March 25: Chinese State Councilor and Minister for Foreign Affairs Wang Yi will arrive in Nepal for a three-day state visit on Friday evening (March 25).

Analysts consider this visit of great significance as Wang is arriving in Nepal just after the ratification of the US grant project Millennium Challenge Corporation (MCC). Officials say that Nepal has already finalized the agendas to be discussed during Wang’s visit.

During this visit, Nepal is expected to sign an agreement to implement the Belt and Road Initiative. It has already been five years since Nepal signed the BRI in 2017. However, the two countries are yet to finalize the projects under the BRI. Experts believe that China is under pressure to implement the BRI after Nepal endorsed the MCC.

One of the pressing issues that Nepal must raise during Wang’s visit is the high interest rate China has imposed on loans. Nepal has long been complaining that the interest on loans invested by China is relatively high.

Chief of the International Support Division of the Ministry of Foreign Affairs Ishwari Prasad Aryal says that the interest rate of Chinese loans is higher than the loans provided by other donor agencies.

“The interest on loans provided by China to build Pokhara Regional International Airport is 2 percent,” said Aryal.

The interests on loans that Nepal receives from the World Bank, International Monetary Fund, JICA among other donor agencies are less than 1 percent. Experts have suggested the government to raise this  issue during Wang’s visit.

An official at the finance ministry said that the time period set by China to repay the loans is also less compared to others. The official said that other nations give concessional loans to under-developed and developing nations on a long-term basis but China has been providing loans for 10 years.

According to the officials of foreign ministry, China’s Asian Infrastructure Investment Bank (AIIB) charges an additional 1 percent interest under the London Interbank Offered Rate (LIBOR).

Nepal had recently borrowed USD 112 million for the construction of transmission lines from the AIIB. Nepal needs to pay the interest rate at 3 percent after adding the LIBOR charge.

Prior to that, the Government of Nepal had also taken loan from Exim Bank of China for investing in the Upper Trshuli III A project, Pokhara airport and to purchase Chinese aircraft. Government officials claim that those loans were also taken at high interest rates. The ministry officials say that the country is facing financial burden due to the high  interest rates.

Former Secretary Puroshattam Ojha says that the government must clarify after this visit how Nepal can benefit from the BRI. He says that Nepal must get Chinese support without adding any more financial burden.

Analyst Hari Roka says that Nepal must receive Chinese support by taking into consideration the national interest and welfare.

Nepal’s former ambassador to India Lokraj Baral opined that China wants to maintain good relations with neighbouring countries.