AIDIA roundtable: Special Envoy for Investment St. Juste urges Nepal to shift to equity financing

KATHMANDU: Calvin St. Juste, Special Envoy for Investment of the Federation of St Kitts and Nevis, has urged Nepal to shift urgently towards equity-based investment and regulatory reform. He has stated that concessional finance is waning ahead of the country’s expected graduation from the Least Developed Countries category in 2026.

Speaking at a high-level roundtable organised by the Asian Institute of Diplomacy and International Affairs (AIDIA) in Kathmandu on Sunday, St. Juste warned that “the era of free money ends”. “Grants fade, and loans cannot sustainably replace them. Equity can,” he said.

The roundtable, attended by senior banking leaders, media and economic analysts, examined Nepal’s investment landscape, credit rating trajectory and opportunities arising from shifting global financial currents.

St. Juste encouraged Nepal not to fear its forthcoming LDC graduation but to view it as an inflexion point. He argued the country should transition away from loans and towards equity-based financing, particularly in sectors such as hydropower, where domestic capacity is strong, but international capital remains essential. “Political uncertainty is temporary,” he said, adding that, challenging or not, “this is the moment to bring investors in.”

Referencing a recent Fitch report that assigned Nepal a BB- rating, St. Juste said the country should use the ratings advantage to attract investment. “As investors, you cannot control politics, but you can control risk,” he said, and urged Nepal to proactively address systemic vulnerabilities.

Speakers at the event addressed misconceptions around so-called tax haven jurisdictions and stressed the difference between competitive tax policy and illicit financial practices. “Tax competitiveness is not illegal,” St. Juste said. “Tax avoidance is legal; tax evasion is not. Don’t be fearful of designing a system that allows your economy to survive.”

Drawing on the experience of St Kitts and Nevis, St. Juste said the country endured bankruptcy in 2005 after decades of dependence on the sugar industry. He said the turning point came when it shifted from reliance on commodities and concessional aid towards attracting foreign direct investment and building investment-driven resilience. “Nepal is landlocked, whereas St Kitts is sea-locked,” he added. “In different ways, we are both small states whose destinies can be profoundly shaped by external forces.”

Local banking and ratings executives warned of immediate challenges. Ram Kumar Tiwari, CEO of Nepal SBI Bank, said investors have begun pulling back because of current political uncertainty. Ananda Jha, CEO of CARE Ratings Nepal Ltd, highlighted structural challenges including regulatory conflicts among Nepal Rastra Bank, the Securities Board of Nepal and the Electricity Regulatory Commission, which he said can produce fragmented or convenience-driven policy outcomes and limit meaningful international access.

Participants also raised concerns about liquidity scarcity, investor scepticism, rigid labour policies and a working culture they said is misaligned with global productivity expectations. They noted that while an eight-hour workday remains valuable, technology and artificial intelligence now enable much higher output without extending hours. High tax rates — corporate taxes of 20–25% and personal taxes up to 39% — were flagged as deterrents to large-scale investment, with speakers questioning the justification for high taxes in the absence of visible improvements in public services.

Sudyumna Prasad Upadhyaya, CEO of Sanima GIC, highlighted the performance and profitability of insurance and reinsurance companies in the Caribbean, including St Kitts and Nevis, during the discussion.