Can Nepal depoliticise its civil service?
Nepal’s civil service serves political parties more than it serves the public, and is a first-order constraint on growth. The new government has a rare opportunity to change this, but it will only work if reformers treat de-politicisation as a political project, not a technical one.
Open PEA | 12 October 2026
Note: This article was first published on VoxDev on 6 October 2026. It was reprinted by permission from VoxDev and the author.
This piece was written before the flash floods on August 26, 2026, which killed at least 1,388 people in Rasuwa and Nuwakot and destroyed roads, homes, and other infrastructure. The argument below has direct implications for the recovery. Reconstruction involves procurement, staffing, and project management. Nepal’s civil service struggles with all of these, and local governments – many of which were already understaffed before the floods – face a steep climb to restore basic services. Nepal has been here before. After the 2015 earthquake, the National Reconstruction Authority went months without functioning leadership while parties argued over who controlled appointments and contracts. Today, recovery from the floods will test the new government’s capacity, as well as its claim to be different from its predecessors. A depoliticised civil service would make responding to national disasters much easier, both now and in the future.
Nepal’s development problem is rooted in misplaced priorities, not a shortage of money. In FY2024/25 the government spent just 63% of its capital budget. The unspent portion (a staggering US$1–1.5 billion) was larger than the total bilateral aid sent to Nepal that year. According to the World Bank, this level of underspending reduced public investment by an average of 5% of GDP between 2021 and 2024.
Meanwhile, remittances from Nepalis working abroad reached almost 29% of GDP in the first ten months of FY2025/26. This inflow rivals the government’s entire budget. The result is a development model in which households sustain themselves and the economy by sending workers abroad, while the state struggles to convert its own budgets into reliable services, infrastructure, and jobs.
The machinery which should be leading that conversion is the civil service, but it does not work as it should. This has huge economic costs; the IMF’s 2026 modelling suggests that effective governance reforms could add around 13% to Nepal’s real GDP over ten years. Comparative evidence points in the same direction, with bureaucracies that recruit and promote on merit generally producing faster growth than those organised around patronages, regardless of the specific policies they pursue. Getting the civil service to function is therefore key to unlocking growth and development in Nepal.
Unfortunately, though, the dysfunction is extraordinarily resilient. It has survived three people’s movements, a ten-year civil war, the end of the monarchy, the arrival of federalism, two constitutions, and a major earthquake. Reform commissions were formed in 1953, 1968, 1976, and 1991. The Civil Service Act followed in 1993, then donor programmes worth hundreds of millions of dollars. The civil service has remained largely unchanged throughout. How is this possible? Politics.
Nepal’s civil service realpolitik
Nepal’s parties, politicians, civil service, and party-affiliated unions are all mutually dependent. Politicians need posts to reward cadres and hold factions together, which they find in the civil service. Parties need money, which they draw from businesses seeking contracts and favourable regulation, with the help of loyal bureaucrats. And civil servants need jobs, both before and after retirement, which politicians distribute in exchange for loyalty or money. Every actor in this system benefits from the privileges created by the dysfunctional status quo, and so each behaves rationally in defending it.
Getting into Nepal’s civil service is broadly fair. The written examinations are generally seen as merit-based, and quotas exist for women and minorities. But progression is a different matter entirely. Political connections largely determine transfers between posts, and each change of government catalyses a new wave of appointments. Ministers demonstrate their power by appointing loyalists to all levels of government, from the senior civil service and the boards of state-owned enterprises down to frontline staff in schools and hospitals.
Positions can also be bought on the active and lucrative transfer market. Civil service unions are central to how this market operates, and all major unions are affiliated with a political party (around 90% of government employees belong to such a union). They have repeatedly and successfully defended their party links against attempts to sever them. As a result, Nepali civil servants must generally serve the party over the people to get ahead.
Serving themselves, not Nepal
Underspending is thus not simply a result of theft or incompetence. Civil servants often delay spending because it serves a party interest or because they fear reprisals from the opposition (e.g., investigation by anti-corruption officials) once it comes to power. There have been 32 governments in 35 years, and no prime minister has ever completed a full term. Files stall while officials look upwards for political cover.
