Several things come into play with the Nepal government’s new <a href="https://www.nepalitimes.com/?p=6146&amp;preview=true" target="_blank" rel="noopener">National Integrity Policy</a> that wants to tighten control over the activities of international NGOs and donor governments. Most of them relate to the country’s sense of integrity and sovereignty.It is quite normal for a government to monitor and control the flow of non-corporate funds coming into one’s country. There are mechanisms already in place in Nepal to ensure that aid organisations and special interest groups can channel funds to government, institutions, non-government organisations and projects in Nepal.The bureaucracy involved for approval varies depending on project parameters. On a global scale, Nepal is considered fairly liberal in this sense, and there is a long history of foreign support for aid and infrastructure projects.Governments in the past have also been more tolerant than most in giving free rein to outside agencies to help with infrastructure, development, and even constitution-writing, transitional justice and human rights.Of late, such aid projects have also included extreme evangelical Christian missionaries that are seen as undermining local culture and religion and upsetting the old order. The claim is that money buys souls. Perhaps worse for the government is that money also buys politics, and with a quasi-communist coalition as the leading power, this is not appreciated.		
		<img width="424" height="571" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107101156/6368d6c39c7e80680e0314a2jpeg.jpg" alt=""/>Two emerging global powers are Nepal’s immediate neighbours: <a href="https://www.nepalitimes.com/here-now/elementor-3766/" target="_blank" rel="noopener">China and India which are vying for a foothold</a> enabling them to adjust Nepal’s internal and external politics to suit their interests. Neither country is tolerant of foreigners, and have strict controls on the activities of non-governmental players and outside agencies.Money can buy sympathy in the countryside and concessions at the central level. And there is more. <a href="http://archive.nepalitimes.com/article/editorial/foreign-aid-covering-domestic-deficiencies-nepal,1338" target="_blank" rel="noopener">Nepal wants to have the funds, clearly, but on her own terms</a>. Those terms appear to involve further control measures and prohibitions. The government will be happy to get rid of all the perceived negative influencers, but it seems to throw out the baby with the bath water.A full implementation of some of the suggested measures in the draft Policy make it much less attractive to work in Nepal for aid agencies, and there are other takers ready elsewhere.Nepal is in a process of devolving power to provincial and local governments, at the same time the central government wants centralisation of financial assistance.Aid organisations and similar outfits don’t want to have to go through the Ministry of Finance, and clear funds there before disbursement. Even worse, the new Policy has stricter guidelines for foreign diplomats, the activities of aid groups and even proposes a surveillance mechanism under the Ministry of Home Affairs and the security agencies to monitor the activities of foreigners.The current channel for aid agencies to work through is the Social Welfare Council policy/registration system which is seen as more workable to get funds straight to legitimate recipients. Why fix something that isn't broken?Olav Myrholt is a social development worker based in Norway with a special interest in Nepal for the last 40 years.Read also:<a href="https://www.nepalitimes.com/?p=6121&amp;preview=true" target="_blank" rel="noopener">Illiberal ills</a> , Editorial<a href="https://www.nepalitimes.com/?p=6152&amp;preview=true" target="_blank" rel="noopener">Govt issues draft guidelines for public hygiene</a>, Backside

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Nepal wants funds, but on her own terms

<h4>The government’s new guidelines for dealings between Nepalis and foreign donors raises hackles</h4><figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107101156/6368d6c09c7e80680e0314a1jpeg.jpg" alt="" width="1400" height="1055"/><figcaption>Bhanu Bhattarai</figcaption></figure>In a sign of its new assertiveness, the Nepal government has issued a draft document laying down strict guidelines about what aid agencies and non-government groups can and cannot do. But critics say its provisions are too broad, and could easily be misused to silence critics at home and restrict the activities of international groups in Nepal.The National Integrity Policy is aimed at ‘promoting integrity and transparency’ in all spheres of public life, guiding the conduct of public officials, and regulating the activities especially of western aid agencies, INGOs and civil society groups working on democracy and human rights.Detractors say it is prompted by the establishment class feeling insecure about losing its grip on power and privileges. The document appears to be a backlash against the funding indigenous and excluded groups received from western donors during the Constitution-drafting process. It also seems to be a reaction to heightened activities of evangelical groups in Nepal.Here are just some of the items in the new directive:<ul><li>INGOs cannot forward any reports to headquarters or donors without first submitting them to, and securing approval from, the government.