Crisis to comeback: Golyan’s roadmap for saving Nepal’s economy

In an insightful and revealing interview, Nepal’s leading industrialist and entrepreneur Pawan Golyan engages with Umesh Poudel, editor of Fiscal Nepal to examine the roots of Nepal’s worsening economic slowdown. With clarity and conviction, Golyan discusses the country’s fluctuating interest rates, growing labor migration, and weak policy execution that have collectively stalled economic progress and shaken investor confidence. Speaking not just as a business leader but as a deeply concerned citizen, Golyan highlights how policy failures, regulatory bottlenecks, and untapped sectoral opportunities are holding Nepal back. Yet the dialogue also carries a note of optimism. He outlines a practical roadmap to recovery, centered on structural reforms, private sector revival, and sustainable development. This timely conversation offers a sobering yet forward-looking analysis of Nepal’s current crisis—and issues a strong call for bold, effective leadership. Excerpts:

Nepal’s economy is facing tough times. From your perspective, what are the main factors driving this downturn?

Three major issues are at the heart of this crisis. First, about two and a half years ago, interest rates spiked dramatically, pushed by the IMF and enforced by Nepal Rastra Bank. This set off a chain reaction that crippled the economy. The real estate market collapsed almost overnight, dragging the stock market down with it. These crashes hit the cooperative sector hard. Small traders—shopkeepers, vendors—rely on cooperatives, depositing money in the evening and withdrawing it the next morning to keep their businesses running. When real estate and stocks tanked, around 200 billion rupees got trapped in cooperatives and frozen investments. Money that’s supposed to flow through the economy like blood in veins stopped circulating, choking businesses and drying up cash flow across the country.

So, this freeze in funds created a ripple effect for businesses?

Exactly, the problem got worse with the Working Capital Guideline, which made it nearly impossible for businesses to get new loans to survive. Without access to credit, many had no choice but to shut down. People lost their livelihoods, and that triggered a mass exodus. During the COVID period, Nepal had over 30 million people; now, we’re down to under 15 million, with maybe 5 million in a floating population. More than half our population—youth, students, farmers—has left the country, often taking low-paying labor jobs abroad.

With fewer people, demand for everything has plummeted. Food, clothes, services—you name it, consumption is cut in half. If 50 shops could thrive before, only 25 can survive now. This drop in demand has slashed imports and exports, as there’s less need for goods and fewer workers for production. Nepal’s already low GDP has shrunk even further, gutting government revenue. On top of that, people are selling their homes and land to fund their migration, leading to capital flight that’s draining our economy dry. It’s a vicious cycle, and we’re left with an economy in ruins.

That’s a stark picture. How can Nepal recover from this? What are the immediate steps we need to take to revive the economy?

The first priority is keeping our people here—farmers, youth, students, laborers—by creating opportunities at home. We can’t rebuild an economy without our workforce. Three sectors hold the key: agriculture, tourism, and IT. Let’s start with agriculture. We need to boost production, focusing on high-value crops we can grow cheaply and export, like coffee.

Nepal can’t compete with cheap imports for staples like rice or wheat, but we can carve out a niche with specialty products. Industrial processing is critical—thinks turning cassava or banana stems into ethanol for fuel or producing organic fertilizers instead of relying on expensive chemical ones. We should also tap into forestry. Nepal’s 45% forest cover is a goldmine sitting idle. If managed sustainably, we could export 700 billion rupees worth of timber annually, replacing old trees and rejuvenating forests. Agro-forestry products like pepper and long pepper have huge demand in India. We could set up industries for timber seasoning and furniture production, using Chinese technology, to export to India and other markets.

Tourism is another massive opportunity, but we’re stuck in old ways. Holding roadshows abroad and begging people to visit Nepal isn’t working. We need to market our unique spiritual and adventure tourism offerings aggressively. Take Doleshwar Mahadev Temple—it’s believed to be the head of Kedarnath, a major Hindu pilgrimage site. During a flood, Kedarnath’s priests worshipped there, yet it’s barely promoted. Marketing it properly could draw 500,000 tourists a year. Other temples, like Guheswori and Santaneshwor Mahadev, are known locally for granting wishes for children but are invisible on the global stage. If we promoted these sites, they’d pull in international pilgrims.

Buddhist tourism is another missed chance. Lumbini, Buddha’s birthplace, is world-renowned, but many Thai tourists arrive via India and don’t even realize they’ve been to Nepal or that Buddha was born here. We need to bring international media and social media influencers from Buddhist countries—Thailand, Vietnam, Cambodia, Sri Lanka—to showcase these sites. Adventure tourism is untapped too. Our hills, mountains, and spots like Kusma’s bungee jump could be pitched as wedding destinations or thrill-seeker hotspots to attract younger travelers.

Then there’s IT. We’re already exporting IT services informally, but the government only recently started formalizing this sector. With proper structure—training programs, incentives, and global marketing—we could create thousands of jobs to keep our tech-savvy youth here. These three sectors—agriculture, tourism, and IT—can be the backbone of our recovery if we act decisively.

