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Bibeksheel Sajha Party President Rabindra Mishra’s call for doing away with federalism and a referendum on secularism has stirred Nepali politics anew. These are the things the Rastriya Prajatantra Party (RPP) has long asked for. So are the old RPP agendas going mainstream? What does the party make of the recent turn of events and how are its election preparations going? Pratik Ghimire of ApEx talked to RPP Chairman Kamal Thapa.

What is the RPP up to these days? Your party seems to have gone completely off the radar.

We are currently focused on organizing the party general convention, which is to be held on November 13 in Kathmandu. Leading up to it, our district-level committees are organizing their own conventions. We will also complete the selection of convention representatives by October 1. The party is all-set to start campaigning for the upcoming local-level elections as well. 

Your party didn’t fare well in the 2017 elections. Despite that you seem to be sticking to the agenda that has been rejected by voters.

There is a misconception about our agenda. The monarchy we are talking about is constitutional, not like the one we had before 2006. In our vision, the House of Representatives shall hold the legislative power and a ceremonial king will be the national guardian. When we lobby for a Hindu state, we don’t want any privilege for a particular religion. All we want is to restore the identity of Nepal as the country of Sanatan dharma.

Similarly, the dissolution of federalism will be accompanied by the formation of a strong central government, and well-equipped and capable local governments. In other words, it is a system where local governments will enjoy autonomy. It is a synergy between traditional and contemporary systems. 

The ruling and the opposition parties have repeatedly failed, which is also the failure of the system they represent. We are a small party at this point, but the public has realized the necessity of our systematic and progressive agenda—nationalism, democracy, and Sanatan dharma. We are the alternative force with the most number of supporters.

What do you make of Rabindra Mishra’s recent political proposal over federalism and secularism?

I am positive about his proposal. RPP believes in the system, not a particular person, and Mishra is talking about changing the system. No matter who builds a progressive path, we will always feel proud. Fifteen years ago, RPP was alone in condemning federalism and secularism and now we have many other politicians, intellectuals, and members of the public who share our sentiment. Even senior leaders of the Nepali Congress and CPN-UML are changing their minds. I take this as my achievement. There should be more open dialogue and discussion on these matters.

Is the RPP open to an electoral alliance with other like-minded forces, say like Mishra’s party?

Although we prioritize political parties that are close to our ideals, our door is open for everyone for an electoral alliance. I can’t confirm it yet, but we will certainly work together with some parties in the upcoming local elections. 

And the alliance for the federal election will rely on the steps of the ruling coalition. If the coalition continues into the election, of course, we will also come up with something competitive. Also, I can’t deny that we will be interested in merging with parties with shared beliefs. 

As a close confidante of ex-King Gyanendra, how do you read his concerns? Is he too planning a comeback of some kind?

He has serious concerns. He always talks about how Nepal could achieve peace, prosperity, and stability. He feels sad because the political parties have failed to live up to people’s expectations. This is his public as well as official view. I don't think the ex-king wants to be involved in mainstream politics, though if the monarchy is restored, it will be a different matter altogether. He will accept the verdict of political parties and citizens.

The MCC compact is again at the center of national attention following the re-election as prime minister of Sher Bahadur Deuba, whose government signed the compact in 2017. Since that time the compact has been in constant controversy for supposedly trying to undermine Nepal’s sovereignty. Here are edited excerpts from veteran TV journalist Bhusan Dahal’s recent interview with US Ambassador to Nepal, Randy Berry, on AP1Hd television.  

The Nepali parliament is yet to endorse the MCC compact. What is its current status in your understanding?

The partnership that is offered through the MCC to the Nepal government is something we would like to see Nepal move forward with. It makes a great deal of sense for Nepal’s own objectives. It is important to remember that the request for the compact started here in Kathmandu and not Washington. The compact is being undertaken for one basic purpose: to provide sustainable development on an infrastructure project of a scope Nepal has not implemented before. This will give a vote of confidence to the economy, employ Nepalis, and it will allow Nepal to monetize a green energy source, which is another priority of our government right now.

The compact still requires parliamentary ratification. It is our hope that the parliament will act on it so that we can get along with the good work. We absolutely welcome, and always have, the scrutiny on the MCC compact. We are committed to transparency and accountability to the people of Nepal on any form of assistance, and it is also the case with the MCC. You can ask any question about that compact because it’s all public. Any form of assistance should get that kind of scrutiny. 

