept 8 and 9 as the reasons behind slow capital expenditure.

The cabinet had frozen most of the Rs 119.53bn allocated to projects lacking adequate groundwork, the Cabinet has frozen most of the funds. However, Rs 42.28bn has been released following justification from concerned ministries.

Growth target slashed to 3.5 percent

The government had set an ambitious six percent economic growth target for the current fiscal year.. The mid-term review has now revised that estimate sharply downward to 3.5 percent.

The downgrade reflects weak performance in agriculture and construction, sluggish real estate transactions, and disruptions caused by social unrest. According to the review report, a decline in paddy production, reduced cultivated area, and lower productivity have dragged down the agricultural sector, while construction activity has remained subdued.

Even the revised 3.5 percent target remains more optimistic than external projections. The World Bank has forecast Nepal’s growth at just 2.1 percent for this fiscal year, citing political uncertainty and economic disruptions. Economic growth in the previous fiscal year has been estimated at 4.6 percent.

Slow spending by development ministries

The very ministries entrusted with driving development have performed the worst over the first half of the current fiscal year. 

According to the mid-term review report, the Ministry of Urban Development has utilized only 6.31 percent of Rs 91.35bn allocated to it. The Ministry of Physical Infrastructure and Transport fared comparatively better, spending 18.12 percent of the total allocation of Rs 153bn.  The Ministry of Energy, Water Resources and Irrigation also managed to spend only 16.56 percent of the allocated Rs 42.77bn.

In contrast, non-development ministries have fared better. The Ministry of Foreign Affairs has already spent 55.8 percent of its budget, while the Ministry of Finance itself has spent 35.54 percent.

Revenue collection falls short

Revenue mobilization has also been weaker than expected. By mid-January, only 81.75 percent of the targeted revenue had been collected. The government could mobilize only Rs 581.4bn out of the targeted Rs 711.20bn in the six-month period. Although revenue is 2.47 percent higher than last year, it remains far below the required level.

Import growth of 17.36 percent has not translated into proportional customs revenue, which rose by only 8.48 percent. The finance ministry has attributed this to increased imports of low-tax goods, ineffective border control, and weak market monitoring.

Lower interest rates have reduced income tax collections, while sluggish real estate and stock market activity has hit capital gains tax. The tourism sector has also underperformed, partly due to the September unrest. Citing these reasons, the government has revised down revenue target from Rs 1,480bn to Rs 1,298bn.

Adm. Samuel J. Paparo, commander of the United States Indo-Pacific Command (INDOPACOM), has said his visit highlighted Nepal’s leadership in promoting regional stability, disaster preparedness, and peacekeeping. He visited Nepal ahead of the March 5 elections to the House of Representatives (HoR), which are taking place against the backdrop of the September 8–9 Gen Z protest.

The visit highlighted Nepal’s leadership in promoting regional stability, disaster preparedness, and peacekeeping. U.S.-Nepal cooperation in these areas benefits Nepali and American citizens throughout the region and supports global peacekeeping efforts, says a press statement issued by INDOPACOM after the two-day visit.

During his stay, Paparo met Foreign Minister Bala Nanda Sharma and Gen. Ashok Raj Sigdel, Chief of Army Staff of the Nepali Army, to discuss strengthening collaboration in disaster response and Nepal’s significant contributions to United Nations peacekeeping missions.

At the Birendra Peace Operations Training Centre in Panchkhal, Paparo interacted with Nepali peacekeeping professionals and observed pre-deployment training activities. The center plays a vital role in preparing Nepali troops for UN peacekeeping missions and supports multinational peace operations, reinforcing Nepal’s standing as one of the world’s leading troop-contributing countries to UN missions.

An alumni event hosted by the Daniel K. Inouye Asia-Pacific Center for Security Studies (APCSS) and its director, Suzanne P. Vares-Lum, brought together Nepali graduates of APCSS programs. The gathering provided a platform for security professionals to exchange ideas and explore collaborative approaches to regional security challenges.

