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A Reckoning for Nepal's Coalition

In the latest developments in Nepal, Prime Minister Sher Bahadur Deuba has taken the leap by announcing the local elections for May 13 and tabling of the Millennium Challenge Corporation (MCC) an agreement for assistance by the United States in the parliament on February 09.

This could be a make or break moment for the Deuba led coalition as the other main parties in the coalition – the Maoist Communist Centre and the CPN Socialist are not in favour of ratification of the MCC in the present form.

What may have led Mr Deuba to force the agreement in the parliament is a letter from the MCC HQ in the United States that in case there is no ratification by February 28, the agreement is likely to be terminated.

“Absent ratification, it is within the MCC Board’s authority to discontinue Nepal’s eligibility to receive the $500 million compact grant from the United States,” said the MCC letter.

Meanwhile wary of lack of support by his alliance partners, Prime Minister Deuba has reached out to chairman of the main opposition party the CPN-UML, Mr K P Sharma Oli.

More over, a leak of a letter by the Kathmandu Post on February 06 written jointly by Deuba and Dahal on September 29 last year seeking four-five months extension for ratification to build consensus among coalition partners has strengthened Mr Deuba’s hand as Mr Dahal has been throughout claiming that he was not in favour of the ratification.


The Millennium Challenge Compact (MCC) is causing friction in the ruling coalition in Nepal led by the Nepali Congress leader Sher Bahadur Deuba. For the record, the five-party coalition government comprises the Nepali Congress, the Communist Party of Nepal (Maoist Centre), the CPN (Unified Socialist), the Janata Samajbadi Party and the Rashtriya Janamorcha.

The CPN Maoist Centre and the CPN (Unified Socialist) are not in favour of ratification of the MCC in the present form.

Multiple media reports from Nepal indicate that leaders of the Nepali Congress (NC) were attempting to convince leaders of the Maoist Center and the CPN (Unified Socialist Party) to agree to tabling the resolution for ratification. Prime Minister Deuba has met with Dahal and Nepal on February 2 in an attempt to convince them to agree to the tabling of the MCC agreement, but consensus has not been achieved.

Meanwhile, as these developments come prior to the local elections announced for May 13 now, there are concerns that the coalition that took office year may split if Deuba insists on tabling the Agreement.

Importantly Speaker of the House of Representatives Mr Sapkota is also not on board for passage of the MCC agreement and thus has postponed the meeting convened for January 30 without informing the Prime Minister

China is also believed to be playing a role in the resistance offered by Mr Dahal as he has had talks with Song Tao, head of the Chinese Communist Party's International Liaison Department.

Nepali media has been drawing attention to Chinese academics raising the issue of the MCC being an American counter to its own Belt Road Initiative (BRI).

Importantly, CPN (Unified Socialist) Chairman Nepal said that the alliance would not be broken till parliamentary elections and blamed his former party the UML for playing a destructive role by not allowing parliament to convene. "The country has now moved ahead with the politics of alliance. The alliance will not be broken by anyone spreading confusion," Nepal said.

On the other hand, it is believed that Prime Minister Deuba as well as Nepali Congress leaders like Shekhar Koirala and General Secretary Gagan Thapa are not keen on continuing the alliance for polls.

But Maoist Centre and the CPN (Unified Socialist) want a poll alliance with the Congress as these parties do not have the organisational structure and heft to face the polls independently.

There is also a sentiment in the Nepali Congress as Mr Deuba has become the prime minister with the support of the other parties, breaking the coalition will not send the right signals. “The party president is leading a coalition government now,” said Purna Bahadur Khadka, a vice president of Congress. “This is not the right time to bring up the debate whether there should be an alliance for upcoming polls or whether the coalition will break apart. It will depend on how the alliance moves forward on very many issues.”

Apart from the MCC, multiple factors may impact political stability in Nepal such as the formation of a coalition led by NC for the local and later parliamentary elections, stand taken by the main opposition party CPN UML and its wily leader K P Sharma Oli and finally outcome of the parliamentary polls due in the country by the end of the year.

Never the less given these developments will the coalition last the ratification and how will this impact the local elections set for May 13 now remains to be seen?

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