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The macroeconomic report for the first half of the current fiscal year and the mid-term review of the monetary policy for fiscal year 2023-24, recently released by the Nepal Rastra Bank, shows positive developments in the external sector of the economy. The economy has experienced strong performance in sectors such as mining, construction, tourism and financial services. The resurgence of tourism after Covid has been remarkable, with a substantial increase in tourist arrivals contributing to economic activities and income generation. Infrastructure development, particularly in the energy sector, is expected to enhance production potential. Foreign exchange reserves have reached an impressive Rs 1,816.57bn by mid-January. This achievement is primarily fueled by a notable 25.3 percent increase in remittances amounting to Rs 733.33bn, which undoubtedly paints a positive picture of Nepal's external sector.

Prudent policy adjustments such as maintaining interest rate stability and implementing targeted measures like lowering interest rates for institutional fixed deposits in the mid-term review of monetary policy demonstrate a proactive approach to mitigating risks and stimulating economic activity. The Nepal Rastra Bank's decision to maintain the interest rate corridor while implementing measures to enhance its effectiveness shows its commitment to balanced monetary policies. Moreover, the focus on supporting agriculture and small to medium enterprises through regulatory retail portfolio arrangements reflects a dedication to growth and economic resilience.

While a healthy foreign exchange reserve is essential for economic stability, it is not a solution to all of our economic problems. The decline in exports, slow import growth, manufacturing slowdown, low demand for bank loans from the private sector and the lack of investment despite favorable conditions highlight the underlying issues plaguing our economy. The government has been consistently missing revenue targets. It is crucial to accurately assess economic indicators and devise appropriate policies. Worryingly, both the government and the central bank seem to be falling short in this regard. It is high time for the government and the central bank to shift their focus from highlighting nominal successes to implementing meaningful changes.

Nepal has long been an important contributor to global peace and stability through its involvement in UN peacekeeping missions. Nepali peacekeepers deployed in various conflict zones have consistently earned praise for their exceptional performance, professionalism, and integrity. 

Now, Nepal has achieved a significant milestone by becoming the largest contributor of troops to these missions. According to the United Nations, Nepal is currently contributing 6,247 peacekeepers, ahead of  Bangladesh (6,197), India (6,073), and Rwanda (5,919).

The Nepali Army has been contributing to world peace for more than six decades. During the period, it has served in more than 44 UN missions sending 149,980 personnel. The army’s association in the peacekeeping missions dates back to 1958 when Nepal first deployed five military observers to Lebanon. 

Over the years, Nepal has risen to prominence in global peacekeeping efforts. While this contribution has earned recognition from the international community, Nepal has not been able to enhance its image in the international arena by utilizing it as a soft power tool.

Although politicians and officials often discuss the potential of leveraging Nepal’s peacekeeping capabilities to bolster the country’s influence on the international stage, it has not yet become a central component of Nepal’s foreign policy. While Nepal’s Foreign Policy, introduced in 2019, briefly touches on this issue, it falls short of outlining a concrete plan and policy for projecting this soft power in the international arena.  The policy states that Nepal’s ‘commitment and contribution to world peace shall be continued and the country shall be projected as a peace-loving country.’ 

In a world grappling with multiple crises and conflicts, Nepal has the opportunity to send a powerful message advocating for peace and harmony. To capitalize on this opportunity, Nepal must elevate its position within the UN system. Despite being the leading contributor to peace missions, Nepal’s representation in leadership and decision-making roles within the UN is notably lacking. It is high time Nepal asserted its claim for top positions within the UN to play a more significant role on the international stage. Achieving this goal requires concerted efforts not only from the Nepali Army but also from the Ministry of Foreign Affairs, and the Office of the Prime Minister and the Council of Ministers. These institutions must actively engage in international platforms, meetings, and negotiations to elevate Nepal’s presence and influence.

Once Nepal secures prominent positions within the UN, it can leverage its soft power effectively. The recognition of Nepal as the largest troop-contributing country presents a significant opportunity that must be seized without delay. Therefore, the foreign ministry, in collaboration with the army, should formulate a comprehensive plan outlining how to project the country’s image through soft power and how to secure top positions in peacekeeping operations. 

