Political Risk Analysis - Problems To Persist Despite Successful Local Elections - SEPT 2017


BMI View: Despite having successfully held its second round of local elections, we believe that Nepal will continue to be characterised by political instability, with the second round having proceeded smoothly following India's intervention. Local elected officials will continue to face challenges in carrying out their election pledges, while the Madhesi minorities are likely to continue to push for a revision to the constitution. This will could undermine the existing power sharing agreement and weaken the position of Prime Minister Deuba. We therefore maintain our short-term political risk score at 43.1.

Nepal conducted the second phase of its local elections on June 28. By all accounts, elections were peaceful, with a turnout of more than 70%. According to the latest results, the Communist Party of Nepal (Unified Marxist-Leninist) [CPN-UML] won the second phase. However, we believe that Nepal will continue to be characterised by political instability regardless of the successful local elections. Prior to the second round, minority Madhesi parties had stated their intentions to boycott the vote to protest the slow pace of constitutional amendments and agreed to participate following intervention by India. This suggests that tensions could flare up once again following the elections. In addition, local elected officials are likely to continue to face challenges in carrying out their election pledges. We believe that these tensions could thus undermine Nepal's fragile power sharing agreement and we maintain our short-term political risk score at 43.1 (out of 100).

Minority Participation Positive Step, But Tensions Likely To Persist

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