Belt & Road Initiative: MoU (2017) & Framework (2024)

Nepal joined the BRI in the immediate aftermath of the 2015–16 border blockade, when reducing dependence on Indian transit became a national consensus; the 2016 Transit and Transport Agreement with China and the 2017 BRI MoU were two halves of the same hedge. The MoU was signed in Kathmandu on 12 May 2017, days before the first Belt and Road Forum in Beijing. Its breadth — everything from railways to currency cooperation — and its secrecy fed both the hopes and the fears that have defined Nepal's BRI decade: the text was kept unpublished by both governments for five years, until Khabarhub obtained and published it in June 2022, and the secrecy itself became a controversy.

The seven-and-a-half-year gap between MoU and implementation framework is the story: successive Nepali governments could not agree internally on accepting Chinese loans, China would not do grants-only mega-projects, and every draft implementation plan — China first proposed one in 2020 — stalled on that point. Nepal has consistently declined commercial-rate loans, citing debt-sustainability concerns drawn from Sri Lanka's experience. The hopes centre on trans-Himalayan connectivity crowned by a Kerung–Kathmandu railway, for which feasibility studies suggest a cost well over $3 billion on one of the world's hardest railway alignments; the fears centre on debt distress and on provoking Delhi and Washington, whose MCC compact became BRI's domestic political mirror-image.

The Framework for Belt and Road Cooperation was finally signed in Beijing on 4 December 2024 during PM K.P. Sharma Oli's visit — pointedly his first major bilateral trip of that term, to Beijing before Delhi. The deadlock broke only by inventing language both sides could read their own way: Nepal's UML–Nepali Congress coalition insisted on grants-only wording, China pushed back, and the agreed term became 'aid assistance financing'. Even so, the Nepali Congress extracted public assurances that no commercial loans would be taken, and the Framework's ten-project list conspicuously favours smaller, doable items — a tunnel road, a university — over the totemic railway. As of the Framework's signing, no project had been implemented under the BRI label in the seven-plus years since the MoU; the Framework is an enabling document, with project-level agreements and their financing terms still to be negotiated one by one. For contemporary Nepal the BRI file is the clearest demonstration of its balancing act: the same governments that ratified the US-funded MCC compact and signed Indian power-trade agreements also renewed and upgraded BRI — each instrument used to discipline the other partners' terms.