Economic Policy Needs One Direction, Not Many

After a long period of political instability, the formation of a single-majority government had raised hopes for economic recovery. Yet, parallel activities within the government are creating fresh uncertainty. Recent tensions between the government and its own lawmakers have raised concerns about internal cohesion, while the handling of economic affairs suggests differences between Prime Minister Balendra Shah and Finance Minister Dr. Swarnim Wagle. The finance minister was absent when the prime minister held discussions with private-sector representatives. Likewise, the absence of the Nepal Rastra Bank governor from a discussion between the finance minister and senior central bank officials sent another troubling signal about coordination among key economic actors. Such incidents reflect a lack of institutional coordination at a time when the economy needs a unified approach. Prime Minister Shah also appeared to take the initiative to scrap taxes imposed on education and health under the Fiscal Year 2026/27 budget through social media posts. He has also held discussions with private-sector organisations without the participation of the concerned ministers. Such practices can blur institutional responsibilities and create confusion over economic policymaking. Finance Minister Dr Wagle has repeatedly assured the private sector that the government will not harass businesses. Yet, reports of police and administrative agencies conducting searches without sufficient evidence and detaining businesspeople until courts order their release have generated frustration. Such actions undermine business confidence and raise questions about the government’s ability to ensure consistent implementation of its policies.