The government’s sudden decision to probe the central bank governor at a time when the finance minister is in question may backfire on the Nepali Congress, according to multiple leaders who believe the move was taken at the behest of the CPN (Maoist Centre).

A Cabinet meeting on Thursday decided to form a committee to probe Nepal Rastra Bank Governor Maha Prasad Adhikari on charges of incompetence, leaking confidential information and failing to discharge his duties. The formation of the probe committee led to Adhikari’s automatic suspension.

The decision to form an investigation committee against Adhikari, according to a source, was taken because he leaked some sensitive information regarding plans to put curbs on imports of some items, created panic about the economy and continued to have differences with Finance Minister Janardan Sharma.

According to Congress leaders, the decision, however, is unpopular and uncalled for ahead of the elections and this won’t send a good message to the people at large. They say there was no discussion in the party about action against the governor.

“It looks like the prime minister came under pressure from Maoist Centre chair Pushpa Kamal Dahal,” said a Congress office bearer who did not wish to be identified as he was critical of his leadership. “It seems the prime minister did not want to annoy Dahal ahead of elections as the ruling coalition has already decided to fight the polls under an alliance.”

The main opposition CPN-UML has sharply objected to the government move, saying Adhikari was made a scapegoat after the role of Janardan Sharma, a Maoist leader, came into question over his failure to take initiatives to address the economic crisis and facilitate the release of some Rs400 million of one Prithvi Shah. Shah, however, has claimed the amount is Rs140 million.

“Someone who has been making mistakes has been spared and those who are doing good are being punished. This governor has good knowledge of the economy and was trying to save the economy from falling into a crisis,” said UML chair KP Sharma Oli at a public function on Saturday. “He is an experienced hand who has served as deputy governor in the past.”

Congress insiders, however, are worried their party President and Prime Minister Sher Bahadur Deuba’s decision to oblige to Maoist chair Dahal could boomerang on the party.

Dahal in the past too has betrayed the Nepali Congress. Many say the Maoist leader has been surviving on double-dealings. In 2016, Dahal had suddenly joined hands with Deuba, causing the Oli government to fall. But in 2017, he abandoned the Congress and sided with Oli to form what he called a larger left alliance. The Maoist Centre merged with the UML in May 2018 to form the Nepal Communist Party (NCP) in which both Dahal and Oli were the chairpersons. Factionalism, however, started in the NCP at the behest of Dahal, which led to the invalidation of the party.

The Maoist Centre currently has no option than to tag along with the Nepali Congress. But he does not hesitate to threaten Deuba with quitting the coalition to form yet another left alliance, something UML’s Oli has constantly pooh-poohed.

Deuba, however, fears a larger left alliance as he does not want to lead the party to yet another defeat in the upcoming elections.

Congress leaders wonder if Dahal did some arm-twisting to convince Deuba to take such an unpopular decision of suspending the governor when the country’s economy is facing headwinds. They say they are worried about political consequences for their party.

Another Congress leader said there are several leaders in the party who are economists and who have served as finance minister and vice-chair of the National Planning Commission.

“It’s strange that the prime minister did not even think of consulting with any of them before taking such a decision of suspending the governor,” the leader told the Post who also spoke on condition of anonymity.

“At least I was not consulted. Nor did I have any clue about the formation of a panel to probe the governor,” said Ram Sharan Mahat, a senior Congress leader and former finance minister. “I have no idea why action has been initiated against the governor.”

Adhikari was appointed governor on April 6, 2020 during the KP Sharma Oli government. He had been serving as the chief executive officer of the Investment Board Nepal. Adhikari is considered close to the UML.

Sharma and Adhikari, according to insiders in Singha Durbar, were not on the best of terms, with the former at times taking a dig at the governor even at public functions. Adhikari, on his part, was not happy with undue interference from the Finance Ministry.

In Nepal, a governor’s term is fixed for five years, and there are strict provisions against the governor’s removal.

According to Mahat, a governor’s suspension definitely does not send a good message.

“The reasons given for the formation of the probe committee are not plausible,” said Ram Sharan Mahat, who has also served as vice-chair of the National Planning Commission and economic adviser to the prime minister.

