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Mero dukha ma roi dine, mero khushi ma ramaai dine,

Sabai bhanda maathi chha, mero euta saathi chha…

That tribute to friendship, set to an unforgettable tune—which I rashly attempted at our National Day (“King’s Birthday Party”, KBP) last week—comes from Sugam Pokharel. To my mind, it beautifully captures the relationship between the UK and Nepal. This year, when I came to write my KBP Speech, it inspired a metaphor about two old friends trekking together.

The UK and Nepal have been travelling together for more than 200 years. We have come to a fork in the path. One track goes straight on. It would take us forward but gain no height. It represents Nepal’s existing business model, reliant on remittances and grant aid. The steeper path would take us more swiftly—up the hill—beyond which lie global capital markets.  

The UK recommends the steeper path—a shorter route to the happy and prosperous Nepal we all want to see. Together, we have mapped out the ascent, fixed some ropes. These include Government achievements such as a positive Sovereign Credit Rating, Nepal’s first international bond (supported by $22m from British International Investment), and important economic reforms backed up by legislation.

Which is just as well. Because the UK has been looking down the apparently easier path and sees several obstacles. Landslides—triggered by things like Russia’s invasion of Ukraine and global trade disputes. We are going to have to climb. The exercise will be good for us!

Here are some of the topics which—being old friends—we discuss amicably along the way:

The national budget

Nepal has a modest supply of provisions but never uses as much as it could. The UK is Nepal’s strongest advocate. But our arguments for climate finance and other benefits are undermined when Nepal does not use its own resources; and use them well.

Concessional international loans

Nepal’s rucksack is full of World Bank and ADB resources. The UK helped procure those entitlements and urges Nepal to take advantage of them. Currently, these sources of finance are largely untouched.

Education

The UK is a big fan of what we call Trans-National Education. We mean any kind of connection between providers in Nepal and abroad which allows Nepal’s young people to get the education they deserve without leaving the country. At affordable prices. The UK has lots of TNE to share. We think it would reinforce Nepal’s economy. It might even attract the other country’s students to this beautiful land.

The diaspora

Many brilliant Nepalis living in the UK are making huge contributions. But the UK doesn’t want them to lose touch with their roots. We want them to help develop Nepal. For this, the UK hopes Nepal will recognise the equivalence of qualifications obtained at British universities. Nepal’s current arrangements seem designed to prevent its children ever investing here.

The last part of the ascent is the steepest. Nepal’s progress is attracting global attention. In London—for example—financiers are starting to talk about Nepal as a destination for investment. They have a sentimental attachment, refreshed by a spectacular visit to Nepal by the Duke and Duchess of Edinburgh. Since then, the UK media and dinner party conversations have been reminding the British public about Nepal’s friendliness and beauty, our proud Gurkha ties, as well as its status as the UK’s “first ally in Asia”.

As well as beauty, these private financiers are coming to understand that Nepal is a land of investment opportunities. But they will not bring their money here until they know they can repatriate their profits. Even the famous Sherpa known as Dolma Impact Fund has had trouble doing that.

This is the altitude we are at today. Close to the summit, beyond which it will be much easier going, downhill all the way to The City of London.

Perhaps it is the rarified air. But my old friend seems conflicted. I recognise the signs. The UK had doubts when we opened our economy to foreign investment. We worried about competition. Loss of control. In practice, however, we found that foreign investment brought not just jobs, but also technology transfer, productivity gains and other good things besides. It is now our life blood. So, let’s continue this journey together.

The author is the British Ambassador to Nepal 

CPN-UML lawmaker Yogesh Kumar Bhattarai has said the policies and programs presented in the House are youth-oriented and investment-friendly. In Tuesday’s meeting of the House of Representatives, he said the policies and programs have ensured suitable policies for providing employment to the youth and for investment.

“There are provisions related to the integrated plan bank and to industrial, environment and youth-centric policies and programs, while priority has been given to policies and programs for agriculture, industry, production and infrastructure development,” Bhattarai said. He argued that if the capital of Nepalis scattered in different parts of the world could be integrated, there would be no need to look to others for national economic development. Lawmaker Bhattarai was of the view that the country would progress through the development of energy, agriculture and tourism.

