Nepal signs framework agreement of China-led AIIB
Nepal has become the founding member of Asian Infrastructure Investment Bank.
Nepal, alongwith 50 countries across Asia, Australia, Europe and South America, signed article of agreement of the Asian Infrastructure Investment Bank in Beijing today. Though, some 57 governments have expressed interest in joining the AIIB, only 50 could sign agreement today. The Philippines and six other countries including Denmark, Kuwait, Malaysia, Holland, South Africa and Thailand would not sign immediately and had until December to make a final decision.
Finance Minister Dr Ram Sharan Mahat today signed the agreement at a programme organised in Great Hall of People’s Republic of China on the behalf of Nepal to join the Chinese-led Asian bank.
Once the bank is formally established, it will give another window of resources for a country like Nepal, which requires huge investment in infrastructure projects. There is a huge gap in infrastructure funding in Nepal also to graduate from the current status of Least Developed Countries (LDCs) to developing country by 2022. The bank is expected to fulfil the resource gap.
The share capital of the bank is estimated to be $100 billion. But, its initial paid up capital will be $50 billion. Nepal is supposed to invest Rs 1.60 billion ($16 million) in the bank.
Today’s signing has not only endorsed a structure that gives Beijing the biggest voting stake at the start but no veto power but will also give tough competition to the western dominated World Bank as AIIB aims at ssimplyfying rules to get fund.
Unlike World Bank, each member of the Asian Infrastructure Investment Bank will receive voting shares in line with its contribution to the bank’s planned $100 billion in capital, under the proposed structure. As the biggest donor, Beijing would get 26 per cent of votes, with India in second-place with 7.5 per cent and Russia third with 5.9 per cent. But the bank will honour the voice of smaller countries.
The bank will be led by a president with a five-year term that can be extended once. Its working language will be English.
Beijing’s proposal for the AIIB attracted unexpectedly wide support from US allies, including Britain, New Zealand, France, Australia and South Korea despite US opposition. Washington and its ally Japan have refrained from seeking membership.
The bank that will be headquartered in Beijing will also help China to gain a bigger voice in global financial regulation that is dominated by the US and Europe. The bank intended to finance investments in railways, cargo ports and other trade links will help meet Asia’s infrastructure development and promote Asia’s connectivity. “It will also deepen regional cooperation for the sake of development,” said Chinese president Xi Jinping during a meeting with the foreign envoys in the Great Hall of the People in central Beijing. “The very fact that representatives from the 57 prospective founding members are gathering in this room today is testimony to this spirit of solidarity, cooperation, openness and inclusiveness.”
China’s voting share may be diluted as more members join, vice finance minister Shi Yaobin was quoted saying.