Kathmandu: The Chinese Embassy in Kathmandu has expressed dissatisfaction with the term “Debt Trap” given to the Pokhara International Airport, saying it would damage cooperation between Nepal and China.

The spokesperson for the Chinese Embassy, Yu Pengchen, stated that they had welcomed the celebration of national pride in Nepal and the significant project that aims to realize the dream of Pokhara residents for over half a century. He expressed dissatisfaction with the term “Debt Trap,” claiming it misrepresents the crucial project that China is supporting to materialize.

Yu’s statement was publicised, stating, “…this is merely an effort to bridge cooperation between a development-oriented country and China.”

The Pokhara International Airport, built with the assistance of a loan from a Chinese bank, was inaugurated by Prime Minister Pushpa Kamal Dahal Prachanda on January 1, 2023. However, despite some chartered flights operated by Chinese airlines, regular international flights have not yet commenced.

Yu, the embassy spokesperson, also clarified that referring to Pokhara Airport as a “Debt Trap” goes against the basic understanding of economics.

According to data presented by the Public Debt Management Office of Nepal, until July 2023, the majority of Nepal’s foreign debt is of a multilateral nature. Yu stated that 88% of the loan is part of the cooperation of institutions such as the International Development Association (IDA), the Asian Development Bank (ADB), and the International Monetary Fund (IMF). He added, “Bilateral loans are only 12%. Among them, Japan is the largest lender followed by India. China is only in the third position.”

He also mentioned that China has always been committed to providing further direct flights from China to Pokhara in international aviation. Information was provided on the implementation of chartered flights from Chengdu and Kunming to Pokhara.

Authority over Pokhara Airport

On 8 Chaitra 2072 BS, an agreement for the construction of the Pokhara International Airport was made between the governments of Nepal and China.

The loan agreement amounted to 1 billion 378.74 million yuan, of which 359 million yuan was an interest-free loan. Nepal Civil Aviation Authority has to repay the remaining loan with interest by 2092.

According to the exchange rate at the time of the agreement, that amount is NPR 22.61 billion. Out of which, NPR 5.83 billion won’t require interest payment. Nepal has to pay Chinese Exim Bank only NPR 840 million in annual interest. Nepal has to repay the loan within 20 years of signing the agreement, including interest.