IMAGE VIA AHMEDW
IN APRIL 2024 Nepali officials stood before an international audience and announced that their country had secured foreign-investment commitments worth hundreds of billions of rupees. Two years on, no one can say how much of that money actually arrived. Depending on which arm of the state you ask, the annual figure for foreign direct investment differs by a factor of two, five or even ten. This is a big problem as it undercuts investor confidence and makes a mockery of economic planning.
The puzzle begins with two institutions. The Department of Industry (DoI) publishes figures on approved FDI—projects granted permission under Nepal’s investment law. The central bank, Nepal Rastra Bank (NRB), reports actual inflows as they appear in the balance of payments. The gap between them is a chasm.
In fiscal 2024-25 the DoI recorded commitments of some Rs65bn. The NRB’s net inflow figure was Rs12bn, less than a fifth of that. Over the past three decades, only about 32% of approved FDI has ever materialised. In the first quarter of this fiscal year, the realisation rate tumbled to around 3%.
Some divergence is inevitable. A foreign investor may receive a permit and then walk away, stalled by tax uncertainty or environmental clearances that take years to secure. But a persistent 70–80% shortfall signals something worse: a state that celebrates pledges because they are politically useful, yet cannot be bothered to track what happens next.
The political economy of bad numbers is easy to see. Commitment figures are large, headline-grabbing and instantly attributable to a summit or a reform. Inflow figures are smaller and often embarrassing. So governments prefer the former. As Nepal approaches its scheduled graduation from least-developed-country status in November, the pressure to show FDI momentum will only intensify. The risk is that promises diverge so far from reality that the entire investment climate loses credibility. ■
