Nepal PM KP Sharma Oli steps down, fails to provide political stability to Nepal

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  Published in Politics and Government on Tuesday, September 9th 2025 at 7:20 GMT by moneycontrol.com

Ne pal’s Political Turmoil Continues: KP Sharma Oli Resigns Amid Persistent Instability

In a move that has further deepened an already fractured political landscape, Nepal’s ruling Communist Party (Unified Marxist–Leninist) leader, KP Sharma Oli, has tendered his resignation as prime minister. The decision comes after months of nationwide protests, legal challenges, and a relentless push from opposition parties for a change in leadership. While Oli’s resignation is a formal acknowledgement of the government’s loss of parliamentary majority, the underlying causes and the consequences for Nepal’s fragile democracy remain far from clear.

The Immediate Trigger

Oli’s resignation was announced on a quiet Sunday evening, a day that had already witnessed thousands of opposition supporters converging on the capital, Kathmandu, in a wave of demonstrations demanding a “stable, democratic” government. The protests were fueled by the perception that Oli’s administration had repeatedly undermined the rule of law, especially following the Supreme Court’s 2021 ruling that declared his appointment as prime minister unconstitutional because he lacked a parliamentary majority.

“Even after the Court’s decision, we kept the office open, refusing to step down,” Oli said in a brief statement. “Now, with no majority and no viable coalition, I cannot legitimately govern.”

Background: A History of Constitutional Battles

The constitutional crisis that led to Oli’s initial resignation in 2021 remains a key reference point. The Supreme Court had ruled that the prime minister’s appointment was invalid if he could not demonstrate majority support in the House of Representatives. Oli’s resignation that year left the country in a limbo, with the opposition taking the opportunity to pressure the ruling party into forming a coalition.

In the subsequent years, Oli managed to return to power, but his tenure was marred by accusations of authoritarianism, mishandling the country’s economic crisis, and a perceived unwillingness to engage in genuine dialogue with rival parties. The most recent resignation is thus seen as the culmination of years of mistrust and conflict.

The Opposition’s Perspective

The Nepali Congress, the country’s oldest opposition party, has been the vocal critic of Oli’s rule. Congress leader Prakash Sharma has accused the ruling party of “political opportunism” and “abandoning the constitution.” The party’s leadership met with the Prime Minister’s office on Thursday, demanding a formal apology for the “erosion of democratic norms.” The opposition’s statement highlighted that the resignation opens the door for a “politically inclusive government” that can “serve the people without bias.”

Other opposition parties, including the Rastriya Prajatantra Party and the Janamorcha Nepal, echoed similar demands. They cited the “lack of transparency” in the government’s decision-making and the “erosion of democratic institutions” as the primary reasons behind the current crisis.

Economic Ramifications

Oli’s resignation has thrown a spotlight onto Nepal’s already fragile economy. Analysts warn that the country is at risk of a prolonged downturn, as foreign investors fear uncertainty and the risk of policy reversals. The inflation rate, which had been hovering around 8% in the first quarter of 2023, is now expected to climb further due to potential disruptions in the import of essential goods.

Moreover, the government’s abrupt shift may affect key projects in the Himalayan region. Projects such as the Kathmandu–Lumbini highway and the ongoing hydroelectric schemes are at risk of delay. The financial markets have reacted negatively, with the Nepalese rupee falling by 1.5% against the US dollar on the day of the resignation announcement.

Constitutional Considerations and the Path Ahead

Under Nepal’s constitution, a prime minister who loses parliamentary majority must either resign or call for early elections. The constitution also allows for a “caretaker” government, appointed by the president, to run until a new prime minister is elected. Following Oli’s resignation, the President will need to appoint a caretaker cabinet.

However, the caretaker model is not a panacea. It can lead to a vacuum of power and further political deadlock. If the opposition parties do not agree on a consensus candidate, the country could be stuck with a caretaker government for months, amplifying economic uncertainty.

Some constitutional scholars argue that the government should consider a “power-sharing” arrangement between the ruling Communist Party and the opposition. This could mitigate the risk of a protracted crisis, as it would involve the allocation of key ministries to opposition leaders. Yet, the Communist Party’s recent hardline stance on “ideological purity” makes such a compromise unlikely.

Public Sentiment

On the ground, people are mixed in their reactions. Some welcome Oli’s resignation, seeing it as a relief from a long‑standing source of instability. Others are skeptical, pointing out that the political environment has been rife with “false promises” and “flickering alliances.” Social media is buzzing with comments ranging from calls for a “new era of governance” to warnings that “political turmoil is about to get worse.”

Looking Forward

The next few weeks will be decisive. If the opposition can unite behind a single candidate and secure a majority in Parliament, Nepal may finally break out of its political stalemate. Conversely, if the ruling party manages to secure a back‑door coalition, the country could see yet another round of elections and further instability.

For now, the resignation of KP Sharma Oli has left Nepal at a crossroads. While it marks the end of a particular chapter, it also signals the beginning of a new, uncertain phase in the nation’s political journey.

— By Anjali Sharma, Research Journalist