Last year, with more than $1 billion in debt to China, Sri Lanka handed over a port to companies owned by the Chinese government. An international freight train departs from Lanzhou, the capital city of northwestern China's Gansu province, on May 11. Asia Society takes no institutional position on policy issues and has no affiliation with any government. The final destination is Kathmandu, Nepal. The trend will continue in 2021. China’s national debt is currently over ¥38 trillion (over $5 trillion USD). But nothing comes for free in this world. Indian politicians and media outlets have been sceptical of China’s efforts to woo Nepal, raising fears that BRI is a masquerade for Chinese domination through debt-swap arrangements. Demographically, the country has reached a … Though Nepal had signed on to the OBOR in May 2017, Kathmandu, which earlier had proposed 35 projects under China’s flagship initiative, cut it down to nine earlier this year. The rail link will provide a boost to Sino-Nepali trade and tourism. At a time when Nepal is increasing its dependence on Beijing, experts believe rampant lending in the past has led to mounting debt and few, if any, jobs in most countries. ... Public debt is equivalent to 30.4 percent of GDP. The project is known to have created a debt crisis in many parts of the world, especially smaller countries that are unable to pay it, losing sovereignty over territories. The project has known to create a debt crisis in many parts of the world, especially smaller countries that are unable to pay it, losing sovereignty over territories. World. Opinion. One example is: China built Nepal Police’s academy in a year when India had promised to do the same for years but never accomplished it. Furthermore, China's debt-trap diplomacy is also not an unheard of concept. As a country intending to benefit from the China-led Belt and Road Initiative (BRI) and its development potentials, Nepal needs to consider the criticisms regarding China’s practice of “debt-trap diplomacy.” Nepal also needs to work out the necessary strategies to avoid or escape a debt trap, if it indeed is a substantial threat. China’s parliament opens tomorrow to approve the new five-year plan. This amount means that the debt in 2019 reached 30.07% of Nepal GDP, a 0.17 percentage point fall from 2018, when it was 30.24% of GDP. Debt bubble: Kenya’s debt to China stood at $737m in 2014, the first year of President Uhuru Kenyatta’s presidency, before ballooning to $6.4bn in December, representing a 766% increase. The other projects are undergoing and economically insignificant to put Nepal under China’s debt. Kerung-Kathmandu Train . Nepal: first came the earthquake, then came the debt. Also, China's share of external debt fell from about 45% in 2015 to about 30% in 2019. China’s Debt Grip on Africa Since the 2008 global financial crisis, ... USA, its bureau office in Kathmandu, Nepal and in bureau offices elsewhere brings the latest and up to date news service. The views expressed by Asia Society staff, fellows, experts, report authors, program speakers, board members, and other affiliates are solely their own. What Nepal will get from China's OBOR on Business Standard. China-Nepal Railway: debt trap or threat to India 6 December, 2019. If we check the tables we can see the evolution of Nepal debt. China's cheap loans to Nepal in the garb of infrastructure development to facilitate trade will lead to another debt trap, concerned Indian government sources have said. Government debt now stands at 270.1 per cent of GDP. China has followed its infamous debt-trap diplomacy in Kathmandu which sees China use its economic might to increase its influence in a country and gives humongous loans with punishing conditions which it knows the country won’t be able to pay back, and hence starts occupying the debtor’s territories and Nepal is the latest entry into a prospective Chinese client state. Countries are going into greater debt to support companies and workers. New Delhi: Highlighting the perils of China's mega connectivity plans like the Belt and Road Initiative (BRI), Indian Army Chief General MM Naravane has said that the project aims to "create regional dependencies". Read more about Debt trap or improved infrastructure? Warnings of a debt trap aside, there is consensus in Nepal on the benefits to be had from the Belt and Road Initiative. It has risen since 2009 in global debt terms, when it was 3,555 million euros 4,958 million dollars although it has fallen as a percentage of GDP, when it amounted to 38.53%. It's now using its debt diplomacy against Nepal as it did with Sri Lanka and Pakistan. Global debt is equal to 355 percent of global GDP. The plan was established, under a slightly different name, by the Commonwealth of Nations in 1951. Unfortunately, these actions caused Japan’s debt level to skyrocket. Nepal has been a recipient of foreign assistance since 1952 when it joined the Colombo Plan for Cooperative, Economic, and Social Development in Asia and the Pacific. Nepal's Foreign Secretary Shankar Das Bairagi and China's Ambassador to Nepal, Yu Hong (L), exchange documents during a signing ceremony relating to … Also in 2018, China and Nepal agreed to establish a rail link and signed a deal to boost Chinese investments in Nepal’s power grid. China's debt jumped by 335 per cent of GDP. Nepal now requires a significant boost in foreign investment and that Nepal is optimistic about reaping benefits after becoming part of the Chinese initiative” (Giri, 2017)). China has been using its favourite policy of debt trap and ambitious use of loans to gain influence around the world. The idea of a railway linking China to Nepal has captured imaginations on both sides of the border ever since Mao Zedong and King Birendra first mooted the idea in 1973. Nepal and China are reportedly hoping to extend the Kerung-Kathmandu rail to Pokhara and Lumbini, two tourism sites in Nepal. Background. The Quarterly External Debt (QEDS) database, jointly developed by the World Bank and the International Monetary Fund, brings together detailed external debt data of countries that subscribe to the IMF’s Special Data Dissemination Standard (SDDS) and a selected number of countries that participate in the IMF’s General Data Dissemination System (GDDS). India is closely watching the developments in the neighbourhood and how China is allegedly entrapping Nepal with an eye to expand its influence in the Himalayan nation. Indian politicians and media outlets have been sceptical of China’s efforts to woo Nepal, raising fears that BRI is a masquerade for Chinese domination through debt-swap arrangements. Nepal. ... of Chinese lending to 24 countries over a decade found no evidence that China was deliberately trapping countries in debt. BRI or the OBOR is Beijing's global infrastructure project, one whose key crucial component passes via Pakistan-occupied Kashmir as CPEC (China Pakistan Economic Corridor). Nepal must not fall into the same debt trap as Sri Lanka; otherwise, its aspirations of a brighter future could turn into a mirage China has offered loans to Nepal and now its economy is getting affected because of the Chinese gameplay. Indian politicians and media outlets have been sceptical of China’s efforts to woo Nepal, raising fears that BRI is a masquerade for Chinese domination through debt-swap arrangements. COVID-19. China’s national debt is currently 54.44% of its GDP, a significant increase from 2014 when the national debt was at 41.54% of China’s GDP. Sound debt management needs to catch up all these issues and challenges to accomplish debt management objectives.Some pertinent debt management issues in Nepal are as follows: Non-performing parastatals with huge amount of on lending debt As the Global Monitoring Report 2007 states official development assistance by members of OECD's Development Assistance Committee fell by 5 … The online news service is being presently served by 16 news professionals. Kenya’s debt profile: Chinese loans comprised 21% of Kenya’s external debt, compared with the World Bank’s 25% at the end of June 2020, according to a National Treasury report. NEW DELHI: Nepal should learn from other countries like Sri Lanka and stay vigilant in its dealings with China, said chief of defence staff General Bipin Rawat on Thursday, in … Though the Nepalese government has welcomed China’s help, ... Nepal is a mountainous country subject to …