PM Oli Risks Losing Coalition Support As Nepali Congress Opposes BRI Loan Plans Ahead Of Crucial China Visit

Nepal's Prime Minister KP Sharma Oli faces the prospect of a political crisis as his coalition partner, the Nepali Congress (NC), strongly opposes his potential decision to accept loans under China's Belt and Road Initiative (BRI). 

According to The Economic Times, the NC has urged Oli to pursue grants instead of loans, warning that his move to join the BRI during his December visit to China could jeopardise the stability of his government.

The Nepali Congress has voiced dissatisfaction over China's unfulfilled grant commitments under the BRI and remains firmly against Oli's plans to align Nepal with the initiative. 

The disagreement between Oli and the NC has escalated into a public rift, with growing indications that the NC may withdraw support from the coalition if the prime minister proceeds to negotiate loans under the BRI framework.

Although Nepal signed a memorandum of understanding for the BRI in 2017, not a single project has been finalized under the initiative. Successive Nepali governments have resisted taking loans from China, citing concerns about economic sustainability and drawing cautionary lessons from the debt crises faced by countries like Sri Lanka and Pakistan.

Nepal has traditionally preferred grants over loans to finance its development projects, a stance that aligns with its cautious fiscal policy.

In contrast, India has maintained a long-standing tradition of providing grant-based assistance to Nepal since 1950. As one of India's most significant development partners, Nepal has benefited from infrastructure cooperation that began in 1951. This historical partnership highlights the divergence in Nepal's approach to India and China concerning development aid.

Addressing concerns about Nepal's foreign policy alignment, Oli sought to reassure critics during the Kantipur Conclave in Kathmandu last week. He emphasized that his upcoming China visit would not harm Nepal’s strong ties with India.

"There is no reason for my visit to hurt relations with India just because I am going to China first," he stated. This statement comes amid a notable deviation from tradition, as Nepalese prime ministers have historically chosen India as their first official foreign destination.

As Oli’s visit to China approaches, the political landscape in Nepal remains precarious. The ongoing debate over BRI loans underscores broader challenges in balancing Nepal's relationships with its two influential neighbours—India and China—while safeguarding its economic and political stability.

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