The funds from the northern neighbour will be used for infrastructure development in Nepal, according to officials.
On Friday, the private secretariat of Finance Minister Prakash Sharan Mahat released a statement stating that China would provide Rs80 billion for the execution of various infrastructure-related projects in Nepal. The commitment was made during a meeting between Mahat and Chinese Ambassador to Nepal Chen Song at the finance ministry.
Officials at the Ministry of Finance and Ministry of Foreign Affairs, however, told the Post that instead of providing new financial aid to Nepal, the Chinese side now wants to release the financial and economic assistance that has been pledged since 2008.
It is not known whether Beijing will include the financial and economic assistance announced during the state visit of Chinese President Xi Jinping to Nepal in October 2019 in this particular assistance amount. During the delegation-level talks between former President Bidya Devi Bhandari and Chinese President Xi on October 13, 2019, Xi had announced that China would provide Rs56 billion in aid to Nepal over the next two years. But according to the Nepali Embassy in Beijing, Xi had announced 3.5 billion RMB, or Rs65.41 billion, to Nepal in grants over two years.
“As soon as President Xi returned from Nepal, the world was hit by the Covid-19 pandemic, so we could not negotiate the assistance announced by the Chinese president,” a senior foreign ministry official said. “Now, it is up to the finance ministry to negotiate and utilise it.”
He added: “We do not know what exactly transpired between Mahat and Chen on Friday, but going by the commitments made by China since 2008, we have yet to receive over Rs100 billion from China which was agreed at different times and during different high-level visits from the two sides.”
The official said the assistance and aid amount that Nepal has been waiting for do not fall under the Belt and Road Initiative projects.
“During several occasions and high-level visits from the two sides since 2008, a number of commitments were made by the Chinese, but the finance ministry has not sought to utilise them. If the ministry had been active in accessing the financial and economic assistance, we would have received the aid on time,” said the senior official at the foreign ministry. “We have been pushing them to select the projects and bring in the money so that we can execute the projects and create jobs.”
Another official said the Nepal government continuously failed to negotiate the projects and utilise the pledged aid.
China would provide Rs80 billion for Nepal’s infrastructure development, according to the statement issued by the private secretariat of Minister Mahat.
During the meeting, ambassador Chen said the assistance would be used in Nepal’s infrastructure sector.
According to the foreign ministry, Chinese assistance to Nepal falls into three categories: Grants (aid gratis), interest-free loans and concessional loans. The Chinese financial and technical assistance, says the ministry, has greatly contributed to Nepal’s development efforts in the areas of infrastructure, industrialisation, human resource development, health, education, water resources, and sports.
For a long time, China had been providing 800 million RMB in annual assistance to Nepal. The amount was increased during the state visit of the Chinese president to Nepal in 2019, said Leela Mani Paudyal, a former Nepali ambassador to China. “We have failed to develop projects, negotiate them with the Chinese and bring the investments.”
A finance ministry official said that with China’s willingness to release the pending financial and economic assistance to Nepal, the two sides now need to sit down and finalise the projects. After the first Constituent Assembly elections held 15 years ago, Beijing started ramping up its financial and economic assistance to Nepal.
The Chinese government announced 3 billion RMB (Rs56 billion) for 2016-2018 to be utilised in jointly selected reconstruction projects.
For post-earthquake reconstruction, China in 2015 had pledged 3 billion Chinese yuan (US $483 million) to be spent between 2016 and 2018 on 25 rebuilding projects in five sectors: infrastructure, livelihoods in mountain areas, archeological heritage renovation, disaster preparedness, post-quake reconstruction and health.
Besides economic assistance, China has been providing training slots to Nepali students and academicians. China provides scholarships every year not exceeding a total of 100 Nepalis studying in China.
“The Chinese side gave Chinese language training to 200 tourism entrepreneurs [40 a year] of Nepal over five years as per an understanding reached between the two sides in March 2016. China has offered 67 scholarships so far for the academic year 2022-23,” said Nepal’s Embassy in Beijing.
The Chinese defence and security aid to Nepal too is on an upward trajectory. Beijing has long provided direct military and defence aid to Nepal but increased it from 2008, when the amount stood at $2.6m. Later, Beijing announced 20.8 million RMB in 2009, $7.7 million in 2011 and $32.3 million in 2017 in defence aid to Nepal.
During former President Bhandari’s state visit to China in April 2019, China pledged 1 billion RMB to the government of Nepal. During the state visit of President Xi to Kathmandu on October 12-13, 2019, China had pledged to extend a 3.5 billion RMB grant to Nepal for 2020-2022.
In 2018, the two sides concluded an agreement to mobilise 2 billion RMB for reconstruction-related projects, including Araniko Highway Repair Project and reconstruction of cross-border bridges in Tatopani and Rasuwagadhi.
During the official visit of former foreign minister Narayan Khadka to China in August last year, China had announced Rs15 billion, or 800 million RMB, in grant. Likewise, in March last year, during his official visit to Nepal, then-Chinese state councillor and foreign minister Wang Yi also announced Rs11.40 billion in grant to Nepal and pledged to honour the development assistance announced during Xi’s visit.
For long, only a handful of China-funded projects and some reconstruction-related projects have gone into implementation, said Poudyal.
Successive governments have been criticised for their failure to prioritise the utilisation of Chinese assistance. “We have failed to propose and negotiate the projects too. As the Chinese assistance comes through government to government channels, politicians, officials, bureaucrats and others cannot profit from them,” said Paudyal. “There is no consultation facility or job opportunities for their near and dear ones while officials, leaders and bureaucrats also don’t benefit from procurement and other measures, so they do not prioritise the projects’ execution.”
Sri Krishna Nepal, head of the international economic cooperation coordination division of the finance ministry, said that the amount stated by the Chinese ambassador could be indicative.
He added that the ministry will soon start project negotiations to secure Chinese aid.
