My Republica, September 21, 2020
The country faces an increasing debt burden due to unchecked spending in unproductive sectors
KATHMANDU: The per capita debt of Nepal has reached Rs 45,753 with an addition of a loan liability of Rs 861 per head during mid July-mid August.
According to the Ministry of Finance, as of mid-August, the outstanding debt of the federal government stood at Rs 1.37 trillion. During the first month of the current fiscal year, the government received foreign loans worth Rs 2.48 billion.
Of the total public borrowing, foreign loans amount to Rs 759.38 billion, which makes 55 percent of the total volume. The government took the rest of Rs 613.21 billion in loan from the domestic sector.
With the slow growth in revenue collection, the government is increasingly depending on the loan amount to meet its financial liabilities. At a time when the government is struggling to spend the funds allocated for the construction of infrastructure, the inability to check the unproductive government spending has been blamed for the soaring public borrowing.
According to the ministry, the share of external loans in the country’s public borrowing has been escalating, with a reduction in grants by foreign donors. Out of the foreign assistance commitment worth Rs 54.94 billion in the first month of the current fiscal year, 98.3 percent was pledged in loan.
In the review period, the federal government paid Rs 1.19 billion in interest for its loans. Of the amount, more than Rs 600 million was paid for foreign borrowing.