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Nepal Expresses Concern Regarding High Interest Rate with China

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Nepal Expresses Concern Regarding High Interest Rate with China

March 28: The government held an in-depth discussion with Chinese authorities regarding the high rate of interest on loans from China during the three-day visit of Chinese State Councilor and Foreign Minister Wang Yi to Nepal. Showing special interest on this issue, Prime Minister Sher Bahadur Deuba urged Minister Wang to facilitate Nepal as it is a poor nation and cannot afford to take such expensive loan. 

According to high-level sources in Baluwatar, Prime Minister Deuba said during the meeting that Nepal wanted to move ahead with projects under the much-talked-about Chinese Belt and Road Initiative (BRI). A source at the Prime Minister's Secretariat said that PM Deuba made it clear to the Chinese Foreign Minister that Nepal would take the loan only if China provided the grant under BRI but it cannot take the loan in the current situation. 

A source at the Ministry of Finance said that the two countries did not sign any immediate agreement under the BRI framework during Wang's visit as the modalities of investment in the projects under BRI were not clear. A senior official at the finance ministry said that the government did not want to sign the agreement immediately but only after finalizing the modalities of China's assistance under the BRI framework. 

“The country's economy is deteriorating. There’s an obligation to take loan for BRI. As the Chinese debt is expensive, the country cannot bear such heavy burden. Therefore, an agreement could not be reached in this regard,” the official said. 

A statement issued by the Ministry of Foreign Affairs did not mention anything about the nine projects previously planned to be built under the BRI concept of China. 

Under the BRI project, China has invested heavily in most of the countries. The government of Nepal is alarmed as countries like Sri Lanka and Kazakhstan are facing difficulties to pay back the loans. 

The statement issued by the Ministry of Foreign Affairs on the agreement reached during Foreign Minister Wang's visit did not even mention the name of the BRI framework. Nepal became a member of the BRI framework of China after signing the deal in 2017. Since then, not a single agreement under BRI has been implemented. China had been planning to sign the BRI Implementation Agreement between the two countries during Wang’s visit to Nepal. 

During a meeting with Foreign Minister Narayan Khadka on Saturday, the Chinese Foreign Minister said that the two countries would benefit from signing an agreement on the BRI implementation plan. 

After signing the BRI agreement in May 2017, Nepal has already witnessed four different governments in the past five years. But Nepal hasn’t had any concrete dialogue with China about moving ahead with the projects under the BRI.

In 2017, Nepal proposed 35 different projects under the BRI which was later reduced to 9 upon the request of China.

 

 

Those projects include Kerung-Kathmandu Railway, Rasuwagadhi-Kathmandu road upgrading project, Kimathanka-Hile road, Galchi-Rasuwagadhi-Krung 400 kVA transmission line, Tamor hydropower project, Madan Bhandari Technical Institute,Fukot Karnali hydropower project, road from Dipayal to Chinese border and construction of Tokha-Bidur road.

However, officials at the finance ministry say the government has not held any discussion with the Chinese side ever since the Deuba-led government was formed nine months ago.

Spokesperson of the finance ministry Sewa Lamsal says that the two countries are yet to complete their homework regarding the BRI agreement and therefore the projects under BRI will not be implemented anytime soon.

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