The government has acknowledged that policy corruption, rent-seeking, and crony capitalism have pushed the economy into an unproductive cycle, limiting growth and discouraging genuine enterprise.
In a newly released economic status report, Finance Minister Swarnim Wagle pointed to structural weaknesses, weak governance, and policy instability as key reasons behind sluggish economic performance. Instead of encouraging innovation and competition, the system has increasingly favoured those with access to licences, contracts, and regulatory influence, creating barriers for new businesses and capable entrepreneurs.
The report also highlights a long-standing trust deficit between the state and the private sector. Unpredictable policies, weak contract enforcement, and concerns over property rights have made the investment climate uncertain, slowing both domestic and foreign investment.
Despite political changes over the years, the government admits that deeper economic transformation has remained incomplete. The economy continues to rely heavily on remittances, with limited job creation at home. Industrial growth has been slow, and the contribution of manufacturing remains low compared to the overall economy.
The report further notes that expansion of social security and welfare programmes without proper financial planning has added long-term fiscal pressure without significantly improving productivity or reducing inequality.
At the same time, the government says the country is now entering a phase of economic restructuring. It has set an ambitious target to achieve an average growth rate of 7 per cent, raise per capita income to 3,000 US dollars, and build an economy worth around 100 billion dollars within the next five to seven years.
To reach these goals, the government plans to focus on four key sectors: energy, agriculture, tourism, and digital technology. Increased electricity production, infrastructure development, modernisation of agriculture, and expansion of the digital economy are expected to drive growth and create jobs.
However, economists caution that without strong implementation and deeper reforms, these targets may remain difficult to achieve.