Government’s Debt Cross Rs 2.2 Trillion Amidst Budget Deficit And Revenue Shortfall

July 19, 2023 | Investopaper

In the last fiscal year that ended on Sunday, the government of Nepal borrowed loans worth Rs 255.99 billion, according to the latest report from the Public Debt Management Office (PDMO).

The PDMO further revealed that the country’s total debt burden has now exceeded Rs 2.2 trillion, owing to additional loans taken by the government during the 2022/23 period. Out of this staggering amount, Rs 1.082 trillion accounts for external loans, while domestic borrowing has reached Rs 1.127 trillion.

Up to the fiscal year 2021/22, the country’s internal debt stood at Rs 987.44 billion, indicating that the government procured the recent loan of Rs 255.99 billion from the domestic sector. Additionally, the government allocated Rs 115 billion to repay the interest and principal amounts to the lenders.

In terms of foreign loans, the government acquired more than Rs 100 billion during the review year. The PDMO’s data also showed that the government managed to pay back Rs 43.01 billion against these foreign loans, with Rs 34.61 billion designated for principal repayment and the remaining Rs 8.39 billion covering interest payments.

The surge in external loans can be attributed to the aftermath of the 2015 earthquake and the challenges posed by the COVID-19 pandemic. However, what’s noteworthy this time is that domestic borrowing has surpassed external debt, mainly due to a substantial gap between government expenditure and revenue during the previous year.

The government faced a budget deficit of Rs 397.87 billion during the review period, primarily caused by lower revenue collection juxtaposed with soaring public expenditure. Comparing it to the fiscal year 2021/22, government receipts declined by Rs 94 billion, while public expenditure witnessed a significant increase of Rs 128 billion.

Last year, the government managed to collect Rs 1.031 trillion in revenue, falling short of the target of Rs 1.458 trillion. Simultaneously, its spending reached Rs 1.429 trillion, highlighting the pressing need for fiscal management and revenue augmentation strategies in the coming period.


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