Asia St: Nepal’s Politics Enters a New Chapter

Asia Street

Know the Street. Know the people. Know Asia.

Welcome to BGA’s Asia Street blog, where you’ll find commentary and analysis from our people on the ground.

Nepal’s Politics Enters a New Chapter

July 20, 2021

Prime Minister of Nepal, Sher Bahadur Deuba (Photo Credit: Wikimedia Commons).

BGA Senior Advisor Sujeev Shakya wrote an update to clients regarding the recent political developments in Nepal. The update addressed changes involving the newly appointed Prime Minister Sher Bahadur Deuba, the country’s broader domestic and foreign policy environment and the implications for companies.

Context

Deuba has been cementing his role as Nepal’s new prime minister amid political change. He decisively won a confidence vote July 18 on the first day Parliament was reinstated, following a landmark Supreme Court judgement that removed former premier K.P Sharma Oli for unconstitutionally dissolving Parliament in May.

This is occurring within a context of Covid-19, which Nepal is managing with some positive economic signs as well as international support. The country received medical equipment, supplies and vaccines from countries including the United States, China and India as it was battling the second wave of the pandemic. Consumption and remittances continue to grow, stock prices have seen a lot of activity and real estate prices have not plummeted.

Significance

Dueba’s victory closes the chapter of Oli’s governance of Nepal which had raised some concerns. Deuba’s victory ends the 3 1/2-year reign of strongman Oli, who along with Bhandari was moving toward authoritarianism by issuing multiple ordinances to take control of government institutions.

Nepal’s recent political changes are also a testament to the strength and integrity of its government institutions. This is particularly true of the Supreme Court, which had reversed Oli and Bhandari’s previous attempt to dissolve Parliament in December 2020.

Implications

Companies can expect relative stability and continued economic recovery. With Oli removed from office and Parliament reinstated, firms doing business in Nepal can expect the country to move forward on some of its Covid-19 challenges as well as the passage of delayed legislation in the roughly 18-month lead-up to Nepal’s next general election.

Deuba still has a series of political challenges ahead of him. This is Deuba’s fifth time as prime minister, and he has never been associated with any great achievements. The disparate makeup of Nepal’s ruling coalition will require Deuba to deftly manage a diversity of interests through a fair amount of negotiation and compromise.

BGA will continue to keep its clients updated on developments in Nepal as they occur. If you have any questions or comments, please contact BGA Nepal Senior Advisor Sujeev Shakya at sshakya@bowergroupasia.com.