Govt taking domestic borrowing worth Rs 240 billion in FY 2023/24; Rs 55 billion will be acquired in the first quarter

Published On: August 2, 2023 09:30 AM NPT By: Republica | @RepublicaNepal

NRB unveils public debt calendar for the current fiscal year

KATHMANDU, Aug 2: The government has set a target of acquiring internal loans worth Rs 240 billion in the current fiscal year, while a total of Rs 55 billion will be collected by the first quarter end in mid-October.

According to the public debt calendar unveiled by Nepal Rastra Bank (NRB) on Tuesday, the borrowing of Rs 55 billion will be generated in the second quarter (between mid-October and mid-January). The domestic borrowing of Rs 53 billion will be borne during mid-January and mid-April, while remaining Rs 77 billion will be taken in the last quarter of the fiscal year 2023/24.

Of the total public debts, the government will generate Rs 55 billion (22.9 percent) by issuing treasury bills. The short term bond will have a maturity period ranging from 28 days to 364 days. Likewise, a total of Rs 179 billion will be taken by issuing development bonds. Under this category, the government will be selling five-year bonds of Rs 30 billion, while it will generate borrowings worth Rs 74 billion and Rs 75 billion out of six-year and seven-year maturity bonds respectively.

Similarly, the central bank, on behalf of the government, will issue five-year citizens saving certificates of Rs 5 billion and foreign employment saving certificates worth Rs 1 billion.

The government raises internal debt by using the mechanism of market borrowing through NRB. The government raises loans through NRB using various instruments such as development bonds, saving certificates and treasury bills. The external debt, which is of non-market borrowing in nature, is taken from foreign agencies.

Due to the low revenue collection compared to the soaring public expenditure, mainly in the last fiscal year, the government has been under pressure to take exorbitant loans to manage its financial liabilities. Of late, with declining grants and declining foreign aid, the government is relying more on domestic borrowing.

According to the Public Debt Management Office (PDMO), the country's public debt has crossed Rs 2.2 trillion as of the last fiscal year. Out of the total public debt, the internal debt is Rs 1.127 trillion, while the external debt stands at Rs 1.082 trillion.

In the fiscal year 2022/23 alone, the government took additional loans worth Rs 255.99 billion. Of the amount, the majority was used to settle the past debts.

The country's public debt has almost doubled in five years. In the year 2018/19, the public debt was Rs 1.048 trillion. The debt reached Rs 1.433 trillion in the year 2019/20, Rs 1.737 trillion in the year 2020/21 and Rs 2.011 trillion in the year 2021/22.