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Economists discuss economies

Sunday, October 23rd, 2011

PM with Nepal PMAs has been customary to receive ‘goodwill gift’ during official visits toIndia, Prime Minister Baburam Bhattarai has his hands full with agreements as he heads back home. Nepal signed Bilateral Investment Promotion and Protection agreement (BIPPA), a major agreement having far-reaching impact in Nepal’s economy and two other agreements as well as secured concessional loan worth USD 250 million on Friday.

The BIPPA commits protection of bilateral investment and acceptance of liability for losses caused by war, riots or any kind of unrest that are not covered by insurance companies. The agreement also gives investments from one country a national treatment in the territory of the other, aiming to promote investment flows between the two countries. Minister for Industry Anil Jha and Indian Finance Minister Pranab Mukherjee signed the agreement in the presence of the two Prime Ministers.

The USD 250 million credit line will be used to finance infrastructure projects including highways, airports, bridges, irrigation, roads and construction of electricity transmission lines. The soft loan will carry a concessional rate of interest of 1.75 per cent annually with repayment period of 20 years . However, the two sides failed to agree on a double taxation avoidance agreement, which was on the agenda. Ahead of his trip, Bhattarai was advised by his party to make his India tour purely ‘a goodwill visit’ and not to sign any ‘controversial’ agreements. But as soon as the news of the signing reached back home, opposition parties NC and UML have declared the agreement as against ‘the national interest’. The hardliners within his own parties have come down sharply against him on the issue. Speaking at a programme in Kathmandu Saturday,

UML Chairman Jhala Nath Khanal said the signing of the BIPPA was against national interest and his party would not accept it. “He has thrown our nationality into Yamuna River,” he said. NC vice president Ram Chandra Poudel questioned the implementation of the BIPPA stating that there is no point signing such an agreement until there is political stability in the country and advised that Bhattarai should instead focus on completing the task at hand.

When reporters informed him about the criticism back home, Bhattarai replied, “I have taken a risk, because I know the agreements are crucial for country’s development. If we want double digit growth, and wish to
raise the per capita income of citizens to $3000 in ten years, we have to be willing to take risks.”

Bhattarai also made visit to Jawaharlal Nehru University and was greeted by thousands of students and red banners. In the lecture organised at auditorium in School of Social Sciences from where he graduated, Baburam was emotional as he thanked the students for the warm welcome. He went on to state “Nepal’s revolution will go down in history alongside great revolutions like American revolution and French revolution.” He said time had come to institutionalise what had been achieved after sacrifice of thousands of Nepalis. The lecture hall was packed to its full capacity and projector was set up outside the hall for hundreds of students who enthusiastically listened to their alumnus.

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