KATHMANDU: The Nepali Congress (NC) has taken a stance that it will now allow the country take loans under China's Belt and Road Initiative (BRI), signaling potential political manipulation affecting the BRI's progress.

Recently, Nepal faced disputes over the Millennium Challenge Corporation (MCC) grant from the American government due to lack of consensus among political parties. Eventually, in early 2022, the House of Representatives approved the US-funded program with an explanatory declaration, leading to its implementation.

The NC’s public stance against accepting BRI loans has cast doubts about reaching an agreement on the BRI implementation plan and Chinese aid projects under it. Nepali Congress leader Dr. Prakash Sharan Mahat stated, "Nepal has a huge debt burden. The size of the loan should not be increased anymore. This (BRI) should only be taken forward with subsidies."

Nepal's public debt began to rise rapidly after the 2015 earthquake, further exacerbated by the COVID-19 pandemic. Mahat noted that even concessional loans from the World Bank and the Asian Development Bank are not being utilized effectively, making additional loans impractical for development projects.

The NC’s position emerged as Nepal and China prepared to sign the BRI implementation plan. However, the Nepali Congress has not clearly stated its stance on accepting concessional loans. During the 16th meeting of the Nepal-China Diplomatic Consultative Mechanism in Kathmandu on June 25, Nepal raised the issue of grants under BRI, but the Chinese side did not agree.

On the same day, Prime Minister Pushpa Kamal Dahal emphasized Nepal's preference for receiving grants under BRI but mentioned the possibility of accepting loans at interest rates similar to those from the World Bank and the Asian Development Bank, which are Nepal's largest donors.

According to the Public Debt Management Office, most of the loans from the World Bank have an interest rate of 0.75 percent, while Asian Development Bank loans go up to 1.5 percent. Former ambassador to Denmark, Bijayakant Karna, expressed skepticism about reaching a consensus on the BRI implementation plan, comparing it to the MCC debate before its ratification. He suggested that without the Chinese offering at least concessional loans, there is little chance of immediate national consensus in Nepal regarding the BRI.