A new draft counter-intelligence bill is raising fears that Big Government wants to constrict constitutionally-guaranteed <a href="https://nepalitimes.com/news/no-freedom-after-expression-y4inku06">freedom of expression</a> and individual privacy.
This comes even as the UML-NC coalition is trying to push through the<a href="https://nepalitimes.com/opinion/guest-editorial/command-and-control"> Media Council Bill </a>that would increase government interference in the media.
The counter-intelligence bill harks back to the Panchayat absolute <a href="https://nepalitimes.com/news/the-ghost-of-monarchy-returns-to-haunt-nepal">monarchy</a> days and also 2014-15 when a repressive anti-corruption agency listened in on citizens and tracked them.
The government says the National Intelligence Act is outdated because of advances in private messaging apps with end-to-end encryption, and needs to be regulated. But after the Prime Minister’s Office released a draft, it has sparked debate even before reaching Parliament.
Civil rights activists have particular objection to a provision in the Bill for ‘interception’ — allowing authorities to monitor, surveil, or record communications, audio, video, or electronic signals from suspected individuals or organisations.
Section 15 of the draft bill states: ‘…If it is not possible to collect information through other means, and if immediate collection of such information is necessary to prevent serious harm to the country, the Inspector General of Police, upon being convinced, may issue a written order to any officer under their direct supervision to monitor or surveil communications, audio, video, or electronic signals or data from any suspected individual, organisation, or institution, or to intercept and record such information.’
Such <a href="https://nepalitimes.com/editorial/in-a-surveillance-state">surveillance</a> is deemed necessary for ‘internal and external intelligence and investigative work and to protect and promote the country’s independence, sovereignty, territorial integrity, national security, national interest, unity, and autonomy’.
Experts say such a provision could be misused as has happened in the recent past when such unchecked authority falls into the wrong hands.
“It is not that such powers should not exist, but other safeguards are necessary which are missing in this draft,” argues constitutional expert Bipin Adhikari, adding that these should include safeguards against the blatant and arbitrary misuse of surveillance powers.
Read also: <a href="https://nepalitimes.com/here-now/spooking-nepalis-by-snooping-on-them">Spooking Nepalis by snooping on them</a>, Mukesh Pokhrel
During the investigation into the murder of Acting Supreme Court Justice Ran Bahadur Bam in 2012, the police collected call details from 500,000 mobile phones and 30,000 SMS messages. Many of the messages that were unrelated to the investigation were reportedly used by officers for entertainment, with sexual content being the most widely shared. This was exposed by an investigation in Kantipur with the headline एसएमएस अरूले हेर्लान् नि! (Others might see your SMS!).
In 2016, a motion for impeachment was filed in Parliament against Lokman Singh Karki, the vicious head of the Commission for the Investigation of Abuse of Authority (CIAA). Although he was appointed by the same politicians who wanted him out, one of the reasons for the move was Karki’s abuse of surveillance powers, including <a href="https://archive.nepalitimes.com/article/from-nepali-press/The-surveillance-state,3382">phone tapping and spying </a>on political leaders, security officials, judges, civil society leaders, journalists, and administrative officers. The phones of 293 individuals were later found to have been tapped.
 
‘NATIONAL INTEREST’
This is not the first attempt such legislation has been pushed, ostensibly in the ‘national interest’. In 2019, a bill consolidating and amending the law on Nepal Special Services included similar provisions, which passed the National Assembly despite opposition.&nbsp;
After committee deliberation, it was approved in May 2020 but became inactive in September 2022 when the term of the House of Representatives ended.
“Globally, provisions like this are used to protect sovereignty and independence, territorial integrity, and national unity. This is standard policy worldwide and is not unique to Nepal,” says Deviram Sharma, the former head of the National Investigation Department.
He adds, “I do not see a need to oppose a provision that has already been approved by an elected body.”
The current draft bill further states that the Inspector General of Police’s order would be sufficient to monitor, surveil, or intercept the communications of a suspect.
