There is an old English adage, ‘If you find yourself in a hole, stop digging.’ For decades the politicians in Nepal continued to dig deep with impunity, it took the Gen- Z generation movement to attempt to bury that hole.

Not that similar tipping points in Nepal’s political history had never happened. This time, it was the total capitulation to the movement and the speed of change that surprised many. Citizenship at times requires courage. It took a generation of youngsters to show us what we had neglected.

The government of Prime Minister Balendra Shah is in a hurry to fill that deep hole. In less than two months of formation there have been many trail-blazing decisions, some less contentious than others.

Tackling corruption seems to be the agenda, and rightly so. The message is that this Government has zero tolerance for it. But in a hurry to make changes, sometimes the tendency is to throw the baby out with the bath water. This can in the long run, retard progress.

The mandate to make change is the people’s expectation, however painful in the interim. The focus now should be to jump start the economy.

The courage of transformation now needs to be mirrored on the economic front and that is expected from the upcoming budget to be delivered by astute Finance Minister Swarnim Wagle.

Nepal’s economic model is fragile in the extreme. It exports migrant workers, and depends on remittances that lacks the capacity to absorb a rapidly growing labour force. The need to address immediate economic issues, like employment and then plan long term for structural transformation is necessary.

The annual policy and programs delivered by President Ram Chandra Poudel, on behalf of the government attempts to address some of these concerns.

Contraction in the consumptive demand is causing businesses to fold. Banks are bloated with excess liquidity due to low demand for credit off-take and an increasing portfolio of non-banking assets. The expectation is that the budget will address these concerns to assuage the economy.

The upcoming budget should, to begin with, address the various anomalies in the taxation system. Nepal attracts the least amount of foreign direct investments in South Asia (only 0.2% of GDP). Issues such as double taxation, a flat VAT rate, excise duty and high tax bracket among others should be revisited.

If we are to reach carbon net zero by 2045, we need to start providing incentives to renewable energy technologies. Alternative energy, besides hydro, cannot commercially compete with fossil fuel. Therefore, a method of viability gap funding in the interim to finance the long term should be availed.

Investments in Micro Small and Medium Enterprises (MSMEs), the most neglected sector, can catalyse the nation’s development by creating employment. Risk capital for this should be availed and scaled up from the present debt financing they receive from the banks to other alternative investment vehicles such as Private Equity (PE) and Venture Capital (PE/VC).

Development finance institutions funded PE have the wherewithal to intervene with MSMEs and assist in access to finance in the form of risk capital, improving production and productivity, providing knowledge in protecting physical assets and resource efficiency.

With climate change as a potent threat, Nepal’s MSMEs need all the assistance to manoeuvre through it. Adaptive resilience financing with social and governance components needs to be introduced.

Foreign Direct Investment (FDI) in primary agriculture for SMEs should be allowed by amending the Foreign and Technology Transfer Act. The 23% of GDP is in that sector and FDI is barred from it.

For Nepal to grow it will need FDI. To attract FDI there needs to be a stable government along with stable policies and most importantly, there needs to be demonstration of rule of law.

Today, Nepal seems to have the political will and social consensus to make that change. Onwards and upwards, we hope.

Siddhant Pandey is CEO of Business Oxygen, an international private equity fund.