Per capita debt in Nepal reaches Rs 79,200, raising economic health concerns

KATHMANDU: The government has added an extra debt of NPR 49.23 billion in the first two months of the current fiscal year, as revenue collection remains low and recurrent expenditure unchecked.

This substantial increase in public borrowing has pushed Nepal’s per capita debt to NPR 79,200, calculated based on the 2021 census data with a total population of 29,164,578, as per the National Statistics Office. It signifies an additional debt burden of NPR 4,684 per person in just two months. At the end of June, the per capita debt stood at NPR 74,516.

According to records from the Public Debt Management Office (PDMO), the per capita debt in Nepal has risen by over NPR 10,000 in the past year. By the end of the fiscal year 2021/22, it was only NPR 68,907.

Nepal, categorized as one of the 46 least developed countries, is facing a concerning surge in per capita debt, which raises questions about the country’s economic health.

Data from the Nepal Rastra Bank (NRB) indicates that, during the review period, the central bank, on behalf of the government, gathered domestic borrowing amounting to NPR 44.26 billion. Of this, NPR 13.06 billion came in during one month, from mid-July to mid-August, with the remaining NPR 31.20 billion raised in the following month.

Out of the NPR 49.23 billion in debt collected in the review months, NPR 4.97 billion was from external borrowing, with NPR 2.71 billion in one month and NPR 2.25 billion in the next.

The government had set a target to accumulate NPR 55 billion in public debt within the first three months of the current fiscal year. This increase is primarily attributed to low revenue collection and the escalating public expenditure, particularly unproductive recurrent expenses that are straining the nation’s finances.

Eight months ago, the government introduced austerity measures, but these have proven ineffective as the government struggles to control its excessive spending. An economist, speaking anonymously, pointed out examples like the lengthy foreign trips of Prime Minister Pushpa Kamal Dahal and other high-ranking political leaders and government officials, accompanied by large delegations, as instances where the government does not adhere to its own rules.

During the review months, the government allocated NPR 32.83 billion for debt financing of internal borrowing and NPR 5.88 billion for foreign debt. Overall, the government incurred NPR 11.06 billion in interest payments on its borrowings.