KATHMANDU, May 20: After weeks of suspense and growing political friction, the appointment of Dr Biswo Nath Paudel as the new Governor of Nepal Rastra Bank (NRB) has finally broken the deadlock—offering not just a new economic direction to the country, but also a lifeline to the fragile coalition government.
The high-stakes appointment, made by a cabinet meeting on Tuesday evening, had become a tug-of-war between the two coalition partners Nepali Congress (NC) and the CPN-UML. What should have been a routine decision turned into a political flashpoint, exposing deep mistrust between Prime Minister K P Oli and NC President Sher Bahadur Deuba.
While Prime Minister Oli had pledged NC the post of NRB Governor, he allegedly stalled the process for weeks, seeking to secure the influential post for a UML nominee. This inordinate delay stirred resentment in the NC camp, particularly as Oli is also alleged to have continued bypassing NC in key decisions—despite NC holding more seats than UML in the House of Representatives.
“This wasn’t just about appointing a central bank chief—it became a matter of political prestige,” argued NC youth leader Shankar Tiwari. “Had Prime Minister Oli not relented, the coalition could have collapsed.”
NC had initially pushed for Dr Gunakar Bhatt, an Executive Director at NRB. But internal manoeuvring, especially the refusal of Acting Governor Nilam Dhungana Timilsina to approve Bhatt’s resignation, foiled the attempt. NC insiders suspected UML pressure was behind the standoff—intended to clear the way for Dhungana's own elevation.
“Prime Minister Oli tried to string along NC with promises he never meant to keep,” claimed Tiwari. “But when NC general secretaries called his bluff, they made it clear this could cost him his job.”
General Secretary Gagan Thapa even went public, alleging undue influence over the prime minister from ‘middlemen’ and vested interest groups. His remarks—particularly the controversial quip that “middlemen have access to the PM’s bedroom”—sparked uproar within the UML and tensions between the coalition partners flared.
The row deepened when PM Oli confronted Deuba over Thapa’s statements after the NC president's return home from Singapore. By then, lines had already hardened—Thapa stopped attending meetings of the bi-party mechanism formed to ensure the smooth functioning of the government and Deuba began discreetly exploring backup coalition options, including overtures to CPN (Maoist Centre) Chairman Pushpa Kamal Dahal after a hiatus of several months.
The tipping point came Monday evening. A routine cabinet meeting was scheduled to confirm Dr Paudel’s appointment but was abruptly postponed. Oli invited Deuba to Baluwatar for a one-on-one meeting on the appointment of the governor. Deuba, signalling his displeasure, declined the invitation. He maintained that he would no longer negotiate on the issue that had already been settled.
Their meeting Tuesday morning would prove decisive. Deuba reportedly warned that failing to honor the agreement reached earlier could bring down the government as he was facing mounting pressure from within his own party to sever the alliance with the UML. Hours later, during a cabinet meeting held in the evening, Dr Paudel’s appointment was confirmed.
The delay in the appointment had already drawn criticism from opposition parties, especially given the economic stakes. Nepal is currently on the Financial Action Task Force (FATF)’s grey list and the NRB vacancy had raised alarms among international observers.
“We should’ve had a new Governor well before Maha Prasad Adhikari’s term ended in early April,” said Tiwari. “The delay harmed our credibility. But the appointment salvaged both Nepal’s international standing—and this coalition government, at least for now.”
The dust may have settled for now, but the episode has left clear fault lines in the ruling alliance. Whether the cracks will widen—or heal—may depend on how long trust can hold in a partnership built on shifting sands.