December 1: The share of Nepal’s public debt is increasing compared to the gross domestic product (GDP). According to the latest data, Nepal's public debt has soared to 43.80 percent of the total GDP. This figure is based on the loans taken by the government as of mid-November.
The National Statistics Office has estimated Nepal’s GDP for the last fiscal year to reach Rs 5381 billion.
Meanwhile, the public debt has increased to Rs 2357 billion of late mainly due to the rise in government’s tendency to raise debt to meet its current expenses.
The government’s internal debt stands at Rs 1183 billion and external debt is Rs 1173 billion.
As of last mid-July, the country’s Rs 2221.67 billion. In the first four months (mid-July to mid-October) of the current fiscal year, the government raised debts of Rs 113 billion through various instruments such as bonds. According to the Public Debt Management Office, the government has taken internal debt of Rs 97.31 billion and external debt worth Rs 15.85 billion as of mid-October. Due to the realization of low external debt, the government has had to rely on internal debt to mobilize the budget.
In the first four months of current FY, the government spent Rs 81.64 billion on financial management which includes payment of interest and principal amounts of internal and external loans. The government has been allocating a large amount of money to pay its debt.
In the current fiscal year, the government has allocated a large amount of budget to fulfill the financial obligations created by the debt. The amount allocated to settle the debts is more than the development budget.
The government allocated Rs 302.7 billion for capital expenditure while Rs 307.45 billion has been earmarked for financial management.
The government started raising domestic debt from the beginning of the fiscal year by revising the schedule as the interest rate has been cheaper in the current fiscal year. This also the reason for the increase in public debt within a period of four months.
Lately, the government has been accused of meeting its recurrent expenses (day-to-day expenses) by taking loans.