This week witnessed a resurgence in the verbal sparring between republican and monarchist forces in the country. Former king Gyanendra Shah took a swipe at the failure of the political parties to bring peace, stability and prosperity to the country. He said there is extreme disappointment among people due to the activities of the political parties. In response, CPN-UML Chairman KP Sharma Oli dismissed Gyanendra Shah as a mere dummy rather than a monarch. Prime Minister and CPN (Maoist Center) Chairman Pushpa Kamal Dahal went on to say that the government would launch an investigation into the 2001 massacre involving King Birendra's family. 

Rastriya Prajantra Party (RPP) has already declared its intent to take to the streets for the restoration of monarchy and the Hindu state. Interactions between former king Shah and royalist forces have intensified recently. Major political parties, including Nepali Congress, CPN-UML, and CPN (Maoist Center), are increasingly concerned about the growing influence of royalist forces. They fear the potential weaponization of public frustration against the current political system. However, engaging in a war of words and issuing threats against royalist forces will not address the root issues. The focus should shift toward addressing the growing dissatisfaction among the people. Foremost among the priorities should be corruption control and improvement in governance at all levels. Widespread unemployment is fueling discontent among people prompting many to seek opportunities abroad or endure miserable conditions at home. The recent trend of Nepalis joining the Russian Army speaks volumes about the desperation for well-paying jobs. Moreover, thousands of people are protesting in the streets, demanding the return of their deposits from troubled financial cooperatives. Victims of loan sharks are preparing to rally as well.

The current situation underscores the imperative for simultaneous economic development to sustain epochal changes such as republicanism, federalism and inclusion. Although historic political changes have taken place in Nepal over the past two decades, political leadership has neither rectified its approaches nor taken serious measures for economic development. The political parties need to recognize that not only royalist forces but also other adversarial elements can exploit public sentiments and frustration to destabilize the existing political system. Therefore, the political parties—both in the government and in the opposition—should think about resolving the key problems that the country is facing at the moment.

Forming governments, formulating laws, overseeing parliamentary functions, conducting hearings and approving annual budgets are the main responsibilities of legislatures. While these functions collectively define the essence of parliamentary duties, the main responsibility remains the formulation of laws.  The winter session of parliament, also known as the bill session, is beginning on Feb 5. The track record of the previous session is not satisfactory when it comes to formulating laws. All the stakeholders, the government, parliament secretariat and political parties, therefore, must be serious about providing sufficient business to the house in this session.

The delay in endorsing crucial bills is impeding the functioning of the federal, provincial, and local governments. Of particular concern is the prolonged delay in endorsing the Amendments to Some Laws relating to AML and Business Promotion Bill which has been gathering dust in the Federal Parliament Secretariat for two years. The failure to promptly endorse this crucial bill is increasing the risk of Nepal being listed by the Financial Action Task Force as a jurisdiction with strategic AML/CFT deficiencies. Political parties must recognize the potential repercussions it could have on Nepal's global financial standing and correspondent banking relationships, and act swiftly to address these concerns. 

Equally pressing is the need for immediate endorsement of crucial bills such as the one related to the Truth and Reconciliation Commission. Although top party leaders have held numerous discussions on the Bill, key contentious issues still remain unresolved. Despite this, the government is preparing to endorse the bill during the winter session.  The Parliament is losing the trust of the people as it fails to perform its key tasks. The operational costs of Parliament are significant, but the performance of both Parliament and parliamentarians is disheartening. It is important for parliamentarians to collaborate with the government in ensuring the timely fulfillment of their legislative responsibilities. 

To expedite the law-making process, parliamentarians can collectively urge the government to provide the necessary business and work towards a consensus on key bills. The continued sluggish pace threatens to further diminish public faith in Parliament, especially at a time when there is growing discontent with the current constitution and political systems. The failure of Parliament to enact laws in a timely manner is affecting effective functioning of the federal system, thereby raising questions about the relevance of such structures. The government, major political parties, and lawmakers need to address the issue urgently because an ineffective Parliament means there will be more attacks on the system.