Kathmandu, May 31: Nepal’s public debt is projected to exceed Rs. 3.418 trillion in the fiscal year 2083/84 (2026/27).
The government has set a target of raising Rs. 657 billion in loans while repaying Rs. 318 billion in principal debt during the year.
By the end of the current fiscal year, public debt is estimated to reach Rs. 3.029 trillion.
The government has presented a deficit budget of Rs. 675 billion and plans to finance the shortfall through public borrowing.
However, since the amount targeted for borrowing exceeds the allocation for capital expenditure, a significant portion of the debt is likely to be used for recurrent spending and distribution-oriented programs rather than productive sectors.
Economist Dr. Sudan Kumar Wali has warned that the emphasis on distribution-oriented expenditure instead of capital formation could increase long-term economic risks.
According to him, the budget deficit could have been reduced by controlling recurrent expenditure.
In the coming fiscal year, the government is expected to spend Rs. 417.89 billion on debt servicing alone (principal and interest payments), representing nearly 20 percent of the total budget.
Of this amount, Rs. 318 billion will be used for principal repayment, while nearly Rs. 100 billion will go toward interest payments.
The government’s Economic Status Report notes that dependence on public debt has been increasing due to the growing budget deficit and high recurrent expenditure.
The report also concludes that as a large share of revenue is increasingly being used for debt repayment, the risk of resource shortages for capital investment and social sector programs is rising.
People’s News Monitoring Service.
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