The coalition government of the Nepali Congress (NC) and CPN-UML has unveiled its annual policies and programs without any major disagreements between the two parties. Parliamentarians are currently deliberating on the policy document, with some NC leaders expressing reservations, noting that certain core agendas of the UML appear to have been prioritized. Historically, the annual program and budget have often sown discord among coalition partners. Lawmakers are now offering their suggestions on the policy document. Meanwhile, the main opposition, CPN (Maoist Center), has expressed dissatisfaction, particularly over the omission of several projects previously announced by Pushpa Kamal Dahal.To preempt potential tensions over the budget, Finance Minister Bishnu Paudel has begun consultations with NC leaders, while also continuing dialogue with the Maoist Center.
A recent friendly exchange between Prime Minister KP Sharma Oli and Maoist Chair Dahal has sparked speculation, with some political analysts predicting a possible collaboration between the two communist parties. However, the UML leadership has concluded that recent efforts to destabilize the government have lost momentum. Some believe that while the NC is negotiating with the government over key positions, Oli is attempting to increase his leverage by adopting a conciliatory approach toward Dahal.
Meanwhile, Dahal’s repeated overtures to the NC have failed to yield meaningful results. NC President Sher Bahadur Deuba reiterated this week that there are no significant problems within the coalition. On the delay in appointing the Governor of Nepal Rastra Bank, Deuba attributed it to internal issues within the NRB, denying any inter-party disagreement. His remarks come amid reports suggesting that disputes over the appointment could strain the coalition—an argument supported by past experiences where minor issues, rather than ideological differences, led to the collapse of alliances.
The ongoing pro-monarchy protests have weakened significantly, though royalist parties and allied groups continue to mobilize. Buoyed by an increase in supporters, former King Gyanendra Shah has been meeting royalist forces to encourage continued protests. Learning from the violent March 28 protest in Tinkune, the former king now appears to be backing political outfits such as the Rastriya Prajatantra Party (RPP). The pro-monarchy movement under Navaraj Subedi has announced an indefinite protest beginning May 29. Subedi has managed to bring RPP Chairman Rajendra Lingden, RPP-Nepal Chairman Kamal Thapa and Keshar Bahadur Bista into his fold—an unexpected development, given Lingden’s earlier reluctance to accept Subedi's leadership. This comes against the backdrop of a meeting between Shah and RPP leaders.
Relations between the NC and China, strained since 2015, are slowly improving. After a prolonged hiatus, senior NC leaders are visiting China at the invitation of the Communist Party of China (CPC), which appears to be stepping up its outreach. This week, NC President Deuba, senior leaders Shekhar Koirala, Shashank Koirala and others attended a photo exhibition on Nepal-China ties. At the event, Deuba reaffirmed NC’s commitment to the one-China policy and pledged that Nepali soil would not be used for anti-China activities—messages well received by the Chinese side.
Prime Minister Oli has also continued efforts to make appointments to transitional justice bodies. This week, he met with Dahal to discuss the matter, but no significant progress was made. Sources close to the discussions admit that the appointments are complex, with divisions not only among political parties but also among conflict victims and various domestic and international stakeholders. Home Minister Ramesh Lekhak has said the government is committed to addressing victims’ concerns. However, Nepal’s human rights community—seen as having a significant stake in the process—is often accused of obstructing progress due to personal or institutional interests.
Nepal has stepped up security across border areas, airports and other sensitive zones in response to escalating tensions between India and Pakistan. The situation intensified after India launched “Operation Sindoor,” conducting airstrikes on nine terrorist sites in Pakistan and Pakistan-administered Kashmir following the April 22 terrorist attack in Pahalgam, which killed 26 people, including one Nepali citizen.
In other developments, the United States has announced an 85 percent cut in USAID programs, citing a shift to align foreign aid with American strategic interests. The US has started transferring the remaining programs that match its revised priorities. In Nepal, the future of the Millennium Challenge Corporation (MCC) remains uncertain, and the US has not clarified the status of remaining USAID-funded projects.
