KATHMANDU, July 10: Finance Minister Yuba Raj Khatiwada has said that the domestic debt that the government has proposed for Fiscal Year 2019/20 was within 'accepted norms' of the country.
Addressing concerns of members of the National Assembly on Tuesday that the proposed domestic debt was high, Khatiwada said that the government will raise it only within the accepted level.
To finance the deficit budget for the upcoming fiscal year, the government has announced that it will raise Rs 195 billion in domestic debt. This will be in addition to Rs 298.83 billion in foreign loans.
To finance the expenditures of a total of Rs 1,532.97 billion for the upcoming fiscal year, the government plans to collect Rs 981.13 billion in revenue and Rs 57.99 billion in foreign grants.
"For over ten years, we have been raising domestic debt below five percent of our gross domestic product. Regardless of which party has led the government, we have adhered to that norm," said Finance Minister Khatiwada.
"The government raises the debt in a way that it can manage. We do it with utmost caution so that we do not fall in the debt trap," he added.
Earlier, addressing the National Assembly on budget deliberations, Jeetendra Dev, a member of the main opposition party Nepali Congress, said that the government's focus should be on curbing the resource leakage rather than raising tax rates and loans.
"There is a huge leakage in the resources of our country. There is a lot of corruption in the country. If the government makes efforts to curb leakages and corruption instead of raising debt and taxes, I don't think we will have shortage of resources," said Dev.
"Instead of wrangling over the ceiling of the debt that the country can raise, the government should try to find a national consensus by bringing all parties including economists and other stakeholders on board on the issue of domestic and international loan ceilings," he added.
Minister Khatiwada said that the government has to mobilize debt to finance the deficit budget.
"We need additional resources to achieve high growth, speedy poverty alleviation, and graduation to the status of developed country. To manage those additional resources, we have to raise domestic debt," said Minister Khatiwada.
While the opposition party has been raising concerns over the domestic debt, the government has not raised it as it had planned in the current fiscal year. Compared to the plan of raising Rs 172 billion, the Nepal Rastra Bank (NRB), the central bank which carries out borrowing for the government, has released the calendar to raise only half of the target. The less-than-target borrowing is mainly due to the low spending of the government and shortage of lendable fund in the market.