$100 billion economy?

Newly appointed Finance Minister Swarnim Wagle’s first order of business immediately after assuming office last month was to repeal 15 laws that restricted business and investment. But since then, his colleague Home Minister Sudan Gurung has been busy rounding up businessmen.

This is not to pass judgement on which captain of industry is clean, and who is not. But it does look like one arm of the government doesn’t know what the other is doing. 

The RSP’s 100-point governance roadmap is ambitious, some would even say unrealistic, but at least it is a time-bound blueprint to double Nepal's economcy to $100 billion by 2031 with 7% annual growth and massive job creation.

But even with the friendliest investment climate for domestic and international companies, that would be fanciful. But factoring in ministers working at cross-purposes, making ad hoc ill-thought out decisions, and the threat of an international recession due to the war in West Asia, the roadmap looks even more iffy. The World Bank has projected the growth rate to slow to 2.3% this year amidst the conflict and the lingering effects of the 8-9 Septemebr 2025 unrest. 

“We have achieved 7% growth post-2015 earthquake, but closing in on that now would require massive investments, domestic and foreign, dismantling the cartels, eliminating rent-seeking,” says economist Kalpana Khanal at the Policy Research Institute. 

She adds: “Politically, there is now some stability so this is feasible. The ease of doing business will improve with the government repealing those outdated laws. We need more policies to make the private sector a facilitator in job creation and innovation.”

Some of the laws that Wagle revoked are not new. The dismantling of the Department of Revenue Investigation was recommended by the High-Level Economic Reforms Suggestion Commission and the $100 billion economy target was set in a National Planning Commission report back in 2015 when Wagle was vice-chair. 

Sujeev Shakya of the Nepal Economic Forum says a $100 billion economy is within reach: “Look at all the small and medium enterprises, the market size. If we can get overseas Nepalis to invest in ventures back home, or simply convert informal remittances to official channels, this alone could amount to $5 billion a year."

Half of the $11 billion Nepal officially received last year in remittances came just from West Asia. But Nepal’s economy is already suffering the fallout of the US-Israeli war on Iran as the Hormuz blockade threatens further escalation. 

Fuel prices were raised for the fourth time, with diesel now at Rs237/l, up from Rs142/l last year. Infrastructure projects have been hit, and the price of food and essentials have soared.

All this will impact the RSP’s election commitment to create 1.2 million new jobs across IT, manufacturing, service sectors, tourism, construction and agriculture to slow outmigration. 

Sujeev Shakya says we need to rethink remittances. Even before the war Nepali youth in West Asia were moving on to Europe and other destinations like Korea and Japan for higher-paying skilled jobs.

Nepal’s economic transformation would also be possible with massive investment in infrastructure, tourism, IT and the service sector. Infrastructure spending would itself create employment, but it would also have a multiplier effect on tourism, agriculture, market linkages, healthcare, education and create downstream jobs. 

Finance Minister Wagle is already working with his team on the RSP’s budget, the mechanism to operationalise his economic blueprint. Says Kalpana Khanal: “Unless the overall capital expenditure increases, other sectors will not be stimulated. For that, huge governance reform is necessary.”

The RSP’s 100-point plan has a 100-day timeline to expedite projects by amending the Public Procurement Act within 30 days and controlling corruption with digital payments, creating a National Project Pipeline with clear investment modalities within two months, launching a data-based end-to-end monitoring system for projects within 90 days, and drafting an umbrella law for project facilitation within 60 days.

“Yes, the targets are ambitious but our plans have to be ambitious. At least we are travelling with a map this time. If we fail, we’ll know where and how," says Shakya. “For the first time in Nepal's recent history, people are actually talking about performance.”

Wagle has a lot on his plate. He must urgently address the fuel crisis, inflation and infrastructure projects grinding to a halt. The budget has to lay the groundwork for mid and long-term reform to boost the economy, while shutting the door on cartels, cronies and corporates meddling with budget priorities as happened in the past. 

The RSP leadership knows that failure is not an option. The public’s expectations of them is too high. It has to work on governance to improve service delivery and performance — all the while aiming for the $100billion target.