Tuesday, Feb 13, 2024 10:45 [IST]

Last Update: Tuesday, Feb 13, 2024 05:13 [IST]

Navigating Nepal's Economic Crisis: Addressing Corruption Amidst Plummeting Sustainability


Nepal has experienced its share of political instability and public discontent with corruption and governance issues in the past. The country has seen various political movements and protests aimed at addressing these issues, including the anti-corruption movement led by social activists and civil society organizations.  In recent years, there have been protests and demonstrations in Nepal on various issues, including government performance, constitutional concerns, and socioeconomic grievances. However, these protests have not necessarily coalesced into a unified revolt against corrupt politicians in the same manner as seen in other countries.

Political Instability: Nepal has experienced frequent changes in government and political instability in recent years. The country has seen numerous prime ministers and coalition governments, leading to challenges in governance, policy continuity, and long-term planning.

Constitutional Amendments: There have been ongoing debates and controversies surrounding Nepal's constitution, which was promulgated in 2015. Various political parties and ethnic groups have raised concerns about the constitution's provisions related to federalism, representation, and minority rights. Calls for constitutional amendments to address these issues have led to political tensions and deadlock.

Ethnic and Social Issues: Nepal is a diverse country with a multi-ethnic and multicultural society. However, tensions and conflicts have emerged on the issues of inclusiveness, particularly regarding issues of identity, representation, and resource allocation. Ethnic-based political movements and demands for greater inclusivity in governance remain significant challenges.

Economic Development: Nepal faces various economic challenges, including high levels of poverty, unemployment, and underdevelopment in rural areas. The country relies heavily on remittances from Nepali workers abroad, but the COVID-19 pandemic has significantly impacted this source of income. Infrastructure development, job creation, and poverty alleviation are critical priorities for the government.

Natural Resource Management: Nepal is vulnerable to natural disasters, including earthquakes, landslides, and floods, due to its geographical location and mountainous terrain. Effective management of natural resources, disaster preparedness, and climate change adaptation are crucial for ensuring the country's resilience and sustainable development.

Corruption and Governance: Corruption remains a significant challenge in Nepal, affecting various sectors, including politics, bureaucracy, and public services. Weak governance structures, lack of accountability, and institutional inefficiencies contribute to the prevalence of corruption. Addressing corruption and improving governance are essential for promoting transparency, accountability, and trust in public institutions.

Infrastructure Development: Nepal faces significant infrastructure deficits, particularly in transportation, energy, and water supply. Poor road networks, inadequate electricity access, and limited access to clean water hinder economic growth and development. Investments in infrastructure development are crucial for improving connectivity, promoting trade and tourism, and enhancing living standards.

As Nepal stands on the threshold of change, it becomes increasingly apparent that the time for complacency has passed. Nepal is plagued by a deeply entrenched system of corruption that continues to undermine the very fabric of our society. The prevalence of corruption in every facet of public lives, from the highest echelons of government to the grassroots level, has left no corner untouched.  The rampant corruption in the country has not only hindered our progress but has also perpetuated a cycle of poverty, injustice, and inequality. It has eroded public trust in the institutions meant to serve and protect people, leading to a widespread sense of disillusionment and despair among the populace. 

Despite numerous promises and assurances from those in power, little has been done to address the root causes of corruption or to hold the perpetrators accountable. Instead, the people have witnessed a culture of impunity where the corrupt remain untouched while the masses suffer the consequences of their actions.  Nepal, like many other developing countries, faces challenges related to managing its international debts and dependency on donor agencies. Here are some considerations regarding this issue:

Sustainability of International Debt: Nepal's external debt has been increasing steadily over the years, and the country relies on both concessional and non-concessional loans from bilateral and multilateral sources. While some level of borrowing can be beneficial for financing development projects and stimulating economic growth, there is a risk of debt unsustainability if borrowing exceeds the country's ability to repay.

Debt Servicing Capacity: Nepal's capacity to service its international debts depends on various factors, including its economic growth rate, export earnings, foreign exchange reserves, and fiscal policies. If debt servicing obligations become too burdensome, they can strain the country's finances, leading to budget deficits, cuts in essential services, and macroeconomic instability.

Dependency on Donor Agencies: Nepal relies heavily on donor agencies and foreign aid to finance its development projects and address socio-economic challenges. While donor assistance can provide crucial support, over-reliance on external aid can also pose risks, including donor-driven agendas, conditionality attached to aid, and potential impacts on national sovereignty and policy autonomy.

Promoting Domestic Resource Mobilization: To reduce dependency on external borrowing and donor assistance, Nepal can focus on promoting domestic resource mobilization through measures such as improving tax collection, enhancing revenue administration, promoting private sector investment, and reducing illicit financial flows. Increasing domestic resource mobilization can help strengthen the country's fiscal position and reduce reliance on external financing.

Enhancing Debt Management Capacity: Nepal can strengthen its debt management capacity by improving debt monitoring, reporting, and transparency mechanisms. Effective debt management practices, including prudent borrowing, debt restructuring, and negotiation of favorable loan terms, can help mitigate risks associated with international debt.

While international debts and dependency on donor agencies can present challenges for Nepal, proactive debt management, domestic resource mobilization, diversification of financing sources, and prudent fiscal policies can help mitigate risks and promote sustainable development. It's crucial for Nepal to strike a balance between leveraging external support and maintaining fiscal sustainability to achieve its development goals.  These issues represent some of the key challenges facing Nepal and addressing them effectively requires concerted efforts from the government, civil society, and the international community. Ongoing dialogue, consensus-building, and proactive measures are essential for addressing these burning issues and fostering sustainable development and stability in the country.

(Views are personal. vidhukayastha@gmail.com)

Sikkim at a Glance

  • Area: 7096 Sq Kms
  • Capital: Gangtok
  • Altitude: 5,840 ft
  • Population: 6.10 Lakhs
  • Topography: Hilly terrain elevation from 600 to over 28,509 ft above sea level
  • Climate:
  • Summer: Min- 13°C - Max 21°C
  • Winter: Min- 0.48°C - Max 13°C
  • Rainfall: 325 cms per annum
  • Language Spoken: Nepali, Bhutia, Lepcha, Tibetan, English, Hindi