</li> 	<li>NGOs must report foreign individuals or agencies involved in ‘activities against Nepal, Nepali civilisation or social harmony’ to the authorities.</li> 	<li>I/NGOs and foreigners are barred from ‘levelling unwarranted charges against Nepal ... and spreading hatred’.</li> 	<li>Security agencies under the Home Ministry will monitor foreigners to check if they are working against the ‘national interest’.</li> 	<li>Nepali officials meeting foreign diplomats should not work against Nepal’s ‘national interest’ and should maintain secrecy.</li> 	<li>l Foreign embassies cannot disburse development aid directly.</li></ul>The Association of International NGOs in Nepal and the NGO Federation have slammed the draft, arguing that they are impractical and create unnecessary hassles, while admitting there may be some wayward and opaque NGOs that need to be reined in.What diplomats and aid officials are worried about is that the policy has ambiguous provisions that can be used to shut down any I/NGO, aid agency, or deport foreigners. Such broad rules could also be used to target critical civil society groups and political dissidents.To be sure, the idea to silence civil society is not new. After king Gyanendra’s coup in February 2005, the Army cracked down on pro-democracy forces, putting Prime Minister Sher Bahadur Deuba under house arrest, jailing political dissidents, and forcing many to go underground.As political parties regrouped, thousands of NGOs and civil society members fought back to reclaim democracy. The king saw civil society as a direct threat to his authoritarian ambition, and jailed many members. He announced new controls on non-profits, INGOs and donors similar to the ones in this draft National Integrity Policy.Deuba returned to power 12 years later, and his first decision in 2017 in his fourth term as prime minister was to do exactly what king Gyanendra had tried: restrict civil society, international donors and diplomatic missions.Read also: <a href="https://www.nepalitimes.com/?p=6121&amp;preview=true" target="_blank" rel="noopener">Illiberal ills</a> , EditorialHe chose two government secretaries known to be vocal critics of international agencies and donors to formulate his National Integrity Policy. It was clearly guided by suspicions that <a href="http://archive.nepalitimes.com/article/nation/golden-age-of-gospel-christianity,3903" target="_blank" rel="noopener">proselytisation</a> was undermining Nepal’s Hindu identity, and the conviction that western embassies, their aid agencies and INGOs were behind conversions.Gopal Lamsal, who is now President of the NGO Federation of Nepal, was a young activist when the king tried to silence critics in 2005. He remembers how they had to hit the streets, burning copies of the NGO regulations and clashing with police.Lamsal says some of the provisions of the new National Integrity Policy seem to be directly lifted from the king’s and Deuba’s rule-book. He says the Policy is full of vague, impractical and outrageous clauses like the one asking NGOs to report anti-national activities. He says: “It is ridiculous that the government wants us to be its spies.”The real reason Deuba ordered a National Integrity Policy last year seems to be because his advisers had concluded that over 65% of NGOs in Nepal were close to UML, and could use their budgets to finance the party’s election campaign.Deuba’s NC party lost the elections anyway, and UML Chair K P Oli replaced him as the new PM in February.Ironically, it is now the Oli government's turn to revive a Policy paper he inherited from Gyanendra and Deuba. An activist explains that Oli is endorsing the controversial draft because it has so many broad provisions that it can be used to snare political enemies.He says: “Gyanendra or Deuba or Oli, they all hate an independent and critical civil society.”Another rights activist interviewed for this article told us the policy was initially mooted in 2011 when Janajati lawmakers, supported by the <a href="http://archive.nepalitimes.com/news.php?id=19592#.Wv1bIrh-jjE" target="_blank" rel="noopener">British aid agency DfID</a> through the Nepal Federation of Indigenous Nationalities (NEFIN), formed a caucus to push for greater representation in the new Constitution.Indeed, even five years ago, various line ministries delayed a UNDP medium-term plan document and demanded that words like ‘structural discrimination’, ‘gender’, and ‘inclusion’ be removed.“The Kathmandu elite began to create a false narrative that foreigners are funding Janajati-Madhesi NGOs to perpetuate political instability and promote proselytisation in Nepal,” the activist said.However, Ex-secretary Sharada Prasad Trital, who led the team drafting the Policy, defended the document: “Does the Chinese government allow an INGO to publish whatever report it writes about China? If not, how can INGOs expect Nepal to allow it?”Trital argues that the guidelines will actually protect Nepal’s international image. “If this policy had been in place, the EU Election Observation Mission could never have been able to publish its <a href="https://www.nepalitimes.com/here-now/hail-to-the-chiefs/" target="_blank" rel="noopener">one-sided report</a> about Nepal’s election laws in March,” he says. “Such biased reports harm Nepal’s reputation, without allowing the government to put forward its own perspective.”A board member of AIN argues otherwise: “Of course, I/NGOs need to be within the Constitutional framework, but it is also their role to monitor