Two knowledgeable sources told the Post that “some powerful centres are already in search of a new governor” considering that Adhikari’s removal is certain.

A source familiar with the development said a retired bureaucrat and two bankers have been lobbying to become the governor.

Adhikari, however, can move the court. In the past, when Finance Minister Mahesh Acharya suspended Tilak Rawal in August 2000, Rawal moved the court and got reinstated.

A Congress leader said though the public sympathy is with Adhikari, there were some reasons to suspend him, which the ruling coalition has failed to communicate to the public.

According to the leader, when the country was grappling with the Covid-19 pandemic, the central bank pumped a huge amount of money into the market under different titles but that went into unproductive sectors like land purchase and imports of luxury goods.

“The money was not utilised properly. Nor did it create additional capital,” said the leader. “The central bank did not review it. Since the central bank has its own research unit, it could have conducted a study on how the money was being distributed.”

There were also concerns from the business community about Adhikari’s working style, he said.

“Then some sensitive information related to financial activities was leaked, which prompted the government to initiate action [against Adhikari],” the leader added.

The decision, however, has made the country’s central bank, whose autonomy is strongly encouraged worldwide, a political playground.

“The government should not have gone this far to suspend the governor at such a crucial time. Our economy is not in good shape and we are set for elections,” said Bishwa Prakash Sharma, general secretary of the Nepali Congress. “If the government was not finding his performance up to the mark, it should have held talks with him and taken him into confidence.”

According to Sharma, even if the decision was taken as per an understanding among the alliance partners, the timing is bad.

In the Nepali Congress, a section is strongly opposed to Deuba’s plan to fight elections under an alliance, especially with the Maoist Centre. Leaders like Shekhar Koirala have been pressing for going to the polls without any alliance with any other party.

Now with the decision on the governor, Deuba has managed to create his critics within his own camp in the party.

“This decision shows that we have been unnecessarily dragged into the Maoist agenda,” said a leader close to Deuba. “In the name of saving the alliance, the prime minister must not compromise on each and every issue in the interest of the Maoist Centre and CPN (Unified Socialist).”

According to the leader, as the captain of the alliance, Deuba has to take the responsibility for all the unpopular decisions, which would have a negative impact on the Congress and its poll prospects.

The decision to suspend Adhikari comes on the heels of the recommendation of ambassadors for various missions abroad. The Deuba government is facing criticism for “distributing” ambassadorial positions to individuals close to alliance leaders.

The recommendation of Bishnu Pukar Shrestha as ambassador to China, sources say, was made under pressure from Dahal despite Deuba wishing to send an experienced hand to Beijing.

None of the dozens of Congress leaders the Post spoke to defended the government’s decision to suspend the governor.

“This was a wrong move and the prime minister should not have indulged in such an issue,” said Min Bahadur Bishawkarma, a leader close to Deuba. “It looks like the prime minister was convinced by arguments against the governor by the Maoist party and the finance minister. But it was a mistake. The prime minister should have discussed the issue within the party first.”

According to him, at a time when the finance minister comes under the scanner for failing to perform, action against the governor is a major political blunder.

Some people having long experiences in the financial sector said if the governor was going out of track, there were several other ways to address the issue, instead of going to the extent of suspending him.

“The prime minister and the finance minister should have tried to convince the governor and asked him to make amends,” said Govinda Pokhrel, a Congress leader who is also a former vice-chairman of the National Planning Commission. “This is not about one individual or one governor. Such arbitrary decisions will ultimately weaken and destabilise the institutions.”

Pokhrel also recalled how Yubaraj Khatiwada, former finance minister, and Chiranjivi Nepal, former central bank governor, tried to work together, or did not create a scene for that matter, despite not being on the best of terms.

“Despite having several differences, Khatiwada and Nepal worked together. Khatiwada tried to influence the central bank but Nepal resisted. They were clearly not on good terms but they avoided washing their dirty linen in public,” he said. “But this time things have gone a bit too far. This is the government's failure. This is the finance minister’s failure.”