Nepal asks China to wipe away a loan it can’t afford to pay back

KATHMANDU: When Nepal’s new international airport opened last year in one of the country’s biggest cities, it was the type of landmark project expected to elevate the fortunes of one of Asia’s poorest countries while deepening its ties with China, which built and financed the project.

But the Pokhara airport has become a symbol of another sort: the pitfalls of China’s international infrastructure projects, which face criticism for sometimes costly and poor quality construction that leave borrower countries awash in debt.

On Thursday, Nepal’s 1-month-old government, led by the country’s largest communist party, formally asked China to convert a $216 million loan for the airport into a grant, wiping away the debt.

The airport has been beset by problems. A few weeks after it opened in January 2023, a domestic flight headed for the city crashed into a river gorge, killing 72 people. The airport has not attracted any regular international flights, dimming the financial outlook for the project. Over the past year, Nepal’s anti-corruption agency and a parliamentary committee started investigations into the airport’s construction.

Last year, The New York Times reported that China CAMC Engineering, the construction arm of a state-owned conglomerate, had inflated the cost of the project and undermined Nepal’s attempts to keep tabs on construction quality.

If Beijing agrees to Nepal’s request, it will be another indication of a strengthening relationship between the country’s new government and China. In July, Nepal’s biggest communist party joined forces with the Nepali Congress, the largest party in the country’s parliament, to create a coalition government, led by K.P. Sharma Oli. His government has wasted no time cozying up to Beijing. Binoj Basnyat, a retired Nepali general working as a researcher with Rangsit University in Thailand, said China would probably convert the loan to a grant because it wanted to build a strong relationship with Nepal’s communist party. He also noted another benefit for China by agreeing to the request.

“The investigation into the corruption charges will quickly come to an end,” said Basnyat. “Nobody will talk about that anymore.”

This article originally appeared in The New York Times.

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