Taranath Dahal, former president of the Federation of Nepali Journalists, warns that arbitrary surveillance could <a href="https://nepalitimes.com/opinion/comment/nepal-must-reboot-human-rights-rule-of-law">violate fundamental rights</a> and create an atmosphere of fear.&nbsp;
“Investigators need data and information, but the right to intercept should only be exercised with court approval. Without this, it will lead to a climate of fear, anyone can be kept under surveillance.”
During the investigation of Justice Ran Bahadur Bam’s murder, concerns about the exposure of collected SMS data led lawyers Baburam Aryal, Tankaraj Aryal, Santosh Babu Sigdel and Taranath Dahal to file a writ petition in the Supreme Court in 2012 to restrict access to private phone and SMS records.
In 2016, the bench of then Chief Justice Kalyan Shrestha and Justice Devendra Gopal Shrestha ruled that access to phone and SMS records must be approved by the district court until a law governing the matter was in place.&nbsp;
The ruling stated: ‘Unless otherwise provided by law, permission for access to information necessary for criminal investigations must be obtained from the relevant district court.’
Constitutional expert Bipin Adhikari adds that the law should not infringe on constitutionally guaranteed <a href="https://nepalitimes.com/news/media-matters">freedom of speech, press</a>, or the right to privacy: “There must be a provision to obtain orders from an impartial authority to prevent the state from using such powers arbitrarily.”
All rights activists and lawyers interviewed for this report unanimously agreed that a citizen’s right should not be compromised in the name of facilitating a broader investigation, and that any information collected by any authority during these should not be misused.
Dahal is confident that the controversial provisions will be removed before the bill reaches Parliament, and sees this early discussion as a positive sign: “I hope none of the clauses that undermine our constitutionally guaranteed fundamental rights make it into the bill.”

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Security or espionage?

<figure><img width="1400" height="1031" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107141112/636904bc9c7e80680e037d3djpeg.jpg" alt=""/><figcaption>UNDERPASS: It looks like you forgot that there is now a new law that forbids disclosure of the private information of public officials. Vatsyayan in Kantipur, 25 August</figcaption></figure>It has only been two weeks since Nepal’s new Penal Code criminalised photography (Section 295), slapped heavy fines and jail terms for recording conversations (Section 293), and announced strict punishment for sending, receiving or using online data (Section 298). Another privacy-related bill in Parliament will prohibit people from publishing personal information of public officials. But it has already had a <a href="https://www.nepalitimes.com/banner/suppressed/" target="_blank" rel="noopener">chilling effect across the Nepali media</a>.A person who ridiculed the prime minister on Facebook was tracked down and arrested for photo-manipulating the prime minister's photo, which violates Section 295 of the Code. Editors of Nagarik, Annapurna Post and Kantipur were summoned to the Press Council for interrogation.Photojournalist Usha Titikshu was taking a photo of a damaged CCTV camera at an airport recently, when she was stopped. “Don’t you know the new rules about not taking photos?” she was warned.If enacted earlier, the new laws would have forced editors to spike their recent investigative reports on the Chief Justice’s doctored certificates, photos showing collusion between top politicians and medical college owners, and stories of corruption in high places.The Federation of Nepalese Journalists last week issued its Godavari Declaration demanding that the provisions be immediately rescinded. The International Federation of Journalists (IFJ), The Committee to Protect Journalists (CPJ), Reporters without Borders (RSF) and others <a href="https://www.nepalitimes.com/latest/amend-criminal-code-rsf/" target="_blank" rel="noopener">all condemned the move</a>, demanding that Nepal adhere to the international standards and principles of freedom of expression.Although the constitution guarantees press freedom as an inviolable right, the laws try to enforce constitutional provisions protecting a citizen’s right to privacy more strictly, even extending it to public figures.Read also: <a href="https://www.nepalitimes.com/banner/strongman-rule/" target="_blank" rel="noopener">Strongman