But the scrutiny has gone to the level that the compact is alleged to hamper Nepal’s sovereignty, and it’s said the grant does not promote Nepal’s national interests. Are you aware of such criticisms, from the street to the political level?

I have heard both of those comments but I have never seen them explained in a way consistent with the facts of the compact. For example, the notion somehow that Nepal’s sovereignty is damaged or that somehow the compact will supersede Nepal’s own laws is completely false. There is nothing in this compact that sets that precedent. In fact, that would undermine what we are trying to do here. So I don’t see a credible linkage that goes to the real element of the compact. This has to do with misinformation, and disinformation—intentional misinformation to skew off what is the real intention of this program. Everything about this compact is absolutely in plain sight. There are no classified addendums, nothing that has been decided outside the public realm. That is part of the transparent process in which the MCC operates. 

Of the many American cooperation packages Nepal has received, this compact has one significant difference: that it needs to be ratified by the country’s parliament. Why was parliamentary ratification necessary?

This isn’t development assistance, this is an investment, and inherent in the compact is to make sure that countries have to achieve a certain threshold on democratic practices and other types of governance that allows them to participate. Fundamentally important is that there is a buy-in, that a country takes ownership of a project. At the end of the day, it is an entity, an infrastructure package, that does not belong to the United States. It will belong to Nepal. The idea of ratification is that it reflects people’s will. People’s elected representatives will decide whether or not the compact is suitable for the country. That’s not something that is required only for Nepal but has been required in every single compact established since the corporation itself began its work in 2002. 

People say the MCC grant is a way of countering China’s Belt and Road Initiative. How true or false is that?

I reject that linkage entirely. You are dealing with two entities that are completely different in their fundamental approach and implementation. For example, in the case of the MCC, there is a very clear set of public criteria that a country has to meet in order to qualify. It is also vital to understand that the United States does not propose compacts to other countries. Other countries request a review and the United States also looks at national priority. For example, in this compact’s case, the priority is the funding that would flow through the MCC compact is not for a project devised or prioritized in the United States. In the formulation of this, a question was asked: What does Nepal want to do with the compact? And the electricity transmission line and roads maintenance that ended up as priority were lifted straight out of Nepal’s own national planning documents. I fear because of misinformation there is always the perception that somehow these projects or the emphasis has been provided by the United States, which is not true. The MCC responded to Nepal’s own government seeking this kind of investment.

The criticism actually started when people started saying that the MCC and the Indo-Pacific Strategy are interlinked.

This is a part of the disinformation. Of course, the United States is going to devise and offer a program that is consistent with its policies. Way too much has been made of labels here. However you talk about the policy, the reality is that the US commitment in this region and in Nepal has been about fundamental freedoms, a free and open society, about economic prosperity and growth, the elements that make a free and open Indo-Pacific. It is too reductionist, too easy to simply link up a couple of phrases that are often misunderstood and point in the wrong direction. We know that the MCC corporation itself came into operation in 2002. Discussion on this compact with Nepal commenced in 2012, and the compact was signed in 2017. All of this predated this concept known as the Indo-Pacific Strategy. 

Coincidentally, the head of the government under whom the compact was signed is back in power in Kathmandu. Does that help?

This project has had the support of every Nepali administration that has been in power since the initial discussions began in 2012. Every single one of them. The substance of this program is sound, it is helpful, it is responsive to Nepal’s needs. I think problems develop when we attempt to politicize it. This is a stand-alone compact that is not attached to anything else the United States does. Of course, we hope that it is complementary to our development agenda and that we are not doing completely uncoordinated engagements here. But there are no conditionalities to it. That’s the one part of the conversation that I found most alarming because too many people are willing to suggest that A is linked to B which is linked to C. In fact, these compacts are designed to be stand-alone, independent sorts of projects. The MCC is a creation of the United States government but it does not reside as a specific US government entity. This is intended to make sure that we don’t get these things into political lanes. 

But like it or not, the compact is being politicized. Now we hear about its amendment, that the compact would not be signed as it is. Is the United States flexible about amending the compact?

