KATHMANDU, Dec. 27 (Xinhua)– Nepal government on Sunday tabled the article of agreement of the Asian Infrastructure Investment Bank (AIIB) at its parliament to legally become the founding member of the China-initiated bank.
The bank which was formally established on Friday has been considered as a milestone in the reform of the global economic governance system as well as in the infrastructure development in the Asia-Pacific region.
Nepalese Finance Minister Bishnu Prasad Poudel tabled the document at the house to get approval of the parliament.
Nepal has got a total 809 shares in the bank whose initial paid up capital is 50 billion U.S. dollars while authorized capital is 100 billion U.S. dollars. According to Nepal’s Finance Ministry, Nepal has to contribute 16.1 million U.S. dollars in the bank’s paid up capital in 10 instalments.
Nepalese government officials and experts said that the bank has opened a new avenue for Nepal to get funding for its infrastructure needs.
A World Bank report entitled “Reducing Poverty by Closing South Asia’s Infrastructure Gap”published in 2014, has stated that Nepal has to invest 8.24 percent to 11.75 percent of its gross domestic product (GDP) in infrastructure to bridge investment gap in infrastructure.
Currently, Nepal’s investment in the sector stands at just 5 percent of the GDP. The report said Nepal falls short of 13-18 billion U.S. dollars in order to bridge the investment gap in infrastructure between 2011-2020.
Senior Nepalese economist Dr. Shankar Sharma said that the AIIB gives an extra window for Nepal to get financing to improve its poor infrastructure.
“Multilateral lenders such as the World Bank and the Asian Development Bank have limitations to finance the needs of Nepal’s infrastructure sector and having additional window of financing is good for the country,” said Dr. Sharma.
He stressed that Nepal should enhance its absorptive capacity of pledged financing which has remained poor.
The AIIB has aimed to start lending from mid-2016. “Nepal will be in position to get financing from AIIB at the earliest if we prepare the necessary project proposals at the earliest,“ said Madhu Marasini, chief of international economic cooperation coordination division at the Finance Ministry.