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The Nepal Rastra Bank (NRB) has unveiled a cautiously flexible Monetary Policy for Fiscal Year 2026/27. The central bank has said that the monetary policy, unveiled on Tuesday, would ensure sufficient liquidity and prudent foreign exchange management to achieve seven percent economic growth, contain inflation at 5.5 percent and cover merchandise and services imports for at least seven months.

“Since the current foreign exchange reserve position is comfortable and the overall macroeconomic environment favourable, the cautiously flexible policy stance adopted so far has been continued,” Governor Biswo Nath Poudel said, while unveiling the policy.

The central bank has kept key monetary instruments under the interest rate corridor, including the policy rate, standing deposit facility rate, and bank rate, unchanged. Similarly, it has said that the existing provisions related to the cash reserve ratio (CRR), statutory liquidity ratio (SLR), and standing liquidity facilities will continue in the coming fiscal years as well.

By keeping key policy rates and statutory ratios unchanged, the central bank has signaled that the current macroeconomic framework is stable enough to support recovery. The central bank has kept credit expansion targets at 11 percent for the upcoming fiscal year. While this may look ambitious, given slow credit growth in the current fiscal year, private sector credit must grow if the government is to achieve a seven percent growth rate set in the budget for 2026/27.

Banks will need to expand credit by over Rs 652bn to achieve 11 percent credit growth target. Since banks and financial institutions do not have the capacity to invest such a huge amount of money, the central bank has said banks that do not have the required capital adequacy ratio would be allowed to raise capital by issuing shares.

The monetary policy also proposes managing distressed industries and stressed loans as a way to support credit expansion. The initiative is expected to help revive financially distressed but potentially viable businesses while making it easier for banks to manage their stock of bad loans.

Likewise, the central bank has said that it would end the existing practice of applying a uniform lending standard to all listed companies for margin loans. Instead, the value of shares pledged as collateral will be assessed based on factors such as a company’s financial health, corporate governance, business performance and overall strength to determine loan-to-value (LTV) ratio.

The central bank also plans to address the problem of borrowers being blacklisted due to dishonored checks. According to the NRB, necessary arrangements will be made to reduce obstacles to banking services for individuals who have been blacklisted because of cheque dishonor.

The central bank is also preparing to reform the existing provisions on personal guarantees. At present, if a company borrows Rs 500m, banks often require every director or shareholder to provide an individual personal guarantee for the full loan amount. The NRB is reviewing the provision since this practice exposes directors to unlimited personal liability if the business fails. 

The monetary policy also proposes allowing individuals to lend directly to one another instead of relying solely on the banking system. The budget for 2026/27 said individual credit score rating would be introduced to promote peer-to-peer lending. Once the central bank puts in place the necessary framework, individuals can access credit outside the formal banking system based on their credit score.

To manage growing excess liquidity in the banking system and rising foreign exchange reserves, the monetary policy has said that commercial banks will be encouraged to invest in foreign central banks or highly secure foreign debt securities. The central bank believes the measure will help manage both excess liquidity in the domestic financial system and the country’s foreign exchange reserves more efficiently.

Allowing migrant workers to retain some of their remittances in dollar-denominated accounts, easing the loan-to-value ratio for large electric vehicles used in public transportation, greater flexibility in bank branch expansion and closure are some of the positive aspects of the monetary policy. 

The monetary policy acknowledges the constraints facing the economy, such as weak credit demand, external dependencies, and structural inefficiencies, while attempting to create conditions for gradual recovery. Whether this approach will be sufficient to achieve seven percent growth remains to be seen. 

The ‘Blue Bus Project’, is one of the 100 provisions the Nepal government promised after the sweeping victory of the Rastriya Swatantra Party (RSP). It involves government run free public bus service aimed at only facilitating women and children for their daily commute with increased security features. Arvin Ghimire from ApEx spoke with people to understand this matter regarding its importance, gender segregation and more.

