Consensus For Projects

Despite immense development potentials, Nepal still lags behind other countries. The world is currently passing through the fourth stage of industrial revolution which is driven by smart machines, technology and internet. But we are still reeling from the shortage of basic infrastructure. Our industrial base is weak and connectivity in the mountainous region is abysmally poor. The soaring trade deficit has become a reality as we do not have enough exportable goods. When the rise of data, automation and connectivity is defining the global economic scenario, we are struggling with rudimentary infrastructure virtually in all fields of economy. 

Though we are set to graduate to the status of developing nation, we are still in the need of huge budget to expedite the development projects, especially those related to the road and hydropower development. It is estimated that the country needs more than Rs. 500 billion in physical infrastructure this year alone but our federal development budget is only Rs. 352 billion. A study shows that Nepal requires mobilising around 8.47 per cent of Gross Domestic Product (GDP) in infrastructure development to achieve 7.5 per cent growth. Against this backdrop, the recent agreement on Framework for Belt and Road Cooperation between Nepal and China in early September has raised hope that bilateral deal will give momentum to the construction of vital infrastructure. Altogether 10 projects have been picked to be implemented under the BRI framework. 

Nepal needs to come up with a clear roadmap with short-term and medium-term plans to execute them. A news report of this daily states that the Ministry of Finance and Ministry of Foreign Affairs (MoFA) have initiated discussions on the funding modality of the proposed projects. Nepal and China have to reach project-wise deal for their execution. The BRI projects such as Tokha-Chhahare tunnel, Hilsa-Simkot road, Kimathanka-Khandbari road and bridge, Jilong-Kerung-Kathmandu cross-border railway and Jilong-Kerung-Rasuwagadhi-Chilime 220 KV transmission line can contribute to economic growth and crucial connectivity between the two neighbours. The cross-border railway is ambitious project that needs huge investment. China-Nepal Friendship Industrial Park in Damak is expected to give momentum to industrial activities, trade and local economy in the eastern region.

With the agreement on cooperation framework, Nepal has, in principle, accepted the aid financing modality that is the combination of both loans and grants. Our focus should be on securing concessional loans to implement the game-changer projects. The projects should be selected on the basis of cost-benefit analysis. There should be clarity as to which projects should be implemented with loans and grants, and which not. Experts are of the view that Nepal should prioritise the transfer of technology as China has excelled in technological innovation in almost all fields of economy. Chinese investors should be invited to invest in agriculture production and agro products should be exported to Chinese markets 

There is growing consensus on investing in cross-border connectivity projects that can diversify trade and tourism, and promote exports of Nepali goods to China. The development projects should be kept above the partisan interests. There should be broader political consensus on finalising the investment modality of the BRI projects. The politicisation of development projects have negative implications for the overall economic performance of the country. The myth of debt trap diplomacy should not come in the way of implementing win-win projects which can enable the country to attain broad-based growth and economic self-reliance.