Let’s turn to government policy. Does the recent budget effectively address Nepal’s economic challenges, or are current policies further deepening the crisis?

The budget sounds impressive, especially on agriculture, but it’s all talk and no substance. Previous budgets had practical measures, like tax exemptions for farmers, but those were rolled back. There’s no income tax relief or investment incentives for agriculture, unlike hydropower, which gets special treatment. Concessional loans for farmers are mentioned, but they’re rarely available—it’s just window dressing.

Export incentives for agricultural products like tea, coffee, cardamom, and industrial goods like handmade paper, carpets, and yarn haven’t been paid for two years, and the new budget doesn’t even mention them. Tourism is suffocating under VAT and luxury taxes, with no relief in sight. The budget is skewed toward big corporations. Granting industry status to hotels benefits large chains, not small guesthouses. Scrapping advance tax helped rice, lentil, and flour mills, but it hurt farmers who grow the raw materials. This isn’t a budget for ordinary Nepalis; it’s a corporate giveaway.

The Nepal Rastra Bank is preparing to issue the monetary policy for the next FY. How can the central bank address the challenges and gaps left unaddressed by the budget?

Monetary policy can’t fix the whole economy, but it can make a big difference if done right. First, we need to rescue small borrowers—those with loans under 50 million or 20 million rupees—who are blacklisted. Clear their names, freeze their accumulated interest, and give them two years to repay it gradually, only charging current interest for now. Banks should assess their ability to recover and offer additional funds if needed, instead of following rigid NRB rules. This would get money flowing from the grassroots, sparking economic activity.

Second, we need a functional Asset Management Company. Banks could transfer their non-performing loans, clean up their balance sheets, and give struggling businesses a way out. It has to be practical, with banks as active partners, not just a symbolic gesture.

Third, ease the Capital Adequacy Ratio requirements for banks for at least two years. Forcing banks to inject more capital now, when they’re grappling with bad loans and cash shortages, would be catastrophic.

Fourth, cut bank operating costs. Why does every bank need its own system for international LC monitoring or AML/KYC checks? The NRB could create a centralized platform for these processes, saving banks money and letting them offer cheaper loans to customers.

Fifth, stabilize interest rates for productive sectors. Rates have swung wildly from 16% to 8-9%, making it impossible for businesses to plan long-term projects. Trading, which makes up two-thirds of our economy, can handle higher rates, but productive sectors—agriculture, manufacturing, tourism—need steady, single-digit rates. Charge more for trading loans to subsidize these sectors, avoiding the drastic spikes we’ve seen that kill investment.

Finally, on the Banks and Financial Institutions Act, separating promoters from banks is a good idea, but those who invested 30-40 years ago need a fair exit. Gradually converting promoter shares to public ones would let them reinvest their capital in productive sectors like agriculture, tourism, or manufacturing. Blocking their exit is unfair and locks up capital we desperately need to rebuild.

So, a complete policy overhaul with a focus on long-term stability is the way forward?

Absolutely, the problem starts with mindset. Politicians are consumed by power struggles, fighting over that get what position. Bureaucrats are paralyzed, afraid to make bold decisions because they might face backlash.

Corporates are stuck in internal battles, unable to act decisively. Even the media shares some blame for not holding power to account more aggressively. If Nepal goes bankrupt, nobody wins—not politicians, not businesses, not citizens. We’re dangerously close to technical bankruptcy, borrowing just to pay interest on our debts. The budget needs to prioritize ordinary Nepalis—farmers, small traders, youth—not just corporate elites.

Policy stability is non-negotiable. Look at what happened when the airport was shut for 10 hours without proper notice—flights canceled, tourists stranded, and hotels in panic. Or when the NRB jacked up interest rates overnight and rolled out the Working Capital Guideline without warning. It’s like slamming the brakes on a speeding car; the economy skids and crashes. We need thoughtful, consistent policies, not knee-jerk decisions that wreak havoc.

Take tourism as an example. We can’t just keep doing the same tired roadshows. We need to tell the world about our spiritual treasures, like Supa Deurali, Pathivara, or Palanchok Bhagwati, which draw local pilgrims but could attract millions from abroad.

Adventure tourism—our mountains, rivers, bungee sites—should be marketed as unique experiences for weddings or adrenaline junkies. In agriculture, we need to protect farmers with fair prices and export support, not leave them at the mercy of big mills. In IT, we need to train our youth and connect them to global markets, not let them leave for menial jobs abroad.

The government must act like it’s running a country, not a short-term scheme. Create a stable environment where businesses can plan, farmers can invest, and tourists can trust they won’t be stranded. Until we shift this mindset—putting citizens first and ensuring policies are predictable and practical—Nepal will keep sliding toward collapse. We have the potential to thrive, but only if we stop shooting ourselves in the foot with bad decisions.