Kathmandu (PTI): Nepal is likely to sign a new Comprehensive Treaty with China for more closer cooperation between the two countries and enhanced financial assistance to Kathmandu, during Premier Prachanda's forthcoming visit to the Communist nation.

After signing of the new pact, China may increase its annual assistance to Nepal amounting to USD 14.6 million during Prachanda's forthcoming visit in April-May. "During bilateral talks with Nepalese officials, Chinese delegation led by Assistant Minister Hu Zhengyue handed over a draft of new Nepal-China Peace and Friendship Treaty and we are studying the draft," Foreign Ministry spokesman Suresh Pradhan, who led the Nepalese delegation during the talk, told PTI.

The new treaty which is likely to be signed between Nepal and China during Prachanda's visit in Beijing will replace the 'Nepal–China Treaty' signed in 1960 which has become obsolete, he said.

Hu Zhengyue's visit which took place just a week after Indian Foreign Secretary Shiv Shanker Menon's visit to the Himalayan nation is significant, as these developments indicate that Nepal comes in China's priority.

The new treaty was necessary as many political and social changes have taken place in Nepal, which turned into a republic and gone through many changes, he said.