I don’t know what those amendments are. I have also seen the press about the need for amendments. But I can tell you that we have not seen any reflection of the content of such amendments. This leads me to believe that in fact the substance of the compact is sound. The reality is, we spent five years negotiating this and answering many of these fundamental questions. This has not been rushed through. This went through a significant process of mutual discussion to make sure that when we got to the point where the compact was signed in 2017, we would have resolved many of the outstanding issues. Again, we welcome the questions raised in the parliament, we welcome the scrutiny, to ensure that there is an adequate degree of buy-in by the government. But rather than amendments I would want to focus on the substance of the question. We have been very committed to helping explain or clarify elements of the compact, so that we are grounded in facts. 

How much time does Nepal have to ratify the compact before it expires?

I can’t walk into hypothetical situations. I can tell you that we very much would like to see a ratification occur so that we can make this great program work for the Nepali people. It is a fundamental requirement of this program. 

What does your gut say? Would the MCC compact be ratified before the end of your term as ambassador in Nepal?

I certainly hope so. I know how critically important this is from a number of different perspectives. I know how important the compact and its implementation is not just for the project itself, which is already substantial, but also for the vote of confidence this can give for Nepal’s ability to implement a world-class infrastructure project on absolutely world class terms of transparency, employing and imparting skills to Nepali citizens, and in a way that allows the country to monetize its green energy: this is fundamentally important. I can’t think of anything else the US government could offer, if you are talking purely in terms of economic growth and employment, which would be a better option.  

Nepal’s monetary policy for the fiscal year 2078/2079 (2021/2021), which the Nepal Rastra Bank (NRB) was scheduled to present on July 18, got postponed for political reasons. Already late by a week, Nepali banking fraternity awaits the policy with anticipation, especially as a new government takes over.

Sunny Mahat of ApEx talks to Bhuvan Dahal, CEO of Sanima Bank and President of Nepal Banker’s Association, about his expectations from the monetary policy and the current liquidity situation. 

What have been the biggest shortcomings of past monetary policies?

In the past, the main problem has been with meeting set targets. The targets for GDP growth and capital expenditure are rarely met. Also, inflation has never been under control. Our inflation rate is calculated based on money supply and the cost side is ignored. That’s where we fail, I think. 

But this last fiscal year saw some success. Inflation was targeted to grow at no more than seven percent and looking at the report of the past 11 months, it is only at around 3.5 percent. 

What are your expectations from the soon-to-be-announced monetary policy now that we have a new government?

I don’t think a change in government will make a fundamental difference as we are in a multi-party democracy. We have high expectations from the current governor Maha Prasad Adhikari though. He is a highly qualified, experienced banker who has already proven his mettle.

If you see reports from the last fiscal, he has met almost all targets he set in the monetary policy. Inflation is under control. Also, the minimum credit growth target of 20 percent was easily surpassed with 28 percent growth. Rastra Bank wanted to keep foreign exchange reserve of no less than seven months; we have 10 months of reserve right now. We had enough liquidity in the last fiscal, which has also brought down our lending rates. Also, interest recovery has been at around 90 percent for the banks despite the pandemic.

Going forward, we hope the liquidity situation remains the same and banks have enough funds to utilize. For this fiscal, we have suggested NRB to use the Rs 300 billion surplus as well as the remaining Rs 70 billion set apart for refinancing. We should let the sectors still under stress refinance and restructure their loans this fiscal too. Right now, commercial banks are only able to use 50 percent of the deposits made by local bodies. We request for 100 percent use to increase liquidity in the system and further decrease lending rates.

Also, we have suggested the NRB to allow inter-bank lending so that banks with both surplus or deficit liquidity can manage their finances accordingly. The NRB should also help us in promoting digital currency by giving us subsidies for inter-bank money transfers so that it becomes free of cost for end customers. If internet costs are brought down and we have enough digital literacy campaigns, we will be able to reduce the logistical costs behind paper currencies as well as create efficiency and transparency in the system. 

It is being reported in the media that ‘monsoon development’ has led to an overflow of liquidity in Nepali banks. If true, could this be counterproductive for the economy?

