KATHMANDU, Nov 20: Nepal’s public debt increased by Rs 83.95 billion in the first four months of the current fiscal year, with the government relying more on borrowings for its debt servicing amid slow collection of revenue.
The report unveiled by the Public Debt Management Office (PDMO) shows that the country’s total debt increased to Rs 2.518 trillion as of mid-November this year from Rs 2.434 trillion at the beginning of the current fiscal year. The latest figure is more than 44.14 percent of the country’s Gross Domestic Product (GDP).
According to economists, there has been a sharp increase in the tendency of the government to take public loans in recent years, which is an alarming situation for the country.
Public debt exceeds Rs 2.434 trillion, increasing by over Rs 30...
Economist Dilli Raj Khanal said a whopping rise in the government debt is due to a shortfall in collection of the government revenue. “Apart from the situation, the government has failed to check its growing expenses in non-productive sectors, while falling behind to invest in projects that give returns.”
During mid-July and mid-November, the government took a cumulative amount of Rs 165.71 billion in public debt, while it paid Rs 86.31 billion in interest and principal repayment. The amount received was 30.30 percent of the government’s target of mobilizing total borrowings of Rs 547 billion in the current fiscal year.
Of the total public debt, internal borrowings stand at Rs 1.252 trillion (21.95 percent of GDP), while external debt makes up Rs 1.265 trillion (22.19 percent of GDP).
Regarding the internal borrowing, the government has set an annual target to collect Rs 330 billion. In the review period, Rs 144 billion was raised under this heading, representing 43.64 percent of the target. In contrast, the government took external borrowings worth Rs 21.72 billion, which was 10.1 percent of the annual target of Rs 217 billion.
The government has earmarked Rs 402 billion to cover interest payments on its debt for the current fiscal year. The amount is way higher than Rs 352.35 billion allocated for capital expenditure.
The current ratio of public debt to GDP is the highest in the past 18 years. In FY 2005/06, this ratio was recorded at 49.52 percent. It was successively reduced to 22.28 percent in FY 2014/15. The amount of public debt again started to escalate following the devastating earthquake that hit the country in 2015. In the last one decade, the figure has surged five-folds.
According to the records with Nepal Rastra Bank (NRB), the country’s public debt was only Rs 1.432 trillion as of FY 2019/20. It rose to Rs 2.434 trillion by FY 2023/24, an increase of Rs 1.002 billion in five years’ period.