the government and be critical if necessary.”He adds: “Some NGOs are required to submit shadow reports to the UN pointing out the government’s failures or weaknesses. The government is obliged by several international treaties to allow these NGOs to draft independent reports.”To be sure, the National Integrity Policy has tried to assert the government’s authority after many decades in which donors and international agencies were allowed to do <a href="http://archive.nepalitimes.com/article/nation/broken-promises-reconstruction,3627" target="_blank" rel="noopener">what they liked without much scrutiny</a>. Many of the provisions in the document could actually help make aid agencies more transparent and accountable.For example, more than one person of a family can no longer be in the executive committee of an NGO, one cannot hold executive posts for more than two terms, and I/NGO budgets cannot cross a threshold for administrative cost. It also reduces the role of Social Welfare Council by empowering the Finance Ministry to approve budgets and programs of allI/NGOs.UML leader Rajan Bhattarai assured Nepali Times: “The guidelines are not intended to curb any freedoms. There will be no compromise on democratic values."However, the policy has alarming provisions like the setting up of a surveillance network to monitor foreigners working in Nepal, check their past records and scrutinise if they are involved in undermining the national interest.Read also: <a href="https://www.nepalitimes.com/?p=6152&amp;preview=true" target="_blank" rel="noopener">Govt issues draft guidelines for public hygiene</a>, BacksideOne such mechanism will be at the Ministry of Home Affairs overseeing surveillance teams made up of the Army, Police, Armed Police Force and National Investigation Department. Those found guilty can be deported, or declared persona non-grata.What troubles many is that the draft is being issued at a time when a joint communist government is in power – parties historically not known to be supportive of democratic freedoms and human rights. see Editorial, page 2) Critics say such a policy, instead of strengthening Nepal’s standing in the world, would undermine its democratic and liberal credentials.Said one: “If the government fairly implements this policy, it could promote integrity. If not, its provisions are so sweeping they could be used against anyone. Even the most upright and law-abiding citizen can be punished.”It is an indication of the degree of fear the policy paper has already spread that most civil society members interviewed for this piece wanted to remain anonymous.Ex-AIN President Deepak Raj Sapkota is not so worried. He says: “We are almost certain the government will not pass the policy in its current form without addressing our concerns.”GUIDE LINESNew rules in the National Integrity Policy for: NGOs-NGOs funded by foreign donors will be categorised separately from those that do not receive funding from foreigners-NGOs must inform the Finance Ministry about how much they are receiving from foreign donors and for which projects and get approval.-NGOs must inform local governments about their projects.-NGOs cannot bid for government contracts-NGOs must have a ceiling for administrative expenses-Registration of an NGO will be scrapped if it fails to renew within three months after expiry-Only one person from a family can be in the executive board of an NGO-A person cannot hold executive positions in an NGO for more than two terms.-A public office holder cannot be associated with an NGO-NGOs must not lobby on behalf of an INGO involved in leveling unwarranted charges against Nepal, harming social harmony or spreading hatred.-NGOs must report to the government if they find foreign nationals or organisations working against Nepal, Nepali civilisation and social harmony among Nepalis.INGO-INGOs must submit applications to the Finance Ministry, detailing their annual programs and budgets and can only spend money if it is approved.-INGOs must adhere to statutes and the preconditions agreed upon before entering into Nepal.-All the taxable spending by INGOs must be brought into the tax net.-INGOs must submit audit reports (to the government)-INGOs must not lobby for, create pressure on or influence the government to formulate laws or policies.-INGOs must abstain from leveling unwarranted charges against Nepal, harming social harmony and publishing reports with  hate content or sending them to their countries.-INGOs must abide by the Statistics Act 2015 while collecting data in Nepal.-INGOs cannot directly carry out projects.-INGOs cannot directly send reports about Nepal to their countries without first obtaining the government's approval.-INGOs must not cross ceilings for administrative works, hiring consultants, foreign junkets or hotel bills.-INGOs must limit the number of foreigners working for them in Nepal.-INGOs must not act against Nepal's civilisation, culture, social relations and goodwill-INGOs must not push for their religious, social or other agendas in Nepal.-Foreigners cannot hold the same position in INGOs for more than three years.-INGOs assisting foreign embassies and religious missions or for their narratives will be barred.-Foreigners will be allowed to work with Nepal-based INGOs only after thoroughly examining their past records.-INGOs must sign written agreements that they will not be directly or indirectly involved in proselytisation. If caught its agreement with the government will be nullified.

