KATHMANDU, May 20: Nepal’s public debt has reached Rs 2.622 trillion by mid-May as the government has been unable to check soaring expenses in unproductive activities.
The records with the Public Debt Management Office (PDMO) show that the country’s debt liability increased by Rs 188.30 billion in the first 10 months of the current fiscal year. Of the amount, extra liability of Rs 48.19 billion was added in the government’s account due to depreciation of the domestic currency against foreign currencies.
Out of the total loan liability of the country, the share of domestic borrowings is Rs 1.266 trillion, while the remaining Rs 1.355 trillion is attributed to the foreign borrowings, according to the PDMO. While the ratio of public debt to the country’s gross domestic product has reached 42.94 percent, the shares of internal and external loans to GDP stands at 22.20 percent and 23.76 percent, respectively.
Public debt exceeds Rs 2.434 trillion, increasing by over Rs 30...
Dipendra Bahadur Chhetri, an economist and former governor of Nepal Rastra Bank, told Republica that the soaring public debt is the result of the government failing to implement austerity measures effectively. According to him, the government must cut down unnecessary expenses on the headings like foreign visits while it needs to spend only on those projects which ensure reducing financial burden to the country.
Due to the increasing debt burden, the government has been compelled to allocate a huge chunk of money for debt servicing at the cost of funds for development projects. In the review period, the government spent Rs 264.28 billion out of the allocated amount of Rs 367.28 billion under the heading for the current fiscal year.
With the slow revenue collection amid surging expenditures, the government has been financing its immediate liabilities through the funds received from borrowings. In the first 10 months, the government incurred a budget deficit of Rs 234.57 billion, with total expenditure reaching Rs 1.157 trillion while the revenue collection stood at just Rs 922.43 billion. Citing the huge budget deficit, the government has cut down the grants to sub-national governments by one-third of the amount announced in the budget for FY 2024/25.
In the review period, the government has already utilized 71.45 percent of the targeted Rs 547 billion under the heading of public debt for the current FY. While Rs 301.14 billion has been mobilized through domestic loans, Rs 89.68 billion was taken under foreign loans.