Snidgha Pakhrin, 18, Student

The blue bus service is a great initiative. Protecting both women and children in buses where they often face harassment, groping and leering is just what’s currently needed. Whereas as for its criticisms, I fail to see any proper ones. I can understand the arguments for including elderly males in the service, however as they do not require as much protection as women and children, especially in public places, their exclusion makes sense. That said, I am still skeptical of the government’s reason to name the service blue bus, doesn't it stereotypically represent men?

Abhinna Shrestha, 17, Student

Any program aimed at protecting women and children has my full support. That said, I fail to see the economic viability of this project. As per my understanding 99 percent of public transportation is currently being run by the Private Sector. Introduction of free service in such industries are certain to hinder the free market, and create unwanted negative consequences, such as reduction of overall transportation or some level of retaliation by bus owners, which is bound to disrupt daily life for a lot of people.

Mira Poudyal, 71, Housewife

The provision of free transportation creates a bittersweet effect. While the customers will be satisfied with the stipulation, the state is forced to bear all the costs. Instead of making the service free for all females,it would be better off charging lower costs, while providing grants to the elderly and children. This way women will be encouraged to create their own source of income. Plus, exclusion of elderly males and the disabled is also a mistake as they also deserve such facilities.

Mohan Bahadur Basnet, 60, Businessperson

This program seems viable only in concept . I do not see any probability for the government to successfully run transportation services, it's just too complicated. Let's look at it practically na, who's going to pay for the cost of acquiring and repairing the buses.  You know these kinds of operations require a command center to operate right? Who is willing to do that in the long run? I just have one thing to say, “The project is just not suitable”.

Mala Kumari Sahani, 23, Student

The current public transportation services are really uncomfortable. I often come across crowded situations where men and women end up pressed against each other while staying in the bus to create more space, which doesn't help further when conductors instruct you to do so. I also have to worry about temperature, where in summer I face excruciating heat fueled by the crowd, and in the winter where no matter the amount of clothes I wear, the cold finds its way to sweep in. I have a lot of hope for the Blue Bus service, to fix those issues and view it as a positive step forward.

Surendra Kumar Subedi, 55, Retiree

I disagree with the practicality of this service. Instead of dividing women and children into a completely different vehicle, the government would be better off increasing the number of quotas designated for them in the existing transportation sector. Which  is a way to both increase comfort for them, while the government can be relieved from the task of operating a transportation service.

Vishnu Dev Yadav, 25, Student

While I'm not really informed about the topic, I find initiatives to protect women and children really good. As the Blue Bus program is free for women, it is even better.  That said, I also believe in equality between males and females, just because a small percentage of men are responsible for committing crimes against women, does not justify their exclusion from the service. Men should also receive services that women receive from the government.

Samjhana Pal, 18, Private sector employee

It is a great initiative, as it makes women and children feel protected in a typically unsafe environment. And for the arguments of including elderly men in the service, I would actually feel concerned for them, as they can also feel uncomfortable being only surrounded by women in a ride predominantly made for women.

Roshani Poudyal, 48, Associate professor 

To begin with there is a lack of information available about the service, despite its operations starting very soon. As a woman I expect some basic services such as trained operators, sanitary environment, and overall a safe form of driving, unlike the current public transportation scenario.

Kul Raj Subedi, 65, Retired bureaucrat

Considering  the difficulty faced by women and children,  the program seems to be a positive way forward. Although women being the major victims of crimes such as leering, other crimes such as pickpocketing, should also be controlled, ensuring everyone’s right to obtain a comfortable and safe transportation environment.

Nepal’s total public debt has more than doubled in seven years, as the government continues to rely on borrowing to bridge widening resource gaps amid slowing revenue growth and rising expenditure needs.

According to the Public Debt Management Office (PDMO), total public debt, which stood at Rs 1,433.4bn at the end of fiscal year 2019/20, has now reached Rs 2,961.19bn by mid-June of the current fiscal year. The total public debt is equivalent to 44.87 percent of the country’s gross domestic product (GDP).

