Nepal’s new government seeks to balance relations with India, China and focus on the economy

  • The former leader of the Maoist rebels became the prime minister for the third time
  • He supports the opposition UML and five other groups
  • It seeks “neighborliness” with its neighbors India and China
  • Economic growth, curbing inflation are key priorities

KATHMANDU, Dec 26 (Reuters) – Nepal’s new government, led by a former Maoist rebel leader, will try to balance relations with close neighbors China and India as it seeks economic growth in one of the world’s poorest countries, ruling coalition officials said. are. told Reuters.

Pushpa Kamal Dahal, who still goes by the name Degar Prachanda, unexpectedly became prime minister for a third term on Sunday after pulling out of the previous coalition and winning the support of the opposition United Communist Party of Marxist-Leninist (UML) and five other small groups. . . Last month’s elections brought back the suspended parliament.

UML leader and former Prime Minister Khadga Prasad Sharma Oli is believed to be pro-China.

Nepal is one of several countries in South Asia where both India and China are seeking influence. India has long viewed Hindu-majority Nepal, a Himalayan nation of 30 million, as a natural ally based on their close historical ties and long open borders.

“We will maintain close relations with both our neighbours,” Narayan Kaji Shrestha, a senior member of Prachanda’s Maoist Center Party, told Reuters. Shrestha was later introduced as Deputy Prime Minister.

“We must immediately focus on curbing inflation, conserving reserves, increasing capital spending, reducing the trade deficit and reducing interest rates.”

Economic challenges

Prachanda also named six more ministers and gave the key finance portfolio to UML’s Bishnu Prasad Paudel. Paudel has been the finance minister twice before.

Another key appointment is Rabi Lemi Khaneh, TV talk show host, in the Ministry of Interior (Interior).

Prachanda kept the foreign ministry for himself.

Beijing and New Delhi have poured billions of dollars in aid and investment into Nepal, which has great potential for hydropower generation.

Prime Minister Narendra Modi of India, which is Nepal’s largest trade and economic partner, was one of the first foreign leaders to congratulate Prachanda on his appointment.

“The unique relationship between India and Nepal is based on deep cultural connection and warm people-to-people relations,” Modi tweeted. I look forward to working with you to further strengthen this friendship.”

The spokesperson of the Chinese Embassy in Kathmandu also congratulated Prachanda in a tweet.

Nepal’s $40 billion economy, which has emerged from the Covid-19 pandemic, needs urgent attention from the new government, which must regain the confidence of investors and businesses as well as boost production, analysts said.

Inflation is more than 8%, which is the highest figure in the last six years. Nepal is also facing dwindling foreign exchange reserves with increasing dependence on imports of essential commodities.

Former finance minister Yuba Raj Khatiwada, who worked under the former, said Prachanda should focus on boosting manufacturing products such as cement for export as well as agriculture for import substitution.

Prachanda, who led a decade-long Maoist insurgency against Nepal’s then-monarchy from 1996, renounced communist leanings and embraced liberalism after joining the mainstream under a 2006 peace accord. The conflict killed 17,000 people.

Nepal has had 10 changes of government since the 239-year-old monarchy was abolished in 2008.

Report by Gopal Sharma; Edited by Krishna N. Das, Muralikumar Anantharaman and Gareth Jones

Our Standards: The Thomson Reuters Trust Principles.

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