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The crow and the scarecrow

The monsoon has got bad press because Nepal’s tourism operators actively told visitors to avoid <a href="https://nepalitimes.com/opinion/managing-the-monsoon?%2F">the rainy season</a>. It is time to change that. The reason can be found right here in the vast alpine meadows of Central Nepal where this time of year you can walk on velvet grass of pastures abloom with delicate pink, red and yellow flowers as the mist rolls up the valley. There is no sound except the hum of bumble bees. &nbsp;&nbsp; There are dozens of places across high Nepal called Chaurikharka, which means yak pasture. But this particular Chaurikharka in Rukum East located at an altitude of 4,000m stands out for its serene beauty, rustic charm and bucolic setting. There is just the occasional chime of <a href="https://nepalitimes.com/here-now/when-yaks-go-so-does-culture">yak bells</a> in the distance, and the sharp whistle of herders corralling sheep. &nbsp;&nbsp; The grass shoots are so fragile that one hesitates to step on them, the rounded ridges appear and quickly vanish in waves of mist. With the<a href="https://nepalitimes.com/here-now/before-the-next-monsoon"> arrival of monsoon</a>, these meadows are a soothing shade of green dotted with millions of <a href="https://nepalitimes.com/review/the-anatomy-of-a-flower?%2F=">multi-coloured flowers</a>. Until very recently, it took a week or so to hike up to places like Chaurikharka, but with the expansion of the road network even to these far-flung mountains in the lap of Dhaulagiri, they are much more accessible. It is just a three-hour uphill from the Mid-Hill Highway on the border between Baglung and Rukum East.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16.jpg" data-media-id="editor_4" data-image-id="20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16" data-rendition-name="original" width="2048" height="1365" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Purists would say that such easy access devalues the sanctity of these remote high meadows, but it also means more people will be moved to treasure the experience, appreciate <a href="https://nepalitimes.com/banner/natures-fragile-gift-to-nepal">the value of nature </a>so they can take steps to protect it.&nbsp; To be sure, the <a href="https://nepalitimes.com/here-now/deadly-monsoon-in-nepal-turns-deadlier">monsoon season can be challenging for road travel</a>. The roads are rough even at the best of times, and in the monsoon they become muddy and treacherous, often blocked by<a href="https://nepalitimes.com/news/monsoon-deluge-in-nepal"> landslides</a>. But that could be precisely the kind of adventure that the more intrepid visitors crave. Improved road connectivity has already made Chaurikharka and places like Badimallika &nbsp;and other sacred lakes in the mountains of western Nepal popular with domestic tourists. What is driving this traffic is the urge to go to exotic new places and share videos and selfies on social media. Several of Nepal’s travel vloggers have visited Chaurikharka and popularised the place, enticing followers on TikTok or YouTube to retrace their footsteps. But even as they become more popular, these fragile and once-remote places should be protected from over-tourism.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446.jpg" data-media-id="editor_8" data-image-id="20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446" data-rendition-name="original" width="1083" height="699" loading="lazy" alt="Visit Nepal in the monsoon NT"> </figure>  <h2>INCREASING FOOTFALL</h2> Chaurikharka is located in Bhume Rural Municipality of East Rukum, near the scenic valley of Dhorpatan in Baglung district. Even in the <a href="https://nepalitimes.com/banner/monsoon-culture">middle of the monsoon</a>, there is a steady stream of Nepali hikers trooping to these high pastures – especially during festival days like Saune Sankranti which this year was on 17 July and actually marks the auspicious beginning of the monsoon here. “This year the rains have not been as heavy and there have been some clear mornings when we could see everything from Dhaulagiri to Machapuchre,” says Khageswar Bhandari, who trekked up here from the road. “The flowers, the greenery and the snowy mountain views make this an incredibly unique place.”&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9.jpg" data-media-id="editor_10" data-image-id="20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9" data-rendition-name="original" width="2048" height="1152" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Chaurikharka is worthwhile to get to in any season, but it has a different charm during the monsoon. Word has spread and because it is now easy to get to from Baglung or even Pokhara, people have been flocking here.&nbsp; “Holidays and Saturdays see the largest crowds, with up to 500 visitors every day,” says ward chair Mankaji Pun of Bhume.&nbsp; There was a time not too long ago when local herders brought sheep, goats, cows, buffaloes, horses, and mules to graze here during the monsoon. Although there are still livestock around, animals have been replaced by visitors taking selfies. Read also: <a href="https://nepalitimes.com/here-now/the-monsoon-and-nature-s-arithmetic">The monsoon, and nature’s arithmetic</a>, Tom Robertson Ward Chair Pun says infrastructure development is his main priority. A foot trail to Chaurikharka was built last year by the Tourism Division Office in Kohalpur, but access via the Raniwas-Koipa road section still remains challenging.&nbsp; “If we get more budget, we can improve the road and facilities to make Chaurikharka the main tourist attraction of this region,” says Bhume Municipality Chair Hom Prakash Shrestha. “After that, we hope to promote Chaurikharka as a top tourist spot.”&nbsp; Economic activity is also picking up with the arrival of visitors, but there seems to be a need to manage the makeshift sheds made of corrugated sheets that spoil the beauty of the place. Tea shops and lodges are also available but facilities are basic. Kuldeep Neupane took a three-day trip from Ghorahi in Dang to visit Chaurikharka recently, and says: “This is an ideal trip to make a quick getaway and let nature recharge your mind and body. And it is much more fun with a tent, to watch the sunrise over the Himalaya or the mist blowing in.”