The latest data show that Nepal’s debt stock increased by Rs 287.14bn, including foreign exchange losses, from the beginning of the current fiscal year. Total public debt stood at Rs 2,674.04bn in mid-July 2025 when the current fiscal year began. With government income failing to match spending requirements, borrowing has become a major source of financing for the budget. In the coming fiscal year, which begins on July 17, the government has set public debt mobilization target at Rs 657.29bn to bridge the gap between its Rs 2,124.34bn budget and projected revenue

The composition of public debt, which used to be dominated by domestic debt in the past, is also shifting gradually. By mid-June, foreign debt accounted for 53.49 percent of total public debt, while domestic borrowing made up 46.51 percent.

Data show foreign currency fluctuations have played a significant role in increasing debt burden. Of the total increase in public debt during the current fiscal year, 53.45 percent came from foreign exchange losses. Depreciation of the Nepali rupee against major international currencies increased the value of foreign debt which pushed the outstanding liability by 5.74 percent compared to the debt stock at the beginning of the fiscal year.

Despite concerns over the rising debt burden, Nepal’s debt level remains below the threshold seen in many developing economies. Government officials also say this level is manageable. However, economists have repeatedly warned that the key question is not only the size of debt but also whether borrowed resources are being used for productive sectors that can generate future income.

The government has set a target of mobilizing Rs 595.66bn in public debt during the current fiscal year. By mid-June, it had raised Rs 418.12bn or 70.2 percent of the annual target.

Domestic borrowing has driven most of the debt mobilization so far. The government has achieved 93.55 percent of its annual domestic borrowing target, while foreign loan mobilization remains weak, with only 34.01 percent of the target achieved, in 11 months.

Of the total debt raised so far, 81 percent came from domestic sources, while external borrowing contributed only 19 percent. The slow pace of foreign loan mobilization has raised questions over Nepal’s ability to finance large infrastructure and development projects that rely heavily on concessional external financing.

At the same time, debt servicing has become a growing burden on government finances. The government allocated Rs 411.01bn for debt servicing in the current fiscal year. Of the earmarked amount, around Rs 351.74bn, or around 85.58 percent of the annual allocation, has already been spent. Debt servicing expenditure during the period amounted to 5.33 percent of GDP. 

The government spent the amount on both principal repayment and interest payments. It repaid Rs 284.45bn in principal and Rs 67.29bn in interest in the first 11 months of the current fiscal year.

The rising cost of debt repayment comes at a time when the government is struggling to meet its revenue targets due to weak economic activity, slower imports and reduced consumption. The government has set a target to raise Rs 1,480bn in revenue in the current fiscal year. Total revenue mobilization currently stands at Rs 1,091.04bn, or 73.72 percent of the target.

The government’s Rs 2,124.34bn spending plan for the upcoming fiscal year 2026/27 rests on an ambitious assumption that revenue collection will jump to Rs 1,580bn next year. The target anchors a spending plan built around tax relief for the middle class, VAT reforms, digital infrastructure investments and measures aimed at stimulating private sector activity. However, the question facing policymakers, businesses and investors is whether such a sharp increase in revenue is achievable given Nepal’s recent performance on revenue fronts, sluggish economy and long-standing structural constraints.

The target for the new fiscal year is Rs 265bn more than the revised revenue target for the current fiscal year. Although the government had initially set a revenue target of Rs 1,480bn for the current fiscal year, it revised the target downward to Rs 1,315bn through the mid-term review of budget in February, citing low revenue collections and slow pace of capital expenditure. Even that revised target appears difficult to achieve as revenue collection by mid-May has reached just Rs 1,039.67 by June 3. This is roughly around 70 percent of the annual target.

Based on current collection trends, total revenue is expected to reach around Rs 1,250bn this year.  That would represent growth of only around 6 percent over last year’s collection of Rs 1,178bn. Against this backdrop, next fiscal year’s target of Rs 1,580bn appears highly ambitious. If revenue collection reaches Rs 1,250bn this year, the government would need growth of more than 26 percent next year to meet its target.

