KATHMANDU, Feb. 12 -- The election last Monday of Sushil Koirala, the most senior leader of the Nepali Congress (NC) party, as the 37th prime minister of the Federal Republic of Nepal, has buoyed investors' confidence with the Nepal Stock Exchange ( Nepse) index leaping by 19.13 points in a single day of trading to close at 803.13.
Koirala's election, which ended days of uncertainty following the Nov. 19 election for members of the Constituent Assembly (CA), has raised hope and expectation of the Nepali people, and the business sector in particular.
The NC is actually the only political party in Nepal that has lobbied for free market economy and liberalization. The NC-led government has introduced an economic reform plan after it rose to power.
Business in Nepal, one of the world's poorest countries, has been in the doldrums after the first CA election held in 2008 that resulted in a political and constitutional crisis.
During the period, Puspa Kamal Dahal and Baburam Bhattari from the CPN (Maoist), Jhala Nath Khanal and Madhav Kumar Nepal from CPN-UML and Khil Raj Regmi, alternately led the country.
"The business community, in this five-year period, hardly felt any urge to expand business activities and make investments for new ventures," Nepal's senior economist Rameshwor Khanal told Xinhua on Tuesday.
"The emergence of optimism in the private sector after the election of a prime minister from the NC will propel economic growth in the near future," Khanal said.
During the last five years, he said, successive governments pledged to revitalize the economy but because of continued instability and political infighting, nothing happened.
Nepal posted an annual economic growth of around 6 percent before the 2008 CA election but has failed to maintain the pace of growth during the following years. In fact, growth last year was down to 4.6 percent based on World Bank figures.
"You can just see the surge in the Nepse index yesterday to gauge the confidence of the private sector in the new government," Pushpa Raj Acharya, a Kathmandu based business journalist, said.
"There is a glimmer of hope in the business community as the NC leads a new government after a long interval," Pashupathi Murarka, vice president of the Federation of the Nepalese Chambers of Commerce and Industry, said.
But the NC-led government is not without serious challenges.
Analysts say that the first and foremost is that the NC should be able to strengthen its power base and restore political stability.
"It should once and for all end the political impasse that has hobbled previous government," one analyst said.
The CA, which is primarily tasked to draft Nepal's constitution, will also serve as the country's parliament for the next four years.
The socio-economic challenges are daunting with as much as 25 percent Nepalis still below the poverty line and thousands of young Nepalis fleeing to foreign countries to look for jobs.
Only under a stable political atmosphere can the business community feel secure and the government be able to attract more foreign and local investments, one analyst said.