Rastriya Swatantra Party leader and lawmaker Swarnim Wagle described the government's policies and program as routine. He was airing his views on party basis during a discussion on the government’s annual policy and programs for the upcoming fiscal year 2025/26 in Tuesday’s meeting of the House of Representatives. “This is merely a list of the old programs brought reluctantly by a tired government. The order of the budget is also not aligned. Tourism has been lumped under the physical infrastructure and agriculture under trade. There is also no coordination between ministries of foreign affairs and finance,” he said.

According to him, although the agreement reached between the Nepali Congress and the UML during the formation of the government was aimed at banishing corruption and maintaining good governance, this is completely missing in practice. He said though the NC and UML had agreed to amend the constitution, they could not bring out the details of amendment even after 10 months of the formation of the government.

Wagle pledged his party’s support if the high-level economic reform suggestion report included in the policies and programs was implemented practically. Referring to his party’s support to the government in the Economic and Business Environment Reform and Investment Promotion Bill, he said the issue of re-prioritizing physical infrastructure projects in the policies and programs was positive.

Rastriya Prajatantra Party (RPP) leader and lawmaker Gyanendra Shahi said, “The government’s policy document speaks of bringing about a revolution in agriculture, but the situation is such that farmers are not able to sell fish due to the import of foreign fish, the apples of Jumla remain unsold; at least if a policy is made to not import agricultural products from outside, then the people themselves will be engaged in production.”

‘Policies and programs traditional’

Secretary of the Communist Party of Nepal (Maoist Center) and member of the House of Representatives Devendra Paudel described the government’s policies and programs as ‘traditional’. During a discussion on the policies and programs for the fiscal year 2025/26 in Tuesday’s meeting of the House of Representatives, Paudel said, “Public policy synchrony, social justice, employment of students 20 hours a week and provisions on citizen apps, online tax system, digital foundation, cyber security, digital Nepal and bank system were included in last year’s policies and programs. These have been copied and included in the new policies and programs.” 

Stating that the policies and programs should incorporate strong resolve for nation-building, Paudel slammed the policy document for failing to cover the overall national development. According to him, the projects of national pride in the current fiscal year are facing problems due to lack of budget. Paudel said only 31.9 percent of the development budget has been spent in the 10 months of the current fiscal year.
Stressing the need to increase investment in the manufacturing sector, he said, “We sell electricity to neighboring countries at cheaper price but buy it at higher price. This should not be the way.”

Aging populations used to be a challenge mostly for wealthier nations like Japan. But now, it’s a shared reality—and Nepal is no exception.

According to the Population Division at the National Statistics Office, Nepal’s population is rapidly entering a demographic transition. The proportion of people aged 60 and above rose from 8.1 percent in 2011 to 10.2 percent in 2021. 

Binod Sharma Acharya, director at the division, said on Monday that Nepal is expected to become an aging society by 2054. This will naturally pose significant challenges in housing, healthcare, social security, and economic support.

The global average life expectancy rose from 64.2 years in 1990 to 72.6 years in 2019. Acharya said that life expectancy is projected to reach 77.1 years by 2050. In other words, by 2050, one in every six people globally is projected to be elderly—aged 65 or above.

In Nepal, about 80 percent of the population is expected to live up to the age of 60. Among them, approximately 85 percent of women and 75 percent of men are likely to reach this age. Among households in the richest quintile, 84.7 percent of individuals are expected to live up to 60 years, while only 77.7 percent of individuals from the poorest households are expected to do so. 

Since 1991, the elderly population in Nepal has nearly tripled. The population pyramid indicates a shift from a youth-dominant structure to one increasingly composed of older individuals. This is mainly due to declining birth rates and increased migration abroad.

The child population is decreasing, and so is the working-age population, resulting in a higher dependency ratio. The census data of 2011 and 2021 show regional variations in the distribution of elderly populations. During this period, the hill region saw a notable increase in its elderly population.

In 2011, the elderly population in the hills was 25.7 percent, which increased to 43.6 percent by 2021. This trend is also evident in the mountain and Tarai regions, though at slightly lower rates. However, compared to the Tarai, the hill and mountain regions have seen a more rapid increase in the elderly population.

Thanks to better healthcare, safer water, and improved nutrition, we are living longer than ever. At the same time, families are having fewer children. In 1950, women had an average of five children; now, that number has fallen to 2.3, according to the UN World Population Prospects, 2022.

For years, many countries benefited from a “demographic bonus”—a large, young workforce that powered economic growth. But now, as that workforce shrinks and the elderly population grows, the bonus is turning into a demographic dilemma.