Not everyone is to blame. Many Nepali civil servants are skilled, honest, and motivated by public service. Community health workers and election officials deliver results that inspire other countries. The problem is that the system punishes precisely those traits. Officials who refuse informal payments, protect procurement rules, or try something new are far too often transferred, sidelined, or denied promotion. Women and members of under-represented caste, ethnic, and regional groups face additional barriers, which is one reason upper-caste Khas-Arya men hold 88% of posts at senior under-secretary levels and above, despite making up just 31% of the population. Many frustrated officials leave for better-paid work elsewhere.
International partners have not helped as much as they might have. Donors have rightly diagnosed a capacity deficit but have avoided looking at political constraints. In the era of big aid, when external finance covered 60–80% of the development budget, governments faced little fiscal pressure to discipline the bureaucracy. Thirty years of that produced a civil service equipped with reams of donor-designed procedures which it had no incentive to use. That aid leverage is now gone. Remittances now dwarf aid, two-thirds of aid arrives as loans, and the largest bilateral donors are India and China.
What has changed
The success of the new Rastriya Swatantra Party (RSP) at the ballot box, alongside the activism of Gen Z, civil society, new leaders in older parties, and small businesses frustrated by red tape and corruption, has created rare political momentum for change. Public tolerance for dysfunction appears to have reached its limit, too. The 2026 election delivered a majority to the RSP on a platform of depoliticising the bureaucracy and appointing on merit, with Balen Shah – a former rapper – becoming prime minister.
The early record of this new RSP-led government on civil service reform is mixed. On the one hand, it has instituted a transfer reform pilot in the Ministry of Finance, performance targets for ministries, and open competition for ambassadorial posts. It has also removed hundreds of political appointees, commissioned an investigation into officeholders’ assets, and sacked a junior minister for nepotism. On the other, it has ruled by ordinance, centralised power in the prime minister’s office, put forward proposals that would weaken provincial governments, and lost a Supreme Court judgment on an attempt to ban party-affiliated unions. The former are good signs, but the latter suggest that speed is being chosen over consultation. This carries significant risks.
At the same time, the coalition defending the status quo remains organised. It includes ousted appointees, senior figures in older parties, parts of the National Assembly, some provincial and local governments, civil service unions, politically connected businesses, and middlemen who broker access. They will not go down without a fight.
Three propositions for Nepal’s civil service
The challenge is immense, but Nepal can depoliticise its civil service. To do so, it should consider the following.
Putting the politics of reform on the policy table. The power dynamics described above are well known in Kathmandu but are almost never written down in policy documents. Reformers who ignore the interests and incentives at play will not only fail but may also inadvertently strengthen opponents of reform. Reformers need a careful understanding of the political incentives and trade-offs. For example, party-affiliated unions cannot survive alongside a neutral civil service, but abolition by decree is constitutionally impossible and provokes backlash.
Building a civil service that looks like Nepal and ending the transfer market. Set five-year representation targets by grade, publish annual data, tie inclusion to promotion rather than entry alone, and protect officials from retaliatory postings. Give the Public Service Commission real authority over mid-level and senior recruitment, promotion, and transfer rules. The goal should be that politicians keep control of policy but lose routine control over who sits in which chair.
Making reform electorally valuable. Citizens do not experience the civil service in the abstract. They experience applications that do not move, medicines that are not available, and roads that have not been built. Publish data on transfers, ministry targets, capital spending, and procurement delays, and be honest and realistic about timelines – overpromising is a gift to the opposition. The next government can reverse technical fixes, but it will find a public constituency for a working state much harder to ignore.
Reform failed for 30 years because governments and donors treated it as a purely administrative and technical question. For change to happen, reformers must address the politics of the civil service explicitly. Nepal today has momentum, a young electorate, and a government on the side of change. Whether that can ensure lasting change remains to be seen.
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