Visit Nepal in the monsoon

Nepal is graduating to become a developing country on 24 November 2026 after half-century in the Least Developed Country (LDC) category. By 2030, the country hopes to transition to middle-income status.&nbsp; Everone from Prime Minister K P Oli have boasted that this is a matter of national pride, and will have a multiplier impact on trade and economy.&nbsp; But will it make any difference to the average Nepali? Not unless improved governance <a href="https://nepalitimes.com/news/why-invest-in-nepal">spurs investment and creates jobs</a>.&nbsp; Countries need to meet at least two of the three criteria in two consecutive triennial reviews to be eligible for graduation from LDC. Nepal has consistently met the thresholds for the Human Assets Index (HAI) and the Economic and Environmental Vulnerability Index (EVI) in 2015, 2018, and 2021. But Nepal was recommended for graduation before meeting the per capita <a href="https://nepalitimes.com/banner/nepals-great-income-divide">Gross National Income (GNI)</a> threshold of $1,306. “A major implication of LDC graduation is the loss of preferential market access available through Generalised System of Preferences (GSP) and other arrangements,” explains economist Sameer Khatiwada. “But over two-thirds of <a href="https://nepalitimes.com/news/nepal-doesnt-produce-its-2-biggest-export-items">Nepal’s exports</a> are to India, and the preferential market access to India is through a bilateral trade agreement. This has nothing to do with our LDC status.”  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250815060832_f5eabe7628a8cdf84f33b25d7cef3c4dc8913a26d8e5b253ea52a36e176b8a85.jpg" data-media-id="editor_3" data-image-id="20250815060832_f5eabe7628a8cdf84f33b25d7cef3c4dc8913a26d8e5b253ea52a36e176b8a85" data-rendition-name="original" width="640" height="470" loading="lazy" alt="LDC graduation "> </figure>  Furthermore, a provision under the South Asian Free Trade Area (SAFTA) allows Nepal to export to India duty-free if the items are at least 30% value-added. Nepali traders take advantage of this by re-exporting edible oils without meeting that requirement, falsely boosting Nepal’s exports.“ Following graduation from LDC, the value addition threshold might increase to 40%,” says Kalpana Khanal of the Policy Research Institute. “This is supposed to work to our advantage, because on paper value addition inherently means <a href="https://nepalitimes.com/multimedia/staying-home-to-create-jobs">job creation at home</a>.” But Nepal’s exports to other major destinations will face <a href="https://nepalitimes.com/news/nepal-and-the-us-india-tariff-tiff">tariff increases</a> with the graduation. A South Asia Watch on Trade, Economics and Environment (SWATEE) study shows that while tariff increase in the US market is relatively low (see page 5) it is considerably higher in Europe. The International Trade Centre (ITC) in a 2022 study also estimated that graduation could result in a 4.3% decline in Nepal’s projected exports, but this is excluding the impact of changes in ‘rules of origin’ provisions in preference-granting countries such as the UK and Europe.&nbsp; Nepal’s top export to these preference-granting countries is <a href="https://archive.nepalitimes.com/news.php?id=1482">carpets</a>, and will not be impacted, but other items such as textiles and apparel will be heavily affected due to higher cost of production. The impact will felt mostly by small and medium enterprises which represent the largest share of exports to LDC-specific preference-granting countries. As for the service exports, Nepal never really made use of the World Trade Organization’s LDC services waiver anyway, hence the effect will be minimal, if any. There is also concern about Nepal’s graduation at a time when the global economy is topsy-turvy, amidst <a href="https://nepalitimes.com/opinion/turning-point-in-us-india-relations">tariff wars and conflicts</a>. This affects Nepalis abroad directly and may impact <a href="https://nepalitimes.com/news/more-remittance-more-than-remittance">remittances </a>which hit $11 billion in 2024. In comparison, Nepal only received $350 million in foreign loans and grants last year.