China Nepal Debt: Nepal may go the way of Pakistan and Sri Lanka, fear of getting trapped in China’s ‘debt trap’
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There have been allegations that this initiative could turn China’s debt diplomacy into ‘debt trap diplomacy’ by sponsoring critical infrastructure projects in developing countries and then influencing those governments on the basis of the ‘debt trap’. to do is included. Apart from the Pokhara International Airport, Nepal has just completed construction of two major projects – the Gautam Buddha International Airport in Bhairahawa and the Chobhar Dry Port in the capital Kathmandu.
Many countries including Sri Lanka failed to repay China’s debt
None of these costly projects is working effectively. If a project’s business strategy is ineffective or is established without rigorous preparation, it sends a very negative message to the international community and future generations. The risk here is that the country’s national debt could prove too onerous at a time when Nepal needs major investment in quality infrastructure.
For the fiscal year 2022-2023, the government of Nepal is allowed to raise a maximum of 256 billion Nepalese rupees (about $2 billion) as internal debt. This decision to curb external debt has come at a time when many countries including Sri Lanka are failing to repay the debt. In such a situation, Nepali officials are very cautious about taking loans from China and are requesting donations instead of loans from Beijing for projects under the ‘Belt and Road Initiative’ initiative.
(Ramesh C. Paudel and Subin K.C., Tribhuvan University)
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