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vantagefeed.com > Blog > Business > Nepal asks China to cancel loans it cannot repay
Nepal asks China to cancel loans it cannot repay
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Nepal asks China to cancel loans it cannot repay

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Last updated: August 24, 2024 8:20 am
Vantage Feed Published August 24, 2024
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KATHMANDU: When Nepal’s new international airport opened in one of the country’s largest cities last year, it was expected to be a landmark project that would improve the fortunes of one of Asia’s poorest countries while deepening ties with China, which built and funded the project.

But Pokhara airport has become a symbol of something else: the pitfalls of Chinese international infrastructure projects, which have sometimes been criticized for costly, poor-quality construction that has left borrowing countries drowning in debt.

Nepal’s month-old government, led by its largest Communist party, formally asked China on Thursday to convert a $216 million loan for the airport’s construction into a grant and write off the debt.

The airport has been plagued by problems: Just weeks after it opened in January 2023, a domestic flight heading to the city crashed into a river gorge, killing 72 people. The airport has no scheduled international flights and the project’s financial prospects are bleak. Over the past year, Nepal’s anti-corruption agency and a parliamentary committee have launched investigations into the airport’s construction.

Last year, The New York Times reported that the construction arm of a state-run conglomerate, China Sino-Japanese Engineering Corporation, had inflated costs for projects, undermining Nepal’s efforts to monitor construction quality.

If China agrees to Nepal’s request, it will be a further sign of strengthening ties between the country’s new government and China. In July, Nepal’s largest Communist Party joined forces with the Nepali Congress, the largest party in the country’s parliament, to form a coalition government led by Prime Minister KP Sharma Oli. The government has wasted no time in moving closer to Beijing. China will probably convert the loan into a grant aid because it wants to build a strong relationship with the Nepal Communist Party, said Binoj Basnyat, a former Nepalese general who now works as a researcher at Thailand’s Rangsit University. He also noted that China has another benefit in agreeing to the request.

“The investigation into the corruption charges will be over soon,” Basnyat said. “No one will talk about it anymore.”

This article originally appeared in The New York Times.

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