In a distressing revelation, recent financial data highlights a concerning trend in Nepal's economic landscape. The government's insatiable appetite for debt has grown unabated, adding to the existing burden on the public. The figures speak loudly and urgently demand corrective action. In just two months of the current financial year, an alarming 44.26 billion rupees of internal debt were raised, exacerbating an already dire economic situation. As per the records of the Public Debt Management Office, the government accumulated 13.6 billion rupees in debt in July and a staggering 31.2 billion rupees in August alone. This surpasses the target set by Nepal Rastra Bank to raise 55 billion rupees in public debt for the first three months of the financial year. It is a clear indication that the government's fiscal management is dangerously off track.
To add to this precarious situation, external loans amounting to Rs 4.97 billion were procured within the same two-month period. The financial data further reveals that a significant portion of this borrowed money was utilized for debt repayments, with Rs 32.83 billion of internal debt and Rs 5.88 billion of external debt being settled. Despite the repayment efforts, the outstanding public debt has surged to a staggering Rs 2.398 trillion. This represents a substantial increase of Rs 10.51 billion in just two months. At the end of the previous fiscal year, Nepal's public debt stood at Rs 2.299 trillion, showcasing a worrisome upward trajectory. Additionally, the interest payments on this mounting debt are a cause for grave concern. An exorbitant sum of Rs 11.648 billion was expended on servicing the interest in the same two-month period. These payments are a substantial drain on the country's financial resources and could have been channeled towards critical sectors such as healthcare, education, and infrastructure development. It is essential for the government to take immediate and decisive action to curb unnecessary expenses and reduce the burden of public debt on the people. Measures must be implemented to streamline fiscal policies, prioritize expenditures, and ensure that borrowed funds are utilized efficiently for the country's development.
In addition to the ever-growing burden of debt management, excess internal borrowing could result in 'crowding out' and potentially reduce the country’s aggregate demand by the private sector. This, in turn, might pose a serious problem for the private sector’s motivation to make further investments and impede economic activities. An increase in external borrowing could also take a toll on the country’s ability to ensure the proper utilization of precious foreign currency earned from remittances. The insufficiency of financial resources for development activities, coupled with passing an extra tax burden to the people, cannot be denied. This underscores the need for transparent communication and engagement with the public regarding the government's financial decisions and debt management strategies. Citizens have the right to be informed about the utilization of borrowed funds and the impact of public debt on their lives and future generations. As a newspaper, we believe that urgent steps need to be taken to rectify the current trajectory of increasing public debt. A prudent and responsible fiscal approach is imperative to safeguard the economic stability and prosperity of Nepal and its citizens. The time to act is now, before the burden becomes insurmountable, stifling growth and progress for years to come.