China rejects Nepal’s proposal to extend deadline for payment of loans

Khabarhub

August 1, 2020

2 MIN READ

China rejects Nepal’s proposal to extend deadline for payment of loans

Ministry of Finance. (File photo/Khabarhub)

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KATHMANDU: The government has proposed to extend the deadline for payment of interest and principal of the loans taken from donor countries and international agencies.

Discussions and consultations have started with donor countries to extend the deadline owning to the economic downturn caused by the coronavirus pandemic.

The government currently has a debt of Rs 1.312 trillion.

Out of that, the internal debt stands at Rs 594.18 billion. This loan is taken from Nepali banks and its loan repayment period is from one year to 10 years. Similarly, the foreign debt stands at Rs 0.718 trillion.

The government has instructed the banks and financial institutions to extend the deadline for the principal and interest payments within the country, but it has not yet decided on loans and assistance taken from abroad.

According to the Ministry of Finance, discussions are underway with the donor countries and agencies on the issue.

Finance Minister Yubaraj Khatiwada himself is urging to postpone the repayment period of foreign loans for a few years.

He is also discussing the impact of coronavirus on Nepal’s economy and Nepal’s efforts with high-ranking UN officials, including the World Bank, IMF, International Finance Corporation, Asian Development Bank, Asian Infrastructure Development Bank and other multilateral development agencies.

But, despite the government initiatives, the donor countries have not responded positively.

Although the Finance Ministry held discussions with countries like China, India and the United States, they have not responded positively.

India and the United States have not made any decision on this. But, China has said it will not be able to extend the deadline or waive interest.

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