Nepal’s Outstanding Public Debt Grows to Rs. 2.43 Trillion

June 21, 2024 | Investopaper

The government’s outstanding public debt has reached Rs. 2.434 trillion as of the end of Jestha of the current fiscal year. This marks an increase of Rs. 199 billion compared to the previous Asar, when it stood at Rs. 2.299 trillion. As of Jestha, the total public debt amounted to 42.24% of Gross Domestic Product (GDP).

Currently, each Nepali shares a debt burden of approximately Rs. 82,000. According to the National Census 2078, Nepal’s total population is 29.16 million. TThe National Statistics Office projects GDP to reach Rs. 5.75 trillion in the current fiscal year.

As of Jestha, the composition of Nepal’s total public debt shows 50.32% external and 49.68% domestic debt. Bilateral loans constitute 44.62% of the total, while multilateral loans make up 5.70%. Treasury bills account for 17.19%, development bonds 31.87%, citizen savings bonds 0.45%, foreign employment savings bonds 0.01%, and IMF bonds 0.16%.

Recent years have witnessed a steady increase in debt servicing obligations, surpassing capital expenditures since the 2072 earthquake.

Looking ahead, analysts indicate that the government’s goal of managing Rs. 405.27 billion in public debt for the current fiscal year remains ambitious. The office reports achieving 67.96% of this target as of Jestha, with 93.75% from domestic and 38.86% from external sources.

In the first eleven months of the current fiscal year, the government has serviced Rs. 271.19 billion in debt, with Rs. 197.32 billion from principal and Rs. 73.87 billion from interest payments. This includes Rs. 191 billion in internal and Rs. 43.99 billion in external debt payments.

Annual budgets have consistently expanded, with public debt also rising proportionally. Reports indicate that in the last five years alone, Nepal’s public debt has increased by over Rs. 1.37 trillion, as per government data.

Increased debt obligations amidst budgetary expansions heighten financial instability risks for the government in the future. Furthermore, the government’s tendency to increase current expenditures without maintaining transparency could potentially discourage additional private sector investments.

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