Achieving such a high revenue growth would be difficult. Data show revenue growth has remained subdued since the Covid-19 pandemic. In 2024/25, revenue growth stood at 11.5 percent, while it remained at just 10.5 percent in 2023/24. Revenue growth even turned negative in two of the past 12 years, declining by 10.2 percent in 2022/23 and by 4.3 percent during the pandemic-hit 2019/20. Before the pandemic, Nepal was seeing revenue growth of around 15 percent. Historical data suggests recording revenue growth of as high as 26 percent would be very challenging if not difficult.

During a post-budget press meet in Kathmandu, Minister for Finance Dr Swarnim Wagle remained upbeat about achieving revenue targets. He argued that the target will be supported by changes in customs duties, VAT, excise taxation and business expansion. The government is also betting that higher economic activity, stronger consumption and improvements in tax compliance will broaden the revenue base.

However, the budget itself contains measures that could reduce revenue collection from some traditional sources. One of the most significant changes is the restructuring of personal income tax slabs. The government has increased the tax-free threshold and lowered tax rates for many middle-income earners in a bid to boost household spending.

In the previous fiscal year, income tax generated Rs 292.6bn, including Rs 108.3bn from individuals and Rs 135.2bn from corporations, for the government. According to finance ministry estimates, the revised income tax structure could reduce annual revenue by Rs 35bn to Rs 40bn.

To offset that loss, the government has introduced a 3 percent equity tax on education and health services and imposed a 5 percent VAT on electricity consumption. The finance minister has estimated that these measures could generate roughly Rs 35bn annually. This, he said, would help bridge the revenue gap created by income tax relief.

Finance ministry officials say the decision to remove excise duties on 273 items would not affect revenue collection much as they believe new environmental or ‘green’ taxes on many products would offset the loss. 

The government has struggled to meet revenue targets despite repeated revisions. Weak domestic demand, slow private sector investment, underperforming imports and inefficiencies in tax administration have constrained collection for several years. Many of those challenges remain unresolved and are not going to change overnight. 

While the government is saying that economic growth will accelerate, business activity will improve and tax compliance will strengthen, achieving more than 26 percent revenue growth within a single year would require a significant departure from recent trends. 

Dhawal Shamsher Rana, who recently split from the Rastriya Prajatantra Party (RPP), and Durga Prasai, coordinator of the Nation, Nationality, Religion-Culture, and Citizens Protection Campaign, have officially signed an 11-point agreement to form a new political party. The two leaders finalized the deal on Friday, stating that the new democratic and nationalist political force is essential to launch a powerful movement for reinstating a constitutional monarchy in Nepal.

Guided by a nationalist philosophy rooted in the historical teachings (Divya Upadesh) of King Prithvi Narayan Shah, the party intends to establish a nationalist front that restores a Hindu kingdom while fully integrating Vedic Sanatan, Kirat, and Buddhist traditions.

The agreement also outlines a shared commitment to several key policy shifts, most notably a push for reform-oriented federalism and a "Once a Nepali, Always a Nepali" stance that advocates for dual citizenship rights for non-resident Nepalis. Additionally, the new alliance plans to address pressing socio-economic grievances, including the issues faced by landless individuals and victims impacted by cooperatives, microfinances, and banks.

Moving forward, Rana and Prasai have stated they will actively collaborate with other like-minded political parties, grassroots movements, organizations, and independent public figures to officially launch and announce the name and structure of the new political party in the near future.

In a historic shift from traditional political patronage, nearly 3,000 individuals have applied for ambassadorial positions after the government opened the appointment process to public competition for the first time. The Ministry of Foreign Affairs (MoFA) called for applications between May 28 and June 5, receiving a massive volume of submissions via online portals, email, and physical drop-offs.

The openings arose after the previous administration under Sushila Karki recalled ambassadors from 10 countries, and the subsequent government led by Balendra Shah officially dismissed remaining political appointees. Nepal maintains 34 embassies worldwide—split equally between career diplomats and political appointees—and 17 of these posts are currently vacant. The government explicitly specified 13 of these countries for the competitive process while allowing applicants to list other preferences.

