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Nepal’s economy is showing signs of steady recovery and resilience, according to latest reports from the World Bank, Asian Development Bank (ADB) and Nepal Rastra Bank (NRB). While the outlook is positive, these institutions say the country still faces some serious hurdles that need to be addressed to maintain this momentum.

The World Bank’s Nepal Development Update (April 2025) has forecast economic growth of 4.5 percent for the current fiscal year, up from 3.9 percent last year. It expects average growth of 5.4 percent over the next two years. The World Bank has attributed this rise to improvements in the services sector, boosted by stronger domestic trade, rising imports and solid performance in hydropower and construction. The ADB’s Asian Development Outlook (April 2025) offers a similar but slightly lower estimate of 4.4 percent growth. It highlights increased hydropower production and better agricultural output—especially in paddy farming—as key drivers of the growth. Both institutions have said that Nepal has managed to bounce back well, despite challenges like natural disasters and travel disruptions caused by the upgrade of Tribhuvan International Airport.

The NRB’s latest report supports this optimistic view. Inflation has eased to 3.85 percent in mid-March of 2025, down from 4.82 percent a year before—well below the central bank’s target. Foreign exchange reserves are healthy, enough to cover more than 17 months of merchandise imports and 14 months of merchandise and services imports, while exports are up by 57.2 percent. These indicators suggest that the country’s economic fundamentals are becoming more stable.

The growth prospects, however, are not without risks. The World Bank has warned that global issues, such as political conflicts, rising prices, and heavy dependence on remittances and tourism, could affect Nepal’s growth. It also said the FATF greylisting has hampered Nepal’s efforts to access international capital markets after having a BB- country rating. The ADB added that ongoing tariff rises may cause a global economic downturn, affecting Nepal’s tourism receipts and remittances, and lower foreign aid could negatively impact growth as Nepal relies on foreign aid to finance development needs. 

The government must prioritize reforms and enhance its spending efficiency to maintain this momentum. Promoting private sector growth through clearer laws and regulations, bolstering the financial system, harnessing hydropower potential, and upgrading tourism infrastructure could generate employment opportunities and lessen dependence on remittances. Similarly, the government should act swiftly to implement the Financial Action Task Force’s recommendations to secure Nepal’s removal from the ‘gray list.’ Failure to address this could lead to severe repercussions.

In recent weeks, the frequency and intensity of pro-Monarchy protests in Nepal have escalated, attracting significant attention both domestically and internationally. The international media, particularly in India, has been extensively covering these protests, fueling interest among political leaders and strategists worldwide. Indian media, in particular, is filled with news, opinions, and interviews related to the protests, further intensifying the global focus on Nepal's political landscape.

The protests gained widespread attention after the violent unrest on March 28, which resulted in two deaths and numerous injuries. Over 70 people have been arrested, including senior figures from the Rastriya Prajatantra Party (RPP), such as Dhawal Shumsher Rana and Rabindra Mishra. Durga Prasai, a businessman and self-proclaimed leader of the March 28 protest, is currently on the run. The RPP, which was divided over whether to support Prasai’s movement, has continued to push its cause, organizing a moderate demonstration in Kathmandu on April 8. They have declared indefinite protests starting April 20. The future of the movement, particularly under the leadership of Panchayat-era veteran Navaraj Subedi, remains uncertain.

After the March 28 violence, Subedi’s group, led by Jagman Gurung, ceased protests. There is a lack of cooperation between Gurung’s faction and other royalist groups like the RPP led by Rajendra Lingden and the Rastriya Prajatantra Party Nepal led by Kamal Thapa. The royalist camp remains divided due to personal clashes, though they have agreed to support each other’s protests. Despite this, they do not consider one another as leaders. Before the March 28 protest, Lingden had warned that backing Prasai could lead to the party's downfall, but senior leaders like Rana and Mishra chose to work under his leadership, which ultimately led to the violence.

Why are pro-monarchy protests taking place?

Nepal was ruled by the Shah monarchy for centuries, except during the 104 years of the Rana autocracy, which significantly weakened the monarchy, though it remained as an institution. In 2008, Nepal abolished the monarchy as part of a peace agreement with the Maoist rebels, who had demanded the end of the monarchy and the establishment of a federal republic. King Gyanendra, the last monarch, did not resist the move, as republican sentiments were overwhelming, even within monarchist factions like the Nepali Congress and the CPN-UML. The country also became a secular state in 2006, a move that has been controversial among certain sections of the population.

