KATHMANDU: The first 100 days of Prime Minister Balendra Shah’s government have revealed an administration determined to reform how the state operates. Digital governance, procedural simplification and administrative efficiency have become defining themes of its economic agenda. Business registration is being integrated with tax administration, electronic billing is expanding, dormant public funds are being identified for productive use and long-stalled cooperative deposit repayments have finally begun. Compared with previous governments, the pace of bureaucratic reform has been noticeably faster.

Yet economies are driven by more than efficient paperwork. They are driven by confidence. And despite a series of administrative improvements, the government’s biggest economic challenge remains the one it has yet to solve: convincing investors that Nepal has become a stable, predictable and attractive place to invest.

The administration has set itself an ambitious objective of expanding Nepal’s economy to US$100 billion within five to seven years. Such a target demands investment on a scale the country has never previously witnessed. Achieving it will require not only better governance but also sustained private investment, greater foreign direct investment, stronger industrial expansion and significantly higher business confidence.

That confidence has yet to materialise.

The contrast between government activity and market sentiment has become increasingly apparent. While ministries have announced dozens of reforms under the 100-point governance agenda, financial markets have moved in the opposite direction. During the government’s first months in office, the Nepal Stock Exchange lost an estimated Rs. 500 billion in market capitalisation. Stock markets naturally fluctuate, and no government can be judged solely by share prices. Nevertheless, such a sharp erosion of market value reflected growing uncertainty among investors about the country’s economic direction.

The private sector appears to be waiting rather than investing.

One reason is that the government’s economic narrative has become closely associated with governance reforms and anti-corruption campaigns. Few would dispute the need to tackle corruption or strengthen accountability. In the long run, transparent institutions are among the strongest foundations of economic growth. Countries that enforce rules fairly generally attract more investment than those that tolerate impunity.

The difficulty lies in balancing accountability with predictability.

The government’s first hundred days have seen a series of investigations and arrests involving several high-profile businessmen and corporate figures. While supporters regard these actions as evidence that no one is above the law, parts of the business community have interpreted them differently. Many entrepreneurs increasingly worry about regulatory uncertainty and whether enforcement will remain consistent, transparent and evidence-based. Investors generally accept strict regulation; what unsettles them is uncertainty over how that regulation will be applied.

Business confidence depends not only on the rule of law but also on confidence that rules will remain stable.

That concern extends beyond domestic investors. Nepal has spent years attempting to attract large international investors into sectors such as manufacturing, infrastructure, tourism, information technology and energy. Yet the government’s opening months have not produced a significant breakthrough capable of signalling that Nepal has entered a new phase of foreign investment.

No globally significant investment announcement has altered perceptions of Nepal’s investment climate.

The structural obstacles remain largely unchanged. Foreign investors continue to encounter complicated approval processes, overlapping regulations, inconsistent implementation, land acquisition difficulties, bureaucratic delays and uncertainty over long-term policy continuity. Administrative reforms have begun to address some of these issues, but few international investors make billion-dollar decisions based on promises alone. They require confidence that policies will remain predictable over decades rather than political cycles.

The government’s emphasis on digital governance represents one of its more convincing achievements. Integrating company registration with tax systems, expanding electronic billing and digitising public services should gradually reduce administrative costs, improve transparency and limit opportunities for corruption. These reforms may not immediately transform economic growth, but they strengthen state capacity in ways that often deliver long-term benefits.

Similarly, progress in resolving Nepal’s cooperative crisis represents an important institutional step. After years of protests by depositors who had lost their life savings, repayments have finally begun under the revolving fund mechanism. Although only a small proportion of affected depositors have received their money, restarting the repayment process sends an important signal that the state is attempting to resolve one of the country’s most politically sensitive financial crises.

Even so, these reforms remain largely administrative rather than transformational.

Nepal’s economy still lacks a compelling investment story capable of attracting both domestic and international capital. Businesses continue to ask difficult questions. Where are the large industrial projects? Which sectors will drive export growth? How will Nepal integrate into regional manufacturing supply chains? What incentives exist for multinational companies to establish long-term operations? How will the government reduce the cost of doing business beyond simplifying paperwork?

Those questions remain only partially answered.

The government’s broader relationship with the private sector has also become more complicated. While ministers frequently speak about supporting entrepreneurship and improving the business environment, sections of the business community increasingly describe a lack of consultation and growing policy uncertainty. Several leading business houses have expressed concern that confidence between government and the private sector has weakened rather than strengthened during the administration’s early months.

Confidence is difficult to quantify but easy to observe. Businesses postpone expansion. Banks become more cautious in lending. Investors delay decisions. Foreign companies continue evaluating neighbouring markets instead of Nepal. These are often early indicators of an economy waiting for greater certainty.

The administration deserves credit for attempting to modernise the machinery of government. Faster administrative processes, digital public services, tax reforms and efforts to improve transparency represent genuine institutional progress. Such reforms have long been needed and may produce meaningful gains over time.

However, administrative reform alone cannot generate sustained economic growth.

Ultimately, investment decisions are shaped by confidence rather than procedures. Entrepreneurs invest when they believe policies will remain stable. International companies enter new markets when they trust regulatory institutions. Financial markets respond when investors believe governments can balance reform with predictability.

After its first hundred days, the Shah government has demonstrated energy, urgency and a willingness to confront long-standing administrative weaknesses. What it has not yet demonstrated is an equally convincing ability to rebuild confidence across the private sector or persuade major international investors that Nepal has entered a new era of economic certainty.

That may prove to be the more difficult task. Reforming government systems is largely within the state’s control. Restoring confidence requires something far harder to achieve: convincing markets that today’s reforms will remain tomorrow’s reality.