&nbsp; Tourism arrivals have finally reached pre-pandemic levels, but bad publicity about pollution, poor infrastructure and bureaucratic hurdles hinder further growth. Manufacturing continues to struggle, while hydropower and the IT sector have taken off.&nbsp; “Look at data -- <a href="https://nepalitimes.com/news/tourism-needs-a-new-push">tourism arrivals</a> are up, spending is up, IT exports are up, <a href="https://nepalitimes.com/news/why-nepal-needs-to-restore-ev-tax-subsidy">EV sales </a>are up, Europe still needs 85-90 million skilled workers. We are sitting on $16 billion in cash reserves, our balance of payment, foreign exchange reserve, tax to GDP ratio, credit flow are all positive, we have to build on these factors,” says Sujeev Shakya of the Nepal Economic Forum. He adds: “Our mindset creates negativity to promote rent-seeking behaviour, but this cynicism will go away after 2026 with LDC graduation. We must deal with data, look at trends, and projects which will bring in <a href="https://nepalitimes.com/from-the-nepali-press/why-there-is-no-foreign-investment-in-nepal">international investments</a>.” Khanal agrees that investment is not dependent on<a href="https://archive.nepalitimes.com/regular-columns/backside/Nepal-not-the-least-developed-country,306"> LDC status</a>. The factors that that affect investment are policy stability, a strong legal framework, market potential and ease of doing business. She adds, “That is where our focus needs to be, and we need to retain <a href="https://nepalitimes.com/diaspora-diaries/migrant-worker-returns-to-create-work-at-home?fbclid=IwAR09xJfsClCwn8uRVAmz28CU658vdKpuyDwB_b1sNlvKtAFFnSldnA0JS2g">Nepalis with jobs at home</a> for our sustained growth.” After 2026, financing support from donors and aid agencies could be affected and Nepal will no longer be able to access Least Developed Countries Fund (LDCF) to adapt to the impacts of climate change. But the Global Environment Fund and Green Climate Fund will still be available.“ LDC status does not determine bilateral development aid, that is usually driven by broader <a href="https://nepalitimes.com/here-now/looking-beyond-two-boulders">geopolitical considerations</a>,” says Sameer Khatiwada. “The World Bank and Asian Development Bank, which provide concessional loans to Nepal, it is determined mainly by per capita income, not LDC status.” &nbsp;However, Nepal may lose some concessional terms for loans. Nepal is currently a lower-middle-income country as per the World Bank in the bracket for GNI between $1,036 and $4,045. The country is already receiving more loans than grants and in July the World Bank increased its interest rate on loans by 100% from 0.75 to 1.5%. “All this means that the impact of LDC graduation for Nepal might not be as earth-shattering as some tend to think. Countries that have recently graduated, such as Botswana and the Maldives, have shows that graduation is just a step in a country’s development path,” says Khatiwada. Sujeev Shakya also sees the glass as half full, explaining that LDC graduation is just a stepping stone if Nepal has the right policies in place. He adds, “Nepal’s biggest advantage is our<a href="https://nepalitimes.com/opinion/investing-in-people"> working age population</a> and we have investments coming in. These aided by how adaptive we are as a society are the very foundations on which Nepal will grow.”