Since the monarchy’s abolition, a section of the population has expressed dissatisfaction with the manner in which key decisions, like the monarchy’s removal and the shift to a secular state, were made. Initially, pro-monarchy forces were silent, fearful of backlash from political parties, but over time, frustration with the political leadership's failure to deliver on promises of development and stability grew. As a result, pro-monarchy forces, including former King Gyanendra, have been framing the republican system as a failure, arguing that the monarchy could restore stability. Gyanendra has hinted that as he nears 80, he may push for the monarchy's revival. He has reportedly stated that if no progress is made in one or two years, he will abandon the effort, emphasizing that he does not want violence in his name.

Not the first time

No, this is not the first time pro-monarchy and Hindu state supporters have protested. Over the past decade and a half, there have been several such protests, including in 1990, 2021, 2023 and 2024. These protests have often resulted in clashes with the police. For example, in January 2021, thousands of pro-monarchy supporters rallied, drawing international attention to their cause, though the protests eventually subsided. In 2024, similar protests in Kathmandu led to confrontations with law enforcement, with the RPP regularly organizing protests in favor of monarchy and a Hindu state. Even during the constitution drafting process in 2015, pro-monarchy parties voted to retain the monarchy.

What triggered the latest protests?

The most recent wave of protests was sparked by a speech from King Gyanendra on Democracy Day (February 19). Traditionally, the king delivers a message on this day, but this year's speech deviated from previous ones. The king called for national unity and prosperity, urging citizens to support the institution of monarchy for national progress. Pro-monarchy forces quickly united, interpreting his speech as a call for the monarchy's restoration. Prior to the speech, protests were already being organized, with supporters reaching out to former senior officials for support. On March 9, thousands of people greeted Gyanendra upon his arrival in Kathmandu, which boosted the morale of his supporters.

Meanwhile, a loose network of pro-monarchy groups led by Navaraj Subedi had been preparing for a “third people's movement.” However, Durga Prasai, who was preparing for the March 28 protests, refused to align with the leadership of Subedi or RPP, eventually consolidating the movement under his own. This caused a split, with senior RPP leaders like Lingden and Thapa staying away from the Tinkune protests, though their supporters were involved. The protest turned violent.

How is the mainstream responding?

The major political parties, particularly the ruling communist factions—CPN-UML, CPN (Maoist Center), and CPN (Unified Socialist)—are sharply criticizing the monarchy and King Gyanendra. Pushpa Kamal Dahal and KP Sharma Oli have been particularly vocal in condemning the king. While these parties have organized protests against the monarchy, the Nepali Congress has not yet joined in the street protests, though it has expressed concerns about the growing monarchy movement. This situation has created a clear divide between monarchy supporters and republicans.

Is India behind?

There is no solid evidence to suggest that India is backing the pro-monarchy protests. High-level government officials in India  have denied any official Indian support. However, some in Nepal's ruling CPN-UML have speculated about India's involvement, though the party later clarified that it had no evidence of such support. Nepal’s Foreign Minister Arzu Rana Deuba raised the issue with her Indian counterpart S Jaishankar, who denied any backing for the protests. Additionally, Nepal’s Ambassador to India, Shankar Sharma, reportedly met with Uttar Pradesh Chief Minister Yogi Adityanath, a known supporter of the monarchy, but there is no clear indication of official support from India.

Will the movement succeed?

The pro-monarchy movement has weakened since the March 28 violence. Durga Prasai, who had mobilized thousands of people, is now on the run, and his absence poses a challenge for the movement. The RPP, which has a small presence in the Parliament, continues to advocate for the monarchy but struggles to unite royalist factions. While the RPP will likely continue its protests, these movements are unlikely to force the political parties into making significant changes. Royalist forces are unclear about what kind of political arrangement they want, but unless there is a dramatic shift, the current political system is unlikely to change.

The protests have brought all political parties together against the monarchy, but if the political leadership does not address the frustrations of the public, the discontent could pose a threat to the current system. What is clear, however, is that support for the monarchy is growing, largely due to the perceived failure of political parties to deliver on their promises.

The United States of America has condemned the violence that occurred during the pro-monarchy protests in Kathmandu on March 28. It extended deepest condolences to the families and friends of those who lost their lives.

On that day, pro-monarchy protests vandalized the public buildings including the offices of Annapurna Media Network and Kantipur Publication. They also set the buildings on fire with some damages.

A State Department spokesperson said: “The fundamental freedoms of expression and peaceful assembly must be protected. However, we do not condone violence and the destruction of property.” Regarding the attack on media houses, the spokesperson said that the United States supports media globally. The free flow of accurate information, ideas and opinion is the cornerstone of democracy, and it is essential that journalists be able to perform their work free from fear, the spokesperson said.

