KP Sharma Oli-led govt may be at risk as Nepali Congress opposes BRI loan from China

The KP Sharma Oli led-government in Nepal runs the risk of collapse if the prime minister agrees to loans under the Belt and Road Initiative (BRI) during his upcoming China visit, with his coalition partner, Nepali Congress (NC), insisting that the Himalayan nation should seek grants instead of loans.

The NC has said that China has not fulfilled its previous grant commitments under the BRI and has opposed Oli's move to join the BRI during his visit in the first week of December. Oli and the NC have publicly differed on China's invitation to Nepal to join the BRI and there are indications that the NC may reconsider its support to the government if Oli goes ahead with the plan to seek loans under the BRI, according to people familiar with the matter.

Although Nepal and China signed a memorandum of understanding on BRI in 2017, not a single project has been negotiated under the initiative as successive governments in Nepal have been averse to taking loans from China, unlike Sri Lanka and Pakistan, said Nepal watchers.


Nepal traditionally has also been wary of loans given its state of economy and has preferred grants to fund its projects. This is among the reasons that it has not taken loans under the BRI despite intense lobbying from China.

India has offered grant assistance to Nepal since the 1950s. Nepal is among India's largest and most prominent development partners. India-Nepal Cooperation for developing modern infrastructure in Nepal began in 1951.

Apart from taking up infrastructure development projects, India has also shared technical know-how with Nepal in various fields.

Meanwhile, Oli said his China visit would not hurt Nepal's ties with India. Speaking at the concluding session of the Kantipur Conclave in Kathmandu last Thursday, he said there was no reason for his visit to harm relations with India just because he was going to China first. Historically, India has been the first destination abroad for any Nepalese PM.