Not poor, but not rich

Two weeks ago, Prime Minister KP Sharma Oli announced jubilantly on social media that Nepal had achieved a historic annual growth of 81.8% in exports. He was right. Nepal’s trade did take a great leap forward compared to last year. But the dramatic rise was mainly due to processed soya bean oil.&nbsp; However, Nepal does not produce the edible oil it exports. In fact, the soya and palm oil that make up 44% of total exports are imported from Southeast Asia and South America, and simply re-exported, mostly to India.&nbsp; Under the SAFTA (South Asian Free Trade Area) Agreement, Nepal can export products to India duty-free if it has at least 30% value-added. Nepal’s traders have taken advantage of SAFTA even though the edible oils they export do not reach that value addition threshold. “The 30% value addition requirement is often only on paper,” says former commerce secretary Purushottam Ojha. “It is clear that simply packaging edible oils in Nepal does not fulfil the terms of the trade agreement.” Prime Minister Oli is aware of this, and even called Nepal’s export figures “fake” at an earlier event. The government is relying on other iffy figures to suggest that Nepal’s economy is strong and getting stronger. For example, the value of imports rose by 13.25% in 2024-25 compared to the previous fiscal year.&nbsp; Some of it was due to a jump in electric vehicle imports worth Rs 31.76 billion, but mostly it was because more wholesale soya oil was imported to be re-packaged and sold in India. The very fact that the government boasts about increased imports is an indication of how much it relies on taxing them for revenue. Touting such trade figures cannot be the basis to claim an economic rebound.&nbsp; “A jump in the value of imports can be interpreted as an increase in purchasing power, but it is not evidence of a stronger economy,” says economist Keshav Acharya. “Even though imports have increased, Nepal's domestic production and productive capacity have not improved.” Nepal Rastra Bank's semi-annual economic activity study report shows that industrial production was down in the first six months of the last fiscal year. This despite an increase in the number of new industries registered and investment commitments. Out of the Rs70.2 billion proposed foreign investment, Nepal received only Rs17.9 billion last year.&nbsp; Meanwhile, the rate of capital formation was limited to 24% last year, which is lower than the year before, suggesting that new investment, job creation and economic expansion all declined. If domestic production does not improve in relation to this year’s inflated trade figures, the outflow will put pressure on foreign exchange reserves like it did three years ago. At that time, Nepal borrowed from the IMF under its Extended Credit Facility Program to kickstart the economy.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f.jpg" data-media-id="editor_0" data-image-id="2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f" data-rendition-name="original" width="1633" height="723" loading="lazy" alt="Nepal's bubble economy NT"> <figcaption>Source: NEPAL RASTRA BANK</figcaption> </figure>  The macroeconomy is on firm footing with foreign exchange reserves at a comfortable Rs2,520 billion in May, up 23% from last year. This was largely due to remittances, and partly due to a falling NPR exchange rate. Real estate transactions and the stock market index have also been climbing as a result of government policies to revive the sector.&nbsp; However, former executive director of Nepal Rastra Bank Nar Bahadur Thapa cautions: “This is not organic growth, it is the result of deliberate policy decisions to relax rules on real estate and stock markets transactions.” In reality, the sharp rise in land prices have increased the cost of production, and excessive monetisation of the real estate has become the main source of Nepal’s economic woes. The central bank has announced a slew of new policies, shifting the terms of loan repayment for industrialists and entrepreneurs, reducing interest rates, and injecting more working capital — all designed to inject adrenaline into the real estate and stock market sectors.&nbsp; When he was governor, Mahaprasad Adhikari made several financial reforms during the latter half of his tenure to stimulate the economy, including tightening credit flow.&nbsp; By the last fiscal year, additional financial reforms had resulted in a credit expansion rate of around 8%. As the pace of credit expansion slows, real estate prices have started to fall. This is actually beneficial to the economy, because it lays the foundation for improvements in land-related entrepreneurship, production, and the construction sector. Just because real estate and the stock market transactions increase, it does not indicate an economic turnaround — especially when manufacturing and productive sector continues to languish.&nbsp; “It is foolish to believe that real estate and the stock market have magically revived our economy. Agriculture employs more than half of the population, but it is in decline. Investment in the productive sector has not increased, and job creation has not increased.” Two years ago, Nepal’s industrialists, business leaders, and political leadership predicted a recession amidst a sluggish business, declining market demand, large-scale job loss, and a shrinking real estate and share market.&nbsp; Still, the economy grew by 3.36% in fiscal year 2023/24. In fact, Nepal’s economy has grown nominally over the last two decades even when all sectors of the economy are in decline.&nbsp; Says Keshav Acharya: “The growth in trade, real estate, and the stock market are bubbles. The real economy remains stagnant.”