There are growing demands that there should be a fair investigation on the violence that occurred in the Tinkune area of Kathmandu. 

There are also reports that police used excessive force and indiscriminately opened fire on the protestors. Police have already arrested more than five-dozen people in connection with the violence.

The Nepal government is refusing to form a judicial commission to probe the March 28 violence. Regarding the attack on media houses, the international community remains silent and the US is the first country to speak about the violence. Over the past few weeks, pro-monarchy protests have been hitting the streets demanding the restoration of the monarchy and the Hindu state. In a latest series of protests, Rastriya Prajatantra Party organized a protest in Kathmandu on Tuesday.

Tom Lutz is a Distinguished Professor Emeritus and Professor of the Graduate Division at UC Riverside, the founding editor-in-chief and publisher of the Los Angeles Review of Books, founder of The LARB Radio Hour, The LARB Quarterly Journal, The LARB Publishing Workshop, LitLit Book Fair, and LARB Books. Ken Subedi sat down and conversed with Lutz about his experiences of Nepal and his works while he was in Nepal for New York Writers Workshop Kathmandu 2024.

When did you come to Nepal for the first time?

During the big earthquake. In 2015.

Did you come for work or pleasure? What was the purpose?

No, I travel. I write travel books. I travel whenever I get the chance. Gertrude Stein said—you can either buy clothes, or you can buy art. So you just have to choose—what do you want? She bought art and I bought clothes for one dollar, and then I travelled.

Where did you travel? To France?

I have travelled to 150 countries.

Where did you travel in Nepal in 2015?

I just travelled in Kathmandu and some rural towns around Kathmandu. What is that big temple town?

Changunarayan? Bhaktapur Durbar Square?

Yes, right.

So you came to Nepal in 2015. But when you were living in the US, when did you know about Nepal for the first time?

Well! It was the first time I had been to Nepal where there was a religion which was so syncretic. I see in the Buddhist temple, a Buddhist monk praying to Ganesh.

But usually Buddhists pray in their own rites. But here in Nepal, even the Buddhists pray to the Hindu gods.   

Exactly! This is the only place I have seen that. 

The roots of Buddhism lie in Hinduism.

Yeah, right! Of course! And the basic kind of Namaste, kindness, was impressive to me. That’s on the positive side. On the negative side—I had a romantic image of Kathmandu.  So I was surprised by the traffic and the pollution, and the poverty. That was surprising. I didn’t expect it.

So you also got to see how the earthquake ruined the country and the people who were devastated by it, right? 

Yes. I only came because I had some time, and I went to India as well.

Right now, how was your experience attending the workshop and Himalayan Literature Festival? 

Literature is international. It’s a cosmopolitan kind of activity. When people write – sometimes Nepalese writers write about Nepal, sometimes American writers write for America. But most of the American writers write hoping to write for the world. 

That is also because of the English language!

Yeah! And Yuyutsu is a perfect example. He goes everywhere. He writes to everyone. And he brings writers from everywhere. He is a perfect example of the cosmopolitanism of literary work.

But at the same time that may also create some sort of homogeneity, also the cultural homogeneity.

Yes. I think literature fights against homogeneity. Literature is interested in all the nooks and crannies of difference. There is no reason to write about Taylor Swift for example. Writers don’t tend to be interested in the normal.

Salman Rushdie says that a writer should always challenge the current stage, like current tradition, current norms, or established values. What’s your opinion on this view?

Yes. Literature always crosses the boundary. For example: Take this cup of tea; there is no story here. But if I take this tea and throw it in your face, then it is a story. I crossed a cultural boundary. It is something abnormal. And then it becomes a story.

You have written lots of books on various genres. You also write travelogues. You travel. There are so many areas where you have worked simultaneously. What excites you, what fascinates you the most? Is it literary criticism, fiction, memoir, or novel, or travelogue? Do you have any favorite areas? It’s like asking a father which son you love the most. In Nepal, the youngest son is always loved.

Yes. And that is true. The youngest child is more loved. The book I am working on is always the one that. I am reading something which is from 2021. Just four years ago. 

Did you write a memoir in 2022?

No, it’s a novel. The novel has some memoirist aspects. It’s the new novel I just finished that is coming this year. And novels are really fun.

You can take the characters to where you want!

The characters go where they want. And I watch them, I think. 

Do you let the characters go, or do you bring some restrictions?

The characters take their own life jack. It’s more like you are watching them do things. 

I guess you love all the genres, but novels should be more near to your heart. 

Yeah! I don’t know about the heart. It’s all about the book 1925. It’s a literary history. It was also really fun. I loved that work.

