Nepal's Public Debt Soars: Reaches Rs. 22 Kharba 21 Arba in 5 Years

Nepal has witnessed a significant surge in its public debt over the past five years. According to the Public Debt Management Office (PDMO) under the Ministry of Finance, the country's public debt has soared to Rs. 22 Kharba 21 Arba 67 crores by the fiscal year 2079-80. This staggering figure includes internal debt amounting to Rs. 11 Kharba 28 Arba 32 crore and external debt amounting to Rs. 10 Kharba 93 Arba 34 crores. In contrast, the public debt stood at just Rs. 10 Kharba 48 Arba in the financial year 2075-76.

The head of the PDMO, Bhumiraj Sharma, was quoted as remarking that the Covid-19 epidemic had driven a significant increase in public debt during this period. Additionally, loans taken for post-earthquake reconstruction have also contributed to the surge. A substantial amount of funds was allocated for earthquake reconstruction during this timeframe.

There have been questions regarding the efficacy of the government's borrowing practices. Sharma was quoted as emphasizing the need to assess the usefulness of the loans based on the government's expenditure. He was quoted as stating, "If the borrowed amount is wisely invested in capital formation, there should be no cause for concern. Otherwise, the utility of the loan must be reviewed."

During the fiscal year 2078-79, Nepal's public debt amounted to Rs. 20 Kharba 13 Arba 29 crores. Over the subsequent financial year 2079-80, an additional Rs. 2 Kharba 8 Arba 38 crores of public debt was accrued, taking into account the debt repaid by the Government of Nepal during that year.

Over the course of one year, the government took on a public debt of Rs. 3 Kharba 58 Arba 11 crores, comprising Rs. 2 Kharba 55 Arba 99 crore in internal loans and Rs. 1 Kharba 2 Arba 12 crores in external loans. During the same period, the government successfully paid off Rs. 1 Kharba 49 Arba 73 crore in debt, resulting in a net increase of Rs. 2 Arba.

Interest and commission payments during the year amounted to Rs. 73 Arba, with Rs. 64.49 Arba going towards interest payments for internal debt and Rs. 8 Arba 39 crores for external loans. The government has started raising domestic debt from November of this year, while external loans are usually obtained through research.

Despite meeting the domestic debt target set for the previous financial year 2079/80, the government could not achieve even half of the target for external debt. Progress in development projects and foreign aid receipt have been impacted by this shortfall.

With the latest data indicating a per capita debt load of Rs. 76,176, Nepal's public debt remains a matter of concern. The government has now set a target of borrowing an additional Rs. 4.5 Kharba in the current fiscal year 2080-81. Emphasis will be placed on mobilizing development aid based on national interests, needs, and priorities to complement internal resources.

(Disclaimer: This is a translation based on an original article. Consistency in information has been maintained for accuracy.)