According to Ministry sources, the initial count appears high due to duplicate submissions and third-party recommendations, meaning the official number of unique candidates will be finalized after thorough data verification. Moving forward, MoFA will screen applicants based on strict criteria set by the 'Guidelines Related to the Appointment of Ambassadors, 2018'. To qualify, candidates must be Nepali citizens aged 35 or older, hold at least a bachelor's degree, and possess a clean criminal record with no foreign residency status like a PR or Green Card. They must also demonstrate expertise in foreign policy or international relations and maintain an excellent command of English.

Qualified shortlists will be forwarded to the Cabinet, and selected individuals will undergo a mandatory parliamentary hearing. Upon receiving the formal presidential appointment, the new ambassadors must sign a strict performance agreement with MoFA before departing for their overseas missions.

Senior advocate Jagadish Dahal, a member of the Supreme Court Bar with nearly three decades of experience in corporate law, says the recent appointment of the Chief Justice, despite bypassing the traditional seniority line, remains constitutionally valid and legally sound. In this interview with ApEx, Dahal discusses the constitutional basis of the appointment, the debate surrounding judicial seniority, speculation over possible resignations by senior justices, concerns about political influence in the judiciary, and the challenges facing the new Chief Justice in leading judicial reform and restoring public trust. Excerpts:

What is your view on the recent Chief Justice appointment, where the seniority line was bypassed?

If we look at the past—particularly before 1990, during the monarchy—the state followed a “pick-and-choose” approach. The King could appoint any Supreme Court justice deemed suitable for the position of Chief Justice. However, after the restoration of democracy and the promulgation of the 1990 Constitution, the seniority system was strictly followed. Until now, no lower-ranked justice had been appointed by bypassing more senior judges. That is precisely why this decision has generated so much debate, scrutiny, and mixed reaction in the media.

If we examine the Constitution and the law, the Judicial Council may recommend any eligible permanent Supreme Court justice who has completed at least three years of service. From a purely constitutional standpoint, the newly appointed Chief Justice fulfilled these requirements.

The Judicial Council, chaired by the sitting or acting Chief Justice, forwarded a list of eligible candidates to the Constitutional Council. The Constitutional Council then assessed those candidates based on experience, competence, decision-making ability, and professional integrity. It selected the individual it believed was best suited to lead the judiciary for the designated term. Since the recommendation was unanimously endorsed by the Parliamentary Hearing Committee and formally appointed by the President, any continuing public debate over “who should or should not have been chosen” no longer holds practical relevance. We should now move forward with optimism, extend our congratulations, and hope the new leadership guides the judiciary in accordance with the spirit of the Constitution.

Has this happened before since 1990? What precedent does it set?

No. Since 1990, there has been no precedent for intentionally bypassing the seniority roll in the appointment of a Chief Justice. There have been rare instances in which a senior justice passed away, allowing someone lower in the order to assume the role earlier than expected. However, deliberately altering the sequence while senior justices were still serving has not occurred in our democratic history.

That said, once the Judicial Council submits a list of eligible sitting justices to the Constitutional Council, the latter has the authority to select the most suitable candidate from among them. Therefore, claiming that this appointment is unconstitutional, illegal, or invalid simply because the seniority order was altered is baseless. The process complied with constitutional procedures, followed the law, and was carried out through proper institutional channels.

This appointment certainly establishes a precedent that any sitting Supreme Court justice who meets the constitutional criteria may be recommended and appointed if the state and Parliament consider them the most capable candidate. We should not automatically view this as a negative precedent. It may instead reflect an adaptation to the demands of the time. Rather than anticipating adverse consequences, we should hope for a positive impact on the judiciary’s performance.

Should the bypassed senior justices quit?

I have seen media reports and heard speculation that the senior justices might resign. There are also rumors that the new Chief Justice may sideline them by withholding bench assignments, or that they are being targeted because they were appointed under different political circumstances.

