Former finance and foreign minister Prakash Sharan Mahat has said that Nepal should adopt a uniform yardstick on development and economic cooperation with all countries including India, China, and the United States.

Speaking at a function titled “Reflecting on BRI: Experiences and Lessons from South Asia”, organised by the Centre for Social Innovation and Foreign Policy (CESIF) in the Capital on Thursday, Mahat said that while seeking and accepting foreign development and economic assistance, Nepal should have the same yardstick for all, should keep national interest at the core and should accept foreign loans or grants only after careful negotiation.

“Nepal should have the same approach to financial support from all sources because ​​where the support comes from does not matter so much, as long as it serves the country’s national interest. While we struggle to utilise low-interest multilateral loans from the World Bank and ADB, we should critically examine, compare, and question the terms and conditions of bilateral loans that have market rate and short-term repayment periods,” he said.

Mahat also pointed out the lack of homework on Nepal’s part in bilateral or multilateral negotiations. “Only later do we engage in debate and discussions,” he said. Mahat was the foreign minister when Nepal signed the Belt and Road Initiative (BRI) with China in 2017. This proves that he is not anti-BRI, Mahat said. “Still, we cannot afford costly commercial loans to build projects.”

Mahat also questioned the rationale behind a railway line between China and Nepal that would take billions of dollars to build. “What we are going to export if we extend the rail from China to Kathmandu?” he asked, arguing that the railway between Nepal and China would be feasible only if India and China agree to build it through Nepal.

“When I talk to Chinese diplomats and scholars, I tend to tell them that Nepal would adopt similar yardsticks in both loan and grant and with all countries. We do not have second thoughts and opinions in this respect,” said Mahat, explaining how long and difficult it had been for him to negotiate BRI terms with the Chinese in 2017. He said that during the negotiations, some of the clauses and proposals presented by the Chinese side such as free trade agreement and the use of Chinese currency for bilateral trade were amended.

Speaking at the same function, Raj Kishore Yadav, chairman of the International Relations and Tourism Committee of Parliament, stressed the need for wider discussion on BRI in Parliament, urging the Nepal government to release the BRI memorandum of understanding signed with China in 2017. He added that the government should clarify the current status of negotiation on BRI and should not opt for any commercial loans.

“Our negotiation with China should focus on grants and concessional loans with interest rates at par with other multilateral financial institutions and without any strings attached,” he stated.

Mahat also voiced concerns over the BRI framework agreement not being public even seven years after its signing, and said any partnership should respect Nepal’s sovereignty and should be based on win-win cooperation.

“The text of the BRI implementation plan, which is being considered by Nepal and China, has yet to be public. It should be made public. It should be discussed and geared towards finalising the modality and partnership. There is not enough discussion on the financing modality as well as on taking commercial loans from China, which also demands detailed discussion,” he said.

The seminar aimed to weigh the opportunities and challenges China’s Belt and Road Initiative has for Nepal in light of the experiences of regional neighbours that have implemented projects under it. The seminar was held at a critical time of accelerated Chinese push for the BRI implementation plan agreement with Nepal.

Welcoming the participants, Executive Chairperson of CESIF Vijay Kant Karna raised concerns about the rationale and significance of the BRI implementation agreement, and called negotiating projects on an individual basis. “A single financing and implementation modality may not fit projects of different nature,” he said.

Talal Rafi, economist and fellow at Oxford Global Society, Sri Lanka, discussed issues concerning BRI projects in Sri Lanka and presented some of the positive aspects. Although International Sovereign Bank (ISB) debt ranks above the Chinese bilateral debt, Sri Lanka’s experience with BRI shows a lack of transparency, ad-hoc planning, selection of projects without viability assessment, lack of technological spillover, and environmental concerns. “The slow-paced debt negotiation with China is delaying the economic recovery process,” he mentioned. 

Mostakim Bin Motaher, associate professor at Jahangirnagar University of Bangladesh, highlighted that China’s presence in the Bangladeshi infrastructure has surged significantly in recent years, with deep trade and investment ties. Some of the common features of the projects financed by China are cost escalation, non-transparent or absent bidding procedures, and delays in execution.

Constantino Xavier’s presentation cited three reasons for India’s decision to stay out of the BRI: the China-driven and led unilateral nature of the initiative, Chinese economic and strategic interests behind the Initiative being unfavourable for India, and the concern about the capacity to absorb capital. He also highlighted how this decision has affected India’s relations with its neighbours, whereby India reinvented its delivery system. “Nepal needs to rely on itself and develop its capacity,” Xavier stressed.

Following country-specific presentations, the seminar hosted two panel discussions. The first brought together Nepali experts to probe current developments and Nepal’s concerns on BRI negotiation. The panel hosted Madhu Raman Acharya, Rameshore Khanal, Akhilesh Upadhyay, and Amish Mulmi.

The speakers called for transparent discourse and strategic negotiation for Nepal's effective role in the BRI. Citing the example of Pokhara International Airport, Acharya reiterated that China has been “shifting the goalpost” on BRI and emphasised that Nepal should have its own “objective assessment of each project,” as the initiative entails China’s strategic and economic interests.