China has agreed to provide grants totaling Rs 9 billion (500 million Chinese Yuan) to support various projects in Nepal.
Krishna Prasad Dhakal, spokesperson for Nepal’s Ministry of Foreign Affairs, confirmed that Nepal and China have signed agreements on nine key initiatives. These include funding for the Tokha-Chhahare Tunnel, efforts to boost bilateral trade, progress on China-assisted development projects, economic and technical assistance, a protocol for the export of thermally processed buffalo meat, and cash support, among others.
This financial commitment was made during the four-day visit of Nepal’s Prime Minister, KP Sharma Oli, to China. The Chinese government will allocate these grants to projects that will be developed with Chinese assistance. These projects are seen as an extension of initiatives launched in 2017, which focused on infrastructure development in Nepal’s highland and Himalayan regions, supported by China.
In addition to the grants, China has pledged financial assistance to support Nepal’s budgetary system. If this commitment is fully realized, Nepal will be able to keep the China-supported funds in its treasury and use them according to its fiscal needs. However, the exact amount to be allocated under this budgetary support has not been disclosed.
Furthermore, both countries signed memorandums of understanding (MoUs) for several China-funded projects to be undertaken in Nepal between 2024 and 2029. These projects will receive grant funding from China over the next five years.
The two nations also signed an MoU to conduct a feasibility study for the Tokha-Chhahare Tunnel. This was a commitment made during Chinese President Xi Jinping’s state visit to Nepal in October 2019, when China agreed to assess the feasibility of tunnel road projects along the Tokha-Chhahare-Gurjubhanjyang and Betrawati-Rasuwagadhi routes. While this commitment has not yet been realized, the latest agreement stipulates that Nepal will carry out the environmental impact assessments for these projects.
Lastly, during Prime Minister Oli’s visit, both countries agreed to enhance cross-border trade. Despite a 2016 agreement to promote free trade between the two nations, progress on this front has been slow.
