Fresh elections will be held in April and May next year, the office of President Bidhya Devi Bhandari said in a statement after she approved the dissolution.
The decision plunges Nepal into months of fresh political uncertainty after years of instability and short-lived governments that followed a decade long civil war.
Prime Minister KP Sharma Oli who had been under pressure from his detractors in the ruling Nepal Communist Party to withdraw a controversial ordinance on Sunday morning recommended dissolution of Parliament.
The recommendation was cleared at an emergency meeting of the cabinet convened by PM Oli on Sunday morning.
“Today’s Cabinet meeting decided to recommend the President to dissolve the Parliament,” said Barshaman Pun, energy minister in PM Oli’s cabinet announced in Kathmandu after the meeting.
The surprise move comes at a time PM Oli was under intense pressure from the rival factions of the NCP led by former prime ministers Pushpa Kamal Dahal
PM Oli had last evening met President Bidya Devi Bhandari at her official residence ‘Shital Niwas’, one of the many meetings that he held on Saturday as he tried to convince his rivals to back down.
Post dissolution of parliament he will continue to head the interim government is seen as a precursor to a split in the party that had been piling pressure on him to withdraw an ordinance that his government had issued on Tuesday to give himself power to make crucial appointments.
On Wednesday, the party’s standing committee had passed a resolution that asked PM Oli to withdraw the ordinance.
He had agreed to comply at the committee’s meeting but later had other thoughts.
On Saturday, PM Oli drove down to Prachanda’s house for one more attempt to reconcile their differences, offering to withdraw the ordinance if the political document that was sharply critical of him was also withdrawn.
People familiar with the matter said PM Oli told Prachanda that they needed to work together and find a way out of the crisis.
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But Prachanda did not budge. PM Oli took the call soon after. He is learnt to have sounded out Home minister Ram Bahadur Thapa, who is seen to be close to Prachanda, and sought his support in dissolving the House.
Analysts said the dissolution of parliament was likely to be challenged in court.
Calling the move unconstitutional. legal expert Bipin said “The Prime Minister cannot recommend dissolution of parliament until there are chances of forming an alternative government,”