So, the venture which you are working on is the most exciting part! 

I think that I have written these very different kinds of things because I had a teaching job. It paid me a salary. I could write whatever I wanted to write.  I didn’t have to worry about whether I sold it, if I sold 10 copies or 10,000 copies, or 100,000.

So, you write for the sake of passion?

It’s whatever you want to do. I travel but I do not have an itinerary. I wander freely and write freely like I travel.

Have you written anything on Nepal?

Yes. I think I have a Nepal section in one of the travel books, The Kindness of Strangers.  I have already written about it.

It is said that for the same person to be a good creative writer and a good literary critic is a rare thing. You have worked as both and succeeded. Do you think you can be good in both areas?

A lot of critical people who write criticism think that they don’t have the ability to write creative kinds of fiction. I think they just don’t try it. And some novelists and some poets think that they can never do other things. So they don’t try. I tried to write a novel when I was much younger but I had not read much and had not gone to college yet. They can get in each other’s way sometimes.

Do you think it is possible to work like you? How can you balance that?

For me, that’s a very personal thing. I said I am not going to try to write great literature. I am going to write a thriller. Mystery genre does not have to be fancy; it does not have to be great literature. It can be just to tell a fun story. I think it’s somewhere in-between.

Is it due to your profession? Are you able to balance both works like literary criticism and the work which you are doing? Many professors teach how to write, but they don’t write themselves. But you have done a great job. 

Exactly, it helps. I think I became a better critic when I wrote some poetry and some fiction. I think I write better criticism, I write better fiction and poetry because I love my works as a historian, as a scholar. 

I think you started with literary criticism. Or, did you start with creative work?

I graduated from my high school. Then, I worked doing different things for ten years. Then, I started going to college. Then after graduate school, I became a professor. So during that period, I was writing poetry, I was writing songs, I tried to write fiction. My earliest attempts were creative writing. But I didn’t publish anything. And then when I started going to school, my first book was a scholarly book.

Regarding the Los Angeles Review of Books, what triggered you to start a new media only dedicated to reviews?

There is a personal reason and a historical reason. The personal reason is—I got a new job, a very good job, and a very good pay. I thought what I should do next is—something that’s not for me, not to make my career better, not something more absurdist. I should do something for the service. When all the book reviews in America were dying, the newspapers were shrinking; I grew up reading the book reviews in the newspapers. That was my introduction to literary culture. And I wanted other people to get into the conversation. I started an online service. It did not cost anything. I called my friends. It was volunteer labor. Gradually it became bigger and bigger. I had to hire staff. So, I built a board of directors and turned it into a non-profit organization so that we could take grants and gifts, and pay staff. I spent 60 hours a week for ten years.

It is like a contribution to the literary fraternity. People are writing reviews throughout the world. The representation of local literature is also accessible throughout the world.

We have readers in 200 countries.  

How do you find the representation of the Global South in producing great literary works? What is your view regarding their representation from South Asia?

I am 71 years old. When I started reading literature in the 1970s, I never heard the phrase Global South. We read Gabriel Garcia Marquez, Alejo Carpentier and Frantz Fanon. There were a dozen texts from around the world. There were a handful of people. Also VS Naipaul. Now, for the last 20 years, the idea of the Global South has been a part of every English Department, every Literature Department. Every university has people working on Global South literature; now, it’s a recognized area. The American book market is dominated by very few bestselling authors. All of the big money is going into publishing all of those few bestselling authors from the US and the UK. In the second level, there are lots of authors from Africa, India, and the East. There are a lot of writers now who are considered the important literary writers of the Four American Literary Readers who are from the Global South. So it’s a big change. If you look at Germany or any Latin American country, the publishers there publish half of the work that is translated from other languages. In America it’s three percent. It’s still a very small part. That means that even though Africa is being represented in Four American Readers, it has been represented by a small percentage of writers from Africa. Often, those are writers who have moved to England or America.

I think one should be at least second generation to become a published author in the US, like Ravi Shankar. If he was first generation in the US, it would have been more difficult for him to secure publishing from the American publishers. It may be because of the languages, the familiarity with the culture.

Ngũgĩ wa Thiong’o from Kenya. He was a famous author in Kenya. His fames were around the world, while he still lived in Kenya. But he had gotten into trouble with the government.  And he was imprisoned. He fled to America. So he lived in America for 20/25 years. So writers like that have much more access to American readers because they live in America, give readings in America and are part of the scene. There are a number of authors who live in both places and cultures. I know there are hundreds of great African writers who Americans have never heard of and have never translated.

What languages do you speak besides English?

I speak some French and some Spanish.