Rift Emerges in RSP Government as PM Shah and Finance Minister Wagle Differ Over Policy Direction

Political tensions appear to be growing within the Rastriya Swatantra Party (RSP)-led government as differences reportedly widen between Prime Minister Balendra Shah and Finance Minister Dr. Swarnim Wagle over the government’s working style, economic decisions and coordination mechanism.

Amid increasing speculation about the relationship between the prime minister and the finance minister, RSP Chairperson Rabi Lamichhane has taken an initiative to bring the two leaders closer through dialogue. Sources familiar with the matter said Lamichhane held a nearly four-hour one-on-one meeting with Prime Minister Shah on Sunday, focusing on the challenges facing the government and the party.

According to sources close to Lamichhane, discussions covered a wide range of issues, including government operations, coordination between the party and administration, public dissatisfaction, economic policies and the role of Finance Minister Wagle. The meeting is being viewed as an attempt to manage internal differences before they affect the government’s stability.

Sources claim Prime Minister Shah has expressed dissatisfaction with some aspects of Wagle’s working approach, particularly regarding budget preparation and changes in tax policies. Shah reportedly questioned whether sufficient caution was exercised during certain decisions and whether some policy changes could unintentionally benefit specific interest groups. However, these allegations have not been independently verified, and the Prime Minister’s Office has not issued an official statement on the matter.

According to sources, Shah also suggested the possibility of assigning Wagle a party-focused role while bringing another leader to head the Finance Ministry. The proposal, however, reportedly faced concerns from Lamichhane, who argued that an immediate change in economic leadership could send a negative signal to investors, the private sector and development partners.

Lamichhane is believed to have taken the position that replacing the finance minister at this stage could create uncertainty within both the government and the party. Wagle, as one of RSP’s influential figures and the face of its economic agenda, holds significant importance in maintaining internal balance, according to sources.

The discussions also reportedly highlighted concerns over increasing public dissatisfaction with the government, responses to sensitive national issues, delays in party responsibility allocation and disagreements over policy-making procedures.

Sources say Finance Minister Wagle has complained that some major economic discussions were taking place without adequate coordination with the Finance Ministry. He reportedly expressed concerns that meetings between the prime minister and private sector representatives were being held without his involvement, while decisions related to economic matters were being made without sufficient consultation.

The absence of the finance minister from some recent meetings between Prime Minister Shah and business leaders has drawn attention within political circles. Since economic policies directly affect investment and market confidence, observers say coordination between the prime minister and finance minister is crucial for maintaining government credibility.

People close to Wagle have argued that technical issues related to budget implementation are being turned into political disputes. They have reportedly suggested that attempts are being made to weaken the finance minister’s position. Meanwhile, sources close to the prime minister’s side say Wagle has not maintained enough coordination with the Prime Minister’s Office and has focused on activities beyond the ministry’s core responsibilities.

The disagreement appears to reflect a deeper difference in governing philosophy. Prime Minister Shah is reportedly seeking stronger direct leadership from the Prime Minister’s Office on policy matters, while Finance Minister Wagle prefers institutional independence of the Finance Ministry and greater reliance on technical procedures in economic decision-making.

The current situation has placed RSP’s three key power centres — Lamichhane as the party’s political leader, Shah as head of government and Wagle as the architect of economic policy — under close observation. How these three leaders manage their differences could significantly influence the future direction, stability and public perception of the government.

Political analysts say the issue is not merely a personal disagreement but reflects the challenge of balancing political leadership, administrative authority and economic expertise within a relatively new governing structure. The coming weeks will reveal whether internal dialogue can resolve the differences or whether the dispute develops into a larger political challenge for the RSP-led government.