rule</a>, Om Astha RaiPress adviser to the prime minister and former editor Kundan Aryal admits that a free press is important, but says the Nepali media has failed to self-regulate."Journalists do not rein themselves in, they feel free to make derogatory comments, especially about women. It is necessary to regulate the press,” he told Nepali Times. Such talk has already had a dampening effect, with editors and reporters now more wary of publishing information in the public interest. The fear is that the laws are so broadly defined and open to interpretation, anyone can be hauled over for anything.The crackdowns started coming thick and fast after the Nepal Communist Party government was elected to power in January: it consolidated the surveillance arms of the state in the PMO, proposed restrictions on advocacy through the National Integrity Policy, and banned popular areas for protest. Photographer Chandra Ale of Onlinekhabar recently faced questions when he was at Kalimati vegetable market where traders had locked up government inspectors. “A person asked me if I had permission to take photos. He followed me, and forced me to delete my pictures,” Ale relates.Photojournalist Usha Titikshu thinks there is a systematic plan to gag the media. “Threats to journalists are more common across South Asia, and we have not connected the dots to see that the same is happening in Nepal,” says Titikshu, citing the rape and deaths of journalists in India and <a href="https://www.nepalitimes.com/banner/the-death-of-democracy/" target="_blank" rel="noopener">the arrest of noted Bangladeshi photographer Shahidul Alam</a> who is being mistreated in jail. “We see our own government moving towards similar intolerance in Nepal.”Ujjwal Acharya, South Asia coordinator of IFJ and digital media watcher says: “Today one thinks twice before posting anything on social media. By the looks of it, the government intends to curtail all kinds of expression, especially investigative journalism.”Says Nagarik editor Gunaraj Luintel who answered an unprecedented summon from the Press Council: “It was overstepping its mandate, even asking me to explain a mistake in print to the parties involved. The council is only supposed to promote ethical journalism, but it has become an arm of the government. The aim is to increase censorship in a planned way.”Narayan Wagle, editor of Kantipur, was also summoned by the Press Council for the first time in his 30-year career, and says the it has outlived its usefulness.“The practice in democratic countries is that the government does not monitor the press. The press monitors itself through a code of ethics. But in Nepal, a new law about the Press Council is in the offing, which proves the government wants to further tighten the noose around the press.”Bikas Karki, president of Photo Journalists’ Club, agrees that the government’s real intention is control: “The Constitution has become like the elephant’s tusks, it is there just for show. The laws are the real teeth inside, which bite.”Nepal has gone through censorship before. The Panchayat system banned political parties, and the royal palace strictly controlled the press. In 2005, King Gyanendra tried to take the country back to those dark days. Some say the new Code is even worse than the Panchayat.“There were threats then, but they were verbal or even unspoken,” recalls photojournalist Gopal Chitrakar, who started out at Gorkhapatra during the Pancahayat. “I don’t remember such draconian measures. These new rules are in writing, they are backed by the law. That gives them legitimacy which is more dangerous.” Kundan Aryal reassured us that the Code and laws can always be amended. But this does not convince journalists who say the laws that restrict media freedom are inherently anti-democratic, unconstitutional and remove its check-and-balance function. Laws that are broadly defined are even more dangerous, and can be a path to authoritarianism.Read also: <a href="http://archive.nepalitimes.com/article/nation/varying-press-freedom-in-burma,1261" target="_blank" rel="noopener">Too little, or too much freedom</a>, Kunda Dixit <h4>The right to say the emperor is naked</h4> Satire flourishes best and is most prolific when there are controls on free speech, and Haribansa Acharya should know. He says he performed his most fulfilling and creative skits during the Panchayat.