Inflation, job concerns loom large as Nepal prepares to vote

Surging global energy and food prices have hurt the economy as it struggles to recover from the COVID-19 blow to the tourism industry

Reuters
Published : 19 Nov 2022, 05:53 AM
Updated : 19 Nov 2022, 05:53 AM

Frustrated by crippling costs and lacking job prospects, up to 18 million Nepalis vote in general elections on Sunday that few expect to bring drastic change or a government able to revive an economy growing at one of the slowest rates in South Asia.

Sandwiched between regional giants China and India, Nepal is home to about 30 million people and Mount Everest, the world's tallest peak.

Surging global energy and food prices have hurt the import-dependent economy as it struggles to recover from the COVID-19 blow to the key tourism industry.

Foreign reserves are shrinking and retail inflation has been hovering at six-year highs of around 8% in the Himalayan nation, where one in five people lives on less than $2 a day.

Political stability has also remained elusive, discouraging many investors.

Nepal has had 10 different governments since it abolished the monarchy 14 years ago, as coalitions led by all three major political parties have yet to serve a full five-year term due to power struggles and infighting.

"It is less likely that the election will produce a single party majority government," Deependra Bahadur Kshetri, a former governor of Nepal's central bank, told Reuters.

"Therefore, it is unlikely that we will have a good government capable of pursuing strong economic development."

The Asian Development Bank's (ADB) latest forecast expects economic growth of 4.7% in the fiscal year starting in mid-July, down from the previous year's estimate of 5.8%, due to tightening measures to curb prices, and a fall in foreign exchange reserves.

PICTOGRAMS AND NOODLE KING

Candidates decked out in marigold garlands promised to bring down inflation, create jobs and boost the economy at nationwide rallies this week.

Among them is Nepal's only billionaire, Binod Chaudhary, nicknamed the "Noodle King" for the Wai Wai brand of instant noodles created by his conglomerate CG Global Corp.

"I will work for the transformation of the economy with a new perspective," Chaudhary told Reuters from his rural constituency of Nawalparasi, about 200 km (124 miles) southwest of Kathmandu, the capital. He did not elaborate.

The economy has not escaped the fallout of the Ukraine war, which has driven up global resources prices.

Inflation touched 8.5% in October, its highest level since 2016, and there are concerns that a global recession could hit remittances from Nepalis working overseas that make up a quarter of GDP.

The election pits the ruling alliance of the Nepali Congress party, led by Prime Minister Sher Bahadur Deuba and some former Maoist rebels, against the Nepal Communist Unified Marxist Leninist (UML) party.

China and India, keen to preserve strategic and economic interests, will be watching the election results. The United States is also now a major development partner.

There are no pre-election polls in Nepal, but political analysts expect the ruling alliance to retain power.

"There is no possibility of any major change in the status quo," said analyst Krishna Khanal, a former professor of politics at Tribhuvan University in Kathmandu.

Nepal's election panel has set up almost 22,000 polling stations nationwide. Results are expected within two weeks.

A third of Nepalis are illiterate, and each voter will get four ballots to choose members of parliament and of the seven provincial assemblies by stamping party-specific pictograms such as a sun, a tree, a plough and an umbrella.

More than 11,500 candidates are running, yet many voters are sceptical of prospects for improvement.

"My expectations for the incoming government are not much," said Kathmandu pharmacist Shishir Khatiwada.

Toufique Imrose Khalidi
Editor-in-Chief and Publisher