Published by Global Banking and Finance Review
Posted on September 23, 2025
4 min readLast updated: January 21, 2026
Nepal's caretaker PM Sushila Karki faces youth protests demanding anti-corruption measures and political reform amid economic challenges.
By Gopal Sharma and Aftab Ahmed
KATHMANDU (Reuters) -Chosen for her integrity after deadly anti-graft protests, Nepal's Prime Minister Sushila Karki now faces her toughest challenge: to meet the demands of the protesters who toppled her predecessor and deliver elections in six months.
The 'Gen Z' demonstrators want the 73-year-old premier to arrest senior party leaders accused of graft, remove politically-connected bureaucrats from key posts, and investigate the deaths of 74 people during this month's protests.
While they support Karki, who showed zero tolerance for corruption as Nepal's first female chief justice, they are also impatient for results.
In a social media post earlier this week, Sudan Gurung, who has emerged as the 'Gen Z' group's representative, supported calls for the "immediate arrest" of ministers in the recently overthrown government of K.P. Sharma Oli.
"We mainly expect her (Karki) to fight corruption. She is our mother and we believe she will protect us," 36-year old Gurung, founder of non-profit organisation Hami Nepal, told Reuters.
Nepal ranked 107 of 180 countries in Transparency International's 2024 Corruption Perceptions Index.
Reuters could not reach Karki on her mobile and messages to her phone remained unanswered.
The protests began after Oli's government announced a ban on social media. While initially peaceful the rallies spiralled out of control on September 8 and in just over 28 hours the government had collapsed.
As well as dozens of deaths, more than 2,000 people were injured as protesters targeted government buildings and businesses believed to be connected to the previous government.
"There is no room to fail ... and six months is a good amount of time," Gurung said. Gurung threatened to bring down Karki's government too if the group's demands were not met.
Karki has already begun to act.
She has promised a anti-corruption committee and formed a panel to investigate the attacks on the protesters.
But experts warned she would need to tread carefully against powerful leaders such as Oli, who remains president of the Communist Party of Nepal (Unified Marxist–Leninist), which maintains a strong support base in the country.
"There is a possibility of another uprising from the traditional political parties that are blamed for mismanagement," said Binoj Basnet, a former army general who is now an independent analyst.
Other political experts said Nepal was at a turning point similar to when the Maoist movement overthrew the monarchy in 2008 following more than a decade of unrest that left the government unstable and economy weak.
Nepal has had 14 governments since, with repeated uprisings fuelled by stark income inequality and youth unemployment at more than 20%. A third of its young population - mostly in their 20s - have left the country for work.
There is also little inspiration for Karki from a similar uprising in Bangladesh where Nobel laureate Muhammad Yunus faces sporadic protests even as he attempts to guide the country through a fragile transition before holding a general election.
"If the Karki experiment does not work and is unable to successfully lay a path for the next credible government then the risk is that the country could be thrown into another decade of unrest," said Puranjan Acharya, an independent analyst and a former government adviser in the 90s.
KARKI'S CHALLENGES
In the midst of a political crisis, Karki also has to fix Nepal's $43 billion economy, which has been hit by a drop in tourism and investment sentiment since the protests.
Fitch Ratings said "a period of extended political stress" would raise risks for the sovereign credit profile of the Himalayan nation, as it dampens economic activity and near-term growth prospects.
Karki's government has said it plans to hold an election on March 5, although analysts say that could be extended by another six months.
They say Karki will have to give the unorganised youth time to figure out their leadership, while the Nepali Congress and the Communist Party-UML, which have dominated the country's politics for decades, need time to identify candidates untainted by graft allegations.
"This movement is all about corruption. So leaders like Oli, and Sher Bahadur Deuba (Nepali Congress President) and their close aides will not fight elections," Acharya said, adding that the parties will have to find new faces.
Youth leader Gurung is mulling the formation of a new youth-based party.
He stressed elections needed to be fair for all sides to accept the results and avoid more protests.
"The next elections will be a generational clash of old versus the new," Acharya said.
(Reporting by Aftab Ahmed and Gopal Sharma in Kathmandu; Editing by Kate Mayberry)
Corruption is the abuse of power for personal gain, often involving bribery or unethical practices that undermine trust in institutions.
Youth unemployment refers to the situation where individuals aged 15-24 are unable to find work despite actively seeking employment.
Economic growth is the increase in the production of goods and services in an economy over a period, often measured by GDP.
Financial stability refers to a condition where the financial system operates effectively, with institutions able to manage risks and absorb shocks.
Explore more articles in the Headlines category