INDOPACOM and Nepal have maintained close cooperation in strengthening disaster response capabilities through joint exercises, technical assistance, and the provision of non-combat equipment such as helicopters, vehicles, and communication systems. U.S. training and logistical support have also enhanced Nepal’s capacity to conduct humanitarian and peacekeeping operations, the statement said.

Officials said the partnership aligns with Nepal’s goal of enhancing self-reliance while contributing to regional resilience and preparedness. The U.S. Indo-Pacific Command reiterated its commitment to promoting stability across the region through security cooperation, peaceful development, and coordinated responses to emerging challenges, according to the statement.

Paparo’s visit highlighted Nepal’s strategic importance in South Asia and reaffirmed its leadership role in fostering regional stability and advancing global peacekeeping efforts.

During then Foreign Minister Pradeep Kumar Gyawali’s visit to the United States on December 18, 2018, then U.S. Secretary of State Michael R. Pompeo highlighted Nepal’s central role in a free, open, and prosperous Indo-Pacific and in global affairs.

 The 2019 U.S. Department of Defense Indo-Pacific Strategy Report officially described Nepal as a valued partner. The report listed Nepal as a member of the State Partnership Program (SPP), which was later rejected by the Nepal government.

This week, House Foreign Affairs Subcommittee on South and Central Asia Chairman Bill Huizenga has said that recent elections in Bangladesh and Nepal present new opportunities for U.S. engagement in South Asia.

In his opening remarks at a subcommittee hearing titled “South Asia: U.S. Foreign Policy in the Region,” Huizenga described South and Central Asia as a dynamic region where young and growing populations are increasingly drawn to Western cultures and values rather than to what he called China’s “authoritarian alternative.”

Bordering India, both Nepal and Bangladesh are undergoing significant political transformations. Bangladesh held general elections on February 12, following the July 2024 revolution that led to the ouster of an authoritarian government in September 2025. Meanwhile, Nepal is set to hold democratic elections on March 5 after youth-led protests overthrew the previous government.

Newly appointed Chinese Ambassador to Nepal, Zhang Maoming, has pledged to implement the important consensus reached between the two countries during Xi Jinping’s 2019 visit to Nepal.

In remarks made upon his arrival to assume office, Ambassador Zhang said, “I look forward to working with friends from all sectors of Nepal to carry forward our traditional friendship and advance all-round exchanges and cooperation across all fields.”

He added that the Embassy of the People's Republic of China in Nepal will continue to practice people-centered diplomacy, serve as a trusted partner to Chinese nationals in Nepal, and act as a steadfast guardian of their legitimate rights and interests overseas.

“Let us work hand in hand to advance the Strategic Partnership of Cooperation Featuring Everlasting Friendship for Development and Prosperity between China and Nepal, and jointly build a China-Nepal community with a shared future,” he further said.

Ambassador Zhang noted that 2026 marks the opening year of China’s 15th Five-Year Plan period. China will accelerate the advancement of Chinese modernization and proactively expand high-standard opening-up, creating new development opportunities for countries around the world, including Nepal.

“Nepal is also at a critical stage of transformation and transition,” he said. “At a time when changes unseen in a century are accelerating and turbulence and transformation are interwoven in the international landscape, China stands ready to work with Nepal to implement the four Global Initiatives, strengthen solidarity and cooperation among the Global South, and jointly promote an equal and orderly multipolar world and universally beneficial and inclusive economic globalization, so as to contribute to building a community with a shared future for mankind.”

In 2019, President Xi Jinping paid a historic and successful state visit to Nepal, elevating bilateral relations to a Strategic Partnership of Cooperation Featuring Everlasting Friendship for Development and Prosperity, he said.  Under the strategic guidance of our two countries’ leaders, political mutual trust has continued to deepen, high-quality Belt and Road cooperation has delivered fruitful results, and people-to-people exchanges have grown ever closer, bringing tangible benefits to our two peoples, he added.