I do not believe they will resign, nor do I think they should. There is no constitutional or legal mechanism that could compel them to resign. Furthermore, I do not expect the new Chief Justice to harbor any hostility toward them. He will assign them benches, seek their cooperation, and accord them the respect they deserve. A capable leader manages the judiciary by fostering collaboration and maintaining institutional harmony, and I believe the current Chief Justice has the acumen to preserve a dignified and cooperative environment among all justices.

Could a strong government influence CJ?

When the Constituent Assembly drafted and promulgated the 2015 Constitution, it designed the terms of Parliament, the Prime Minister, and the Chief Justice by drawing from global parliamentary practices while adapting them to Nepal’s unique context.

We should not prematurely assume that a majority government—even one approaching a two-thirds majority—will necessarily complete a full five-year term without disruption, or that a particular Prime Minister or party will remain politically unchallenged. Nepal’s parliamentary history, the instability of previous governments, and the influence of geopolitics on domestic affairs all remind us that politics can change unexpectedly.

While the Constitution envisions full institutional terms, and we naturally hope both the executive and judiciary complete their mandates without interruption, history shows that unforeseen crises can and do arise. We have seen Chief Justices resign under pressure, and majority governments dissolve Parliament and call snap elections.

When we consider the changing nature of society, the younger generation’s growing aspirations, and the political shifts that brought the current government to power, it is clear that citizens are impatient for change. Given Nepal’s limited resources and broader global economic pressures, maintaining complete stability is always difficult. Therefore, rather than speculating about political influence or guaranteed timelines, we should hope that every organ of the state fulfills its constitutional responsibilities independently and successfully completes its tenure.

Can the new Chief Justice build a fair and controversy-free judiciary?

It is still too early to fully assess the new Chief Justice’s leadership or predict the trajectory of his tenure. However, he is undoubtedly regarded as a highly scholarly, capable, and competent judge. Since his appointment to the Supreme Court, his performance has been strong and largely free from controversy. He distinguished himself through his work as a justice, which is precisely why the state selected him for this leadership role.

Leading the entire judiciary and overseeing appointments across the Supreme Court, high courts, and district courts is undoubtedly a monumental challenge. The judiciary has struggled for long with case backlogs, institutional inefficiencies, and political scrutiny. Nevertheless, given his clean record and legal expertise, it is entirely possible that he could steer the institution toward a more transparent and merit-based future.

If he maintains the same integrity he demonstrated as a justice and resists external political pressure, establishing a fairer and less controversial judiciary is well within reach. What is most important now is to give him the time and institutional support necessary to prove his leadership.

Embattled CPN-UML Chairperson KP Sharma Oli has made a fiercely defiant public comeback, drawing a line in the sand against critics both inside and outside his party. Speaking at a program, Oli explicitly rejected any notion of stepping down, mockingly stating he did not take the job just to drop his bag and run away when the going got tough.
This defensive rhetoric is a direct response to a simmering, unprecedented debate inside the CPN-UML regarding leadership transition and accountability. While Oli has long maintained an absolute grip on the party machinery, recent political catastrophes have severely cracked that facade. In the wake of the party’s historic drubbing in the March 2026 general elections, younger leaders and reformist factions within the UML have quietly—and some overtly—begun demanding a generational shift.
These critics argue that the political landscape has permanently veered toward younger, anti-establishment forces, and they worry that retaining an old guard heavily associated with the status quo will relegate the UML to political irrelevance. To counter this, Oli is invoking his democratic mandate from the party's recent convention, framing any push for his resignation as political opportunism and signaling to internal rivals that the party’s lawful constitutional procedures will not be bypassed for a quick coup.
Oli further stated that he did not become the chairman to abandon the leadership during difficult circumstances.
“You chose me as the chairman in mid-December. It wasn’t meant for me to step forward eagerly to secure the Prime Minister’s post when things are easy and the environment is favorable, only to drop my bag and run away when difficult situations arise,” Oli said. Oli stated that he would only take his leave after leading the party to success.
Over the past few weeks, there is growing pressure on Oli to step down as prime minister. Senior party leaders except few are urging him to resign stating that the party cannot move ahead under his leadership.