Government accumulates additional loan of Rs 218.86 billion in eight months

KATHMANDU: Nepal’s public debt has reached a staggering Rs 2.388 trillion by mid-March of the fiscal year 2023/24, as per data released by the Public Debt Management Office. This marks an increase of Rs 218.86 billion in loans over the past eight months.

During the same period, the government managed to repay Rs 146.64 billion of internal debt and Rs 28.86 billion of external debt. However, the increase in debt remained significant, with internal debt rising by Rs 163.31 billion and external debt by Rs 55.55 billion.

The current figures indicate that the government’s internal debt liability stands at Rs 1.185 trillion, while its external debt liability amounts to Rs 1.202 trillion.

Notably, the government’s expenditure for obtaining these loans totaled Rs 126.3 billion, with an additional Rs 49.47 billion paid in interest during the period under review.

The surge in public debt raises concerns about Nepal’s fiscal sustainability and the government’s ability to manage its finances effectively.

While borrowing is sometimes necessary for funding development projects and addressing economic challenges, it is crucial for the government to ensure that debt levels remain manageable and sustainable in the long run.

Efforts to diversify revenue sources, enhance tax collection mechanisms, and prioritize investments that generate long-term economic growth are essential for mitigating the risks associated with high levels of public debt.

Additionally, transparency and accountability in debt management processes are vital for maintaining investor confidence and promoting fiscal stability in Nepal.