As elderly population is poised to rapidly expand, governments and policymakers around the world need to consider its various challenges and implications. Chronic illnesses like heart disease, diabetes, and dementia are on the rise. Yet many countries don’t have enough doctors, nurses, or long-term care facilities trained to manage elderly health needs.

Also, fewer workers and more retirees mean economic trouble. The International Monetary Fund (IMF) has already said that pension reforms are necessary in many nations to avoid fiscal crises. But not all aging is equal. In many developing countries, people grow old without pensions, healthcare, or secure housing. The World Health Organization (WHO) notes that aging in poverty is often “aging with hardship.”

As the workforce shrinks, economic growth slows, and industries face labor shortages. To offset this, governments and policymakers should come up with a sound plan.

The demographic shift will transform more than just health and economics. It will reshape how we build our infrastructure, how we design transportation, and how we organize work and education.

Hydropower generation in Nepal began over a century ago with the 500-kilowatt Pharping Hydropower Project, the country’s first. Initially, the government held a monopoly on hydropower, and only a limited number of projects were developed. By 1989, Nepal had generated just 167 megawatts of electricity. After the first People’s Movement in 1989, the country transitioned to a multi-party democracy. The 1990 Constitution embraced a policy of liberalization, opening the door to private sector involvement in industry and business, which significantly increased the demand for electricity. Former Energy Secretary Devendra Karki notes that hydropower development has since seen visible progress.

The government alone could not meet the rising electricity demand. The Electricity Act of 1989 paved the way for private investment in hydropower. In 1995, the first private sector project, Himal Hydro, signed a Power Purchase Agreement (PPA) for the 60-megawatt Khimti Hydropower Project, which was connected to the national transmission grid in 2000.

According to the Independent Power Producers Association of Nepal (IPPAN), private developers have added 2,740 megawatts to the national grid over the past 24 years. The private sector now accounts for about 80 percent of Nepal’s hydropower generation, says IPPAN General Secretary Balram Khatiwada. In contrast, government projects contribute about 700 megawatts. In recent years, Nepal has made notable strides in hydropower generation, electricity export, green energy promotion, and private sector engagement—moving the country closer to energy self-reliance and economic growth.

Nepal has vast potential for hydropower generation. Government data suggest that approximately 72,000 megawatts can be generated economically and technically. However, current production stands at around 3,400 megawatts, with PPAs signed for an additional 11,000 megawatts.

To address chronic load-shedding, the government declared an energy crisis in 2015 and ramped up hydropower development. At one point, Nepal was importing electricity worth Rs 22bn annually from India to meet demand. Since then, domestic electricity production has surged. Today, surplus electricity during the monsoon season is exported to India, and in Nov 2024, Nepal began exporting 40 megawatts to Bangladesh.

In April 2023, Nepal and India signed a long-term agreement to export 10,000 megawatts of electricity, setting the stage for Nepal to become an energy-exporting nation within the next decade. The private sector has invested approximately Rs 600bn in hydropower, with an additional 4,200 megawatts currently under construction. IPPAN estimates that total investment could reach Rs 1,500bn when ongoing projects are included.

Total investment in completed and ongoing projects stands at around Rs 1,300bn, which includes bank loans, equity capital, and contributions from around 400,000 individual investors. While hydropower development initially occurred in a handful of districts, it has now spread to 70 of Nepal’s 77 districts. Energy projects are underway in nearly all districts except Bara, Bardiya, Bhaktapur, Dang, Dhankuta, Salyan, and Saptari.

According to preliminary IPPAN data, hydropower development has contributed not only to electricity generation but also to socio-economic development in remote areas. These projects have built 3,300 kilometers of roads, 350 kilometers of tunnels, 140 health centers, 153 schools, 95 drinking water systems, and 45 irrigation systems.

To address local needs, the sector has also supported the hiring of 200 teachers and the provision of 30 ambulances. A one-megawatt project under construction can employ about 300 people, while operational projects employ around 10 people each.

To build on this progress, the government has introduced the Energy Development Roadmap and Action Plan 2024, aiming to expand production, consumption, and export of electricity. The goal is to generate 28,500 megawatts of electricity within the next decade. Former Secretary Karki emphasizes the importance of public-private collaboration to implement the roadmap effectively. “The roadmap has been prepared, but to ensure it is not derailed, we must revise laws and create an investment-friendly environment on time,” he says.