Finance Minister Khanal Addresses U.S. Chamber of Commerce Business Dialogue

14th October 2025, Kathmandu

Finance Minister Rameshore Prasad Khanal utilized his platform at the U.S. Chamber of Commerce Business Dialogue, titled “From the Himalayas to the Heartland: Strengthening U.S.–Nepal Partnership,” to deliver a comprehensive message on Nepal’s structural economic reforms and its renewed commitment to creating a stable and profitable investment climate for foreign businesses.

FM Khanal Addresses USCC

The dialogue, held on Monday, October 13, 2025, in Washington D.C., served as a crucial engagement with the American private sector alongside the annual World Bank and IMF meetings. This exclusive SEO article delves into the core topics and policy shifts highlighted by the Finance Minister, providing in-depth analysis on the path forward for Nepal’s economy, as per your request for an SEO article over 600 words.

The Core Message: Governance, Discipline, and Private Sector Revival

Minister Khanal’s address centered on the need for a paradigm shift in Nepal’s economic management, echoing the recommendations of the High-Level Economic Reform Commission, which he previously chaired. His three primary policy pillars for the interim government are: Good Governance, Fiscal Discipline, and the Revitalization of the Private Sector.

The Minister explicitly detailed a move away from populist spending, signaling a firm return to technocratic rigor and accountability. A key immediate measure announced was the directive to cut or scrap “petty and politically-influenced projects” from the current budget, ensuring that capital expenditure is strategically channeled only towards productive and prepared initiatives. This commitment to fiscal discipline is intended to restore public trust and optimize the limited government resources, which is vital for long-term economic stability and attracting serious, long-term investors.

Tackling Structural Economic Weaknesses

Nepal’s economy has been grappling with deep-rooted issues, including excessive dependency on imports, declining private investment, weak productivity, and a crisis in the cooperative and financial sectors. Minister Khanal’s policy blueprint aims to tackle these structural weaknesses head-on:

Investment-Friendly Environment: The government is prioritizing measures to restore business confidence and create an environment conducive to investment. This includes plans for greater labor law flexibility and fostering effective Public-Private Partnerships (PPP). Special emphasis is being placed on the formalization of Small and Medium Enterprises (SMEs) by providing them with better access to finance, technology transfer, and market guarantees.

Addressing Financial Sector Vulnerability: The Minister highlighted the urgency of resolving the cooperative sector crisis, where a significant amount of public savings is currently trapped. Proposed measures include government intervention to protect small savers and the introduction of stronger financial regulation. Additionally, reforms are targeting restructuring problem loans, strengthening debt recovery laws, and promoting productive lending through clear monetary policies.

Governance Reforms and Regulatory Streamlining: To combat the bureaucratic hurdles and corruption that deter foreign investors (as noted in international climate reports), the government is moving towards transparent, result-oriented policy-making. This includes the drafting of an Economic Reform Action Plan 2082, which seeks to repeal outdated and restrictive laws, such as the Black Market and Social Offenses Act 1975 and the Birta Abolition Act 1959. This legislative streamlining is expected to significantly reduce the cost and complexity of doing business in Nepal.

Reforms of State-Owned Enterprises (SOEs): A bold, but necessary, element of the reform agenda involves liquidating loss-making state-owned institutions. The plan includes the restructuring and partial privatization of others, such as Hetauda Cement and Udayapur Cement, and finding strategic international partners for organizations like Nepal Airlines. The long-term goal is to transform SOEs into public limited companies, freeing them from political interference and enabling them to mobilize capital through public share sales and bond issuance.

High-Level Dialogue with the IMF: Sustained Cooperation

Preceding the Chamber of Commerce dialogue, Minister Khanal held a critical meeting with Bo Li Biby, Deputy Managing Director of the International Monetary Fund (IMF), accompanied by Nepal Rastra Bank Governor Dr. Biswo Nath Paudel. This high-level discussion focused on maintaining macroeconomic stability and accelerating structural reforms under the IMF’s Extended Credit Facility (ECF) program.

The IMF recently completed its sixth review of Nepal’s ECF arrangement, approving a disbursement of approximately $43 million. This approval signifies the IMF’s continued confidence in Nepal’s reform trajectory despite recent political instability. Key issues discussed and emphasized by Deputy Managing Director Bo Li included:

Financial Sector Strength: The necessity of completing the Loan Portfolio Review (LPR) of major banks to accurately assess asset quality and addressing the vulnerabilities in the savings and credit cooperative sector.

Fiscal Consolidation and Transparency: A call for sustained efforts in domestic revenue mobilization, improved execution of capital expenditure, and enhanced fiscal transparency.

Governance and Anti-Corruption: The importance of strengthening anti-money laundering (AML) measures and amending the Nepal Rastra Bank Act to enhance central bank independence, which is crucial for removing Nepal from the FATF gray list and boosting international trust.

Minister Khanal’s engagement with the IMF reaffirmed his commitment to accelerating the ongoing economic reform programs, positioning Nepal to benefit from continued international financial and technical support, which is a powerful signal to potential U.S. and global investors.

The Investment Climate Outlook

While acknowledging persistent barriers to foreign investment—such as cumbersome bureaucracy, profit repatriation issues, and political uncertainty—Minister Khanal’s presentations aimed to highlight the immense potential and the government’s determination to clear the path.

The Minister implicitly showcased Nepal’s attractive sectors for U.S. investment, including:

Hydropower: Nepal’s vast hydroelectric potential is a consistent draw for foreign capital, supported by initiatives like the U.S.-backed Millennium Challenge Corporation (MCC) Compact, which focuses on power transmission and road infrastructure.

Tourism & ICT: With structural reforms aimed at modernizing business practices, the service-oriented sectors are ripe for investment.

The overall takeaway from the Washington D.C. dialogues is that Nepal’s new economic leadership, rooted in technocratic experience, is providing a robust and clear roadmap. By prioritizing governance, fiscal discipline, and the structural revitalization of its economy, Minister Khanal is actively building a compelling case for the U.S. private sector to become a strategic partner in Nepal’s growth story.

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