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The government is preparing to summon the summer session of the parliament, or the budget session, from as early as next week. As per the Constitution of Nepal, 2015, the government must bring fiscal budget on May 28.

Except for some bright spots, the Nepali economy is passing through a challenging situation marked by diminishing demand and sluggish growth. Banks, which have lending capacity of over Rs 600bn, are seeing a lack of demand for loans as the private sector is not making new investments. The central bank's efforts to stimulate the economy through monetary easing have not yielded desired success. Purchasing power of consumers is dwindling due to factors such as youth outmigration and the lingering effects of previous interest rate hikes. These developments have eroded the consumption base that fuels economic activity. This has left businesses struggling with unsold inventories and underutilized production capacities. While the central bank has lowered interest rates to historic lows, this has become ineffective as there is not much improvement in consumer demand.  

It is evident that monetary measures alone cannot revive the economy. A combination of both monetary and non-monetary reforms that foster collaboration among the government, central bank, financial institutions and the private sector is what the economy needs. Non-monetary reforms should address structural issues hindering economic growth. Measures to boost employment opportunities can limit the outflow of potential consumers. Simultaneously, initiatives to improve productivity and competitiveness could bolster the private sector's confidence to invest. Furthermore, the government must play a catalytic role through targeted fiscal interventions. Expediting capital expenditure and clearing outstanding payments of construction entrepreneurs can provide an immediate boost to economic activity.

The National Statistics Office has forecast 3.87 percent GDP growth for the current fiscal year, which is more or less similar to the projections made by the World Bank and the Asian Development Bank. This shows a significant improvement compared to the previous fiscal year.  Addressing the demand-side constraints through a mix of monetary and non-monetary policies is crucial to continue this momentum.

On April 28 and 29, Nepal is hosting the 3rd Nepal Investment Summit with the aim of attracting foreign investment for the country's major infrastructure projects. For a long time, there has been a widespread perception among the international community that Nepal presents numerous policy and bureaucratic hurdles for investment. However, this perception is only partially accurate, and there are many misunderstandings about Nepal's investment climate.

While the decade-long insurgency, followed by a prolonged transition period and ongoing political instability, undoubtedly created an unfavorable environment for international investors, these factors alone do not fully explain the lack of foreign direct investment in Nepal. One of the main arguments put forth by the diplomatic community is the lack of policy consistency in the country. However, if we look at the past 10 years, with the exception of a few development projects, there has been relative policy consistency in the country. When it comes to attracting foreign direct investment, there are no major policy disagreements among the major political parties. For instance, the government has issued ordinances to amend nine laws in line with the demands of international investors, and there is no disagreement among the major political parties on this matter. Regardless of whether the government is led by communist or other parties, all are seeking international investment, and there is no disagreement on this front.

Another argument often raised is the lack of political stability in Nepal. While it is true that there has been instability in the past, there has been a degree of political stability following the promulgation of a new constitution in 2015, as elections for all three tiers of government are now held every five years. There are no hostile political parties or groups actively obstructing or discouraging foreign direct investment in Nepal. Concerns raised by the international community, such as tightened labor laws or difficulties in exiting the market, have been substantially eased over the past few years. While issues of corruption and bureaucratic red tape still exist to some extent, there has been progress in addressing these challenges. It is also true that some foreign companies have taken undue advantage of Nepal's poor governance systems. Despite these challenges, Nepal remains an ideal destination for international investors due to its strategic location bordering the large markets of India and China, its youthful population and other factors. 

While Nepal may not achieve full political stability within the next 5-10 years, the current political situation does not pose any significant threats to the international investors.. There is an all-party consensus regarding the investment summit, with no prominent opposition voices raised against it. Therefore, international investors should not be overly influenced by narratives claiming an inappropriate environment for investments in Nepal. At the same time, the diplomatic community should be cautious about misleading their respective investors through flawed briefings about the political situation in Nepal. Despite some occasional street protests, Nepal has largely remained a peaceful country since signing the Comprehensive Peace Agreement in 2006.

Major political parties are busy forming and toppling governments at both the federal and provincial levels. Even a month after the change in the coalition at the center, the process of forming new governments in the provinces remains incomplete. Provincial governments have become even more unstable than the federal government. 

At the same time, major political parties are engaged in blame-games. The country is facing numerous challenges, such as an economic recession, rampant corruption, and poor governance. Even worse is the  silence of parties over sensitive issues that demand immediate and urgent attention. Over the past few months, Hindu-Muslim clashes in the Tarai region and Christian-Hindu clashes in the hill region have been escalating. Last week, the local administration in Sunsari had to impose a curfew for a couple of days to calm tensions. This week, tensions brewed when a rally organized by Hindu organizations was disrupted by another group. These incidents are not isolated; similar clashes are erupting in different parts of the country.

This surge in inter-community conflicts marks a troubling departure from Nepal's history of religious tolerance and peaceful coexistence among its diverse communities. It is evident that certain vested interests are sowing seeds of discord in Nepali society by providing financial and logistical support to fuel these tensions. Nepal's security agencies, including the Nepal Army, have ground information about the groups trying to create disturbance in Nepali society. It is time to act tough to control these activities. This should become the agenda of major political parties in Parliament. Unfortunately, parties preoccupied with power struggles have yet to take the issue seriously.

Major political parties must prioritize addressing this escalating social crisis. They must unequivocally denounce these divisive activities and urge their members to refrain from participating in such provocations. Similarly, civil society, media and other social organizations, including religious organizations, must also rally to confront this challenge. Such tensions could spiral out of control any time, unleashing a new crisis which will be more detrimental than the Maoist insurgency. The inaction from the government and political parties is surprising. As a first step, Prime Minister Pushpa Kamal Dahal should call an all-party meeting to discuss this agenda.

The main opposition party, the Nepali Congress, has been obstructing parliamentary meetings for the past few days demanding the formation of a parliamentary committee to probe the alleged involvement of the Deputy Prime Minister and Minister for Home Affairs in a cooperative fraud. However, ruling parties do not agree with the NC’s demand, stating that there is no solid evidence of the minister’s involvement in the misappropriation of cooperative funds. 

While political parties have every right to stage protests in the Parliament, they should never forget that rights come with responsibilities attached. In Nepal’s context, major parties have misused this right to protest all too often by holding the parliament hostage for fulfilling their petty interests. In essence, all major parties are responsible for not allowing a smooth, independent and effective functioning of the parliament. This practice seriously hampers the law-making process and deliberations on the people’s agendas.

A case in point: It has been a decade since Nepal formally adopted federalism, but dozens of laws are yet to be formulated, giving successive governments opportunities to rule through ordinances without parliamentary scrutiny. 

Therefore, it’s time for all major parties—the Nepali Congress, CPN-UML and the CPN (Maoist Center)—to realize their mistakes and vow to never obstruct the parliament again by keeping in mind that such obstructions have never benefited them as they have to reach a compromise solution sooner than later.  Allowing the parliament to work independently is crucial, especially at a time when voices against the current political system are getting stronger and regressive parties are questioning the relevance of the current political system by pointing toward a dysfunctional parliament. 

The time has come for the parties to put an end to such obstructions once and for all—like they did with Nepal Bandh protests in view of tremendous hardships caused to the people—and allow the House to fulfill its duties, given that several urgent bills, including those related to the 2024 Nepal Investment Summit, remain pending in the House. 

A declining public trust toward the parliament resulting from the tendency of using the sovereign body to make or break a government and pursue various other petty interests should also act as a wake-up call for the main opposition and other parties to end such obstructions and get back to business. The sooner they do it, the better.