It is partially ‘monsoon development’ but this has more to do with the Nepali way of expenditure management. Most government as well as private organizations have this habit of making major payments at year-end. Government agencies wait for Asadh (June/July) to finish their budget. So this results in liquidity overflow in the banking system at the end of the fiscal. This year, we saw a total deposit of Rs 700 billion, out of which Rs 200 billion were made in Asadh only.

But as this is a recurring phenomenon, the banks are already prepared. We pre-plan where to spend the deposits. It is indeed counterproductive when there is a sudden cash flow or a sudden drought of money in the system. To counter this, the government has to create a system where budgets are released and bills are paid monthly or at least on short periodical basis. 

What do Nepali banks feel about the current surge in stock market investments? Have ‘share loans’ increased too? Could this create more volatility in the banks’ debt ratios?

Share loans have increased by almost 100 percent increase this year. The banks only lend 70 percent of the total value and keep the rest 30 percent as margin. Also, the liability for a debtor goes beyond the share value and the total exposure of share loans for commercial banks is only about 2.4 percent. That makes banks safe from any volatility in the share market.

Many questions swirl around the new Sher Bahadur Deuba government, particularly after Deuba’s better-than-expected performance in the parliament, where he got the support of 165 lawmakers. He has a tough task balancing national and international actors even as he leads what is essentially an electoral government. ApEx’s Pratik Ghimire talked to veteran political analyst Vijay Kant Karna for some insights.

In your opinion, how long will Deuba’s coalition partners continue to support him?

The majority of MPs who stood against the House dissolution and announcement of midterm elections are now backing the government. So their hands are morally and politically tied to continue supporting it until the end of its term in late 2022. I don’t think we need elections right now because our constitution provides that our parliament will complete its full term. So, the Deuba government will and must continue until its natural expiry date.

How did the Thakur faction of the Janata Samajbadi Party come around to supporting Deuba’s premiership ?

The Thakur faction follows the majority. It would not have supported any government, whether led by Oli or Deuba, had other parties refrained from doing so. Its MP Resham Chaudhary is still in jail, the Supreme Court has scrapped the citizenship ordinance, and the issues of Madhes haven’t been addressed. The faction was compelled to vote for the government to stand a chance of getting their demands met. Deuba too asked Thakur for a favor.

How would you remember PM Oli’s over three-year tenure?

There are few bases to evaluate the government—political and constitutional—and election manifesto. The Oli government was a failure on all counts. He tried to weaken the essence of the republic: democracy, federalism, inclusion, proportionality, and secularism. The around 80 bills he introduced created mistrust between the central and provincial governments. This includes bills related to the Public Service Commission, bureaucracy adjustment, and more. The national intelligence department, which comes under the Home Ministry, was placed under his office. The Revenue Investigation and Money Laundering Department, which was to be governed by the Ministry of Finance, was also dragged under his office.

Moreover, Oli converted constitutional bodies and diplomatic posts into his party’s recruitment centers where he appointed his henchmen. The media and guthi bills, restrictions on protests in open places, and phone-tapping are also examples of his authoritarian tendencies.

What difference can we expect now that Deuba is at the helm?

I don’t have many expectations from the current government. But Deuba could take a few things back on track. I guess he won’t do things that will hamper the constitutional base of Nepal and further. He could also withdraw controversial bills.

Oli murdered our diplomatic relations and foreign policies with India, China, the US, the UK, and other European nations. None of the countries replied to the diplomatic note asking for vaccines. A few years back, in South Asia, we used to be the favorite of foreign powers. But today, Bhutan and Bangladesh are receiving vaccines as grants, but we aren’t. I hope the Deuba Cabinet will look into these things.

Unlike Oli, Deuba won’t run his office on individual whims. He has experience running a coalition government. Gandaki province has a Congress government, Province no. 2 has Congress alliance, and Lumbini could see a new Cabinet, so I think he will link well with provinces. For now, we should not expect more from him.

How do you expect the Deuba-India relationship to progress?

Nepali Congress and India have historical relations. And now too, I think these two friends will have normal diplomatic ties—but I can’t say it will reach new heights. Deuba shouldn’t take an ultra-nationalist stand and unnecessarily ditch the southern neighbor. India, in recent days, has established itself as one of the world’s most powerful nations, and it has fostered cordial relations with Western countries. The current government could use India’s diplomacy for national benefit.