“Saying ‘17 Sal’ out loud was banned, since it was the year of King Mahendra’s coup. So we got away by saying ‘the year between 16 and 18’,” remembers Acharya. “We also called Prime Minister Surya Bahadur Thapa ‘Gham’ instead of Surya. We played cat and mouse with the censors, and it was more fun and creative. Today’s satire seems to lack that art.”Satire, in fact, seems less necessary when there is full freedom, but it is a lifeline during restrictive times. Even during the absolutist Rana and Shah reigns, the royals knew citizens needed to let off a little steam. So, they allowed one day in a year on Gai Jatra (on 27 August this year)when people had freedom to say anything. <figure><img width="1200" height="841" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107141112/636904bf9c7e80680e037d3ejpeg.jpg" alt=""><figcaption> </figcaption></figure>Culture expert Tejeswor Babu Gongah remembers Gai Jatra revelers burning an effigy of the Panchayat, an act that would have people locked up on any other day of the year."Humour is one space where you can raise issues that you cannot elsewhere, therein lies its power to question authority,” he adds.Some have noted that this year’s Gai Jatra seemed subdued, with fewer shows. On social media, there were comments that satirists had already started self-censoring because of the new Criminal Code.Satirist Manoj Gajurel, who has made a career out of lampooning kings, prime ministers and guerrilla commanders, says: “Humour has a social responsibility to carry the people’s message to authority when it refuses to listen to direct communication.”However, an elected government now wants to take away that right of Nepalis to poke fun at power. Section 306 of the Code specifically prohibits ‘satire’ and categorises it under libel, and Section 295 prohibits caricatures.“I feel a great sense of dread,” admits cartoonist Durga Baral, who went underground during the Panchayat but continued to produce cartoons under the pen-name Batsyayan, despite threats."Freedom of expression is our basic right, and if we are not free to speak out, it all gets bottled up inside.”Nepali cartoonists are pushing back. Last week, Rabin Sayami drew a savage cartoon that tore the government to shreds over its callousness in not investigating the Kanchanpur rape case, and killing a protester. It depicted a smiling Pushpa Kamal Dahal and a smug Prime Minister Oli with a smoking gun in his hand (above). The rapist holds a bloody knife, and has his back turned. Two photos of the rape victim and a dead protester hang on the wall.Sayami was warned by friends to be careful, and that he might be sent to jail. He says the cartoon was a test: “To see if we are still a democracy.”Read Also: <a href="https://archive.nepalitimes.com/article/Nepali-Times-Buzz/saparu-the-festival-of-death-and-rebirt,2543" target="_blank" rel="noopener">Saparu</a>, Sonia Awale<a href="http://archive.nepalitimes.com/news.php?id=11225#.W4fAI84zbIU" target="_blank" rel="noopener">Festival of death and satire</a>, Desmond DoigCode wordsWhile Nepal's journalistic community is up in the arms about the latest Criminal Code, lawyer Madhav Basnet says it is not as worrying as perceived, for the following reasons: <ul><li>The 1990 Constitution was the first one to clearly mention the right to privacy.</li><li>Nepal has a long history of laws against slander and libel, even in Jang Bahadur's Muluki Ain of 1853.</li><li>The Criminal Code does not specifically mention any profession like writers, journalists or photojournalists.</li><li>The conduct of journalists is covered by other laws related to the media, which remain unchanged. The Criminal Code mentions that it will not supersede laws relating to specific professions.</li><li>With social media, it is not just journalists and photographers who take photos, collect and disseminate information, but everyone. The Code is only prescribing limits for them.</li><li>The law, however, does apply to journalists if they are not transmitting through the mass media.</li><li>The Criminal Code is not the guarantor of freedom of expression, the Constitution is. That freedom is not without its limits, and the limits are also mentioned in the Constitution. However, nothing can take away that freedom. And if any law seems to infringe upon it, then there are Constitutional remedies.</li></ul>Read also: <a href="https://www.nepalitimes.com/opinion/nepal-has-press-freedom-but-no-freedom-after-press/" target="_blank" rel="noopener">Nepal has press freedom, but no freedom after press</a>, Shashank Shrestha

Gagging the press in installments

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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