Nepal’s bubble economy

The final investigation report on the crash of a Saurya Airlines jet on 24 July 2024 at Kathmandu airport has revealed flaws in the carrier’s technical operation procedures, poor monitoring by the Civil Aviation Authority of Nepal (CAAN) and gaps in the airport’s emergency response. Eighteen people including a child were killed, and only the captain survived as the plane plunged seconds after takeoff, crashing within the airport perimeter. This was the latest in a series of aircraft accidents in previous years, and further tarnished Nepal’s already poor aviation safety record and contributed to the country being retained in the EU’s air safety list. &nbsp;&nbsp;&nbsp; The circumstances in the Saurya crash were different from the Yeti Airlines crash in Pokhara in January 2022 that killed all 72 on board, and two Tara Air crashes in February 2016 and May 2022 on approach to Jomsom that together claimed 45 lives. However, all four tragedies were a result of negligence of carriers and crew, failure to follow procedures, regulatory slackness, and overconfidence. The Saurya crash, especially, was a glaring example of how an ailing airline broke its own rules to allow passengers, including non-employees, a joy ride to Pokhara on a maintenance ferry flight. CRASH REPORT The Final Investigation Report prepared by the Aircraft Accident Investigation Commission and released on the first anniversary of the crash last week carried a long list of rules that were ignored or broken, and of regulatory failure. The first mistake was to cram spares, tools and inflammable chemicals needed for the aircraft’s C-Check in Pokhara into the cargo hold flouting its own ground handling procedures.&nbsp; There was no check-in of passengers, some of whom were not even employees – even though regulations say only flight and maintenance crew should be on board a maintenance positioning flight. Many brought their own luggage into the plane and stored it unsecured in the cabin. There was no flight attendant to give a safety briefing to passengers. The load and trim charts given to the flight crew were rough estimates, and the total takeoff weight of the plane was 18,300kg plus or minus 200 kg. That would still have been all right, but there was a glaring mistake in the speedchart Saurya pilots were using to calculate the minimum takeoff speed (known as VR), and it had been wrong ever since the 21-year-old aircraft entered service with the airline in 2017. FAULTY DATA&nbsp; The Commission probed Flight Data Recorder inputs from previous takeoffs of the Canadian-built CRJ200-LR in 2023-2024 and found that the undetected error in the speedchart had caused the plane to pitch up at an abnormal rotation rate at least 18 times on previous takeoffs.&nbsp; Any rotation rate more than 3°/sec is regarded as unusual. But on at least two occasions, this aircraft with tail number 9N-AME had rotation rates of 5.8°/sec and 5.5°/sec, the second one was when the pilot who survived was flying in March 2024.&nbsp; On this particular day, the plane’s rotation rate was 6.5°/sec, causing it to go into a deep stall soon after takeoff, the Commission report said. Essentially, the plane was not flying fast enough down the runway to take off safely.&nbsp; It is not yet clear whether excess weight, unsecured luggage, wrong centre of gravity were also factors, but relying on a faulty speedchart for the given takeoff weight, the captain flying pulled back on the yoke before the plane had reached takeoff speed and at a pitch angle that was too steep. The investigation report says the plane then went into a deep stall and started banking right with the stick shaking. At this point, the flight officer on the right hand seat is heard on the cockpit voice recorder saying: “Whoa, whoa, whoa. Sir, Sir, Sir…” It then banked left before the pilot flying turned the plane sharply to the right again in an evasive action to avoid the parking aprons of the international and domestic terminals. Had he not done so, there would have been a disaster of a much greater magnitude at Kathmandu airport that day. The plane scraped the runway with its right wingtip, collided with a container having helicopter spare parts, and plunged into a gully east of the runway, exploding in a fireball. The investigation also noted that the impact forces seemed to be survivable for some occupants. The fire trucks took unnecessarily long to reach the site even though it was inside the airport perimeter. The absence of an ICAO-standard runway strip, inadequate rescue drills, lack of training, and a blocked emergency service gate leading to the crash site were cited as other factors. &nbsp;&nbsp; <h2>Timestamp of a Disaster</h2>  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725.jpg" data-media-id="editor_0" data-image-id="20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725" data-rendition-name="original" width="778" height="826" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:10:34 - The Saurya Airlines CRJ200 on the takeoff roll from runway 02. It had a takeoff weight of about 18,300kg, but the pilot’s speedcard had a previously undetected mistake about the minimum takeoff speed. 11:10:55 -The plane with tail number 9N-AME goes into deep stall soon after takeoff because it does not have enough speed to lift its weight. The plane also has an abnormally steep nose-up attitude.&nbsp; 11:11:03 - Without enough speed to generate lift, the plane banks right, then left and right again in CCTV photos taken from the domestic apron (below). If it had not banked right, it could have hit the aprons and terminal buildings. Seen parked is Saurya’s other CRJ200 with tail number 9N-ANM.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd.jpg" data-media-id="editor_1" data-image-id="20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd" data-rendition-name="original" width="770" height="555" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:11:08 - The plane scrapes the runway with its right wingtip, and falls into the gully. The captain is thrown off the left side of the cockpit and survives. 11:11:15: Plane explodes in a fireball inside the airport perimeter. Firefighters take time to reach the site because of lack of access road and a blocked gate. Read the full investigation report <a href="https://www.tourism.gov.np/files/9N-AME%20AIC%20Final%20Report.pdf">here</a>.

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