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By Our Reporter

With the increasing public debt, the government is now compelled to raise loans to pay the old loans and the interest of the loans.

Deputy Prime Minister and Finance Minister Bishnu Paudel also admitted this recently stating that the government was facing challenges to manage funds for development works because of the rising public debt.

In the last fiscal year, the government collected public debt worth Rs. 360 billion. Of that, Rs. 234. 4 billion was internal loans and Rs. 125 billion external loans. The government allotted Rs. 350.3 billion to pay the loans and their interests last fiscal year. Of that, Rs. 223.3 billion was to pay the loan and Rs. 82.03 billion to pay the interest. These statistics show the scenario of the loans as well as the challenges in paying the loans and interest.

Still, the government has claimed that the country’s public debt has not reached a critical level.  During a meeting with representatives of the development partners on Monday, FM Paudel said this. It is said that the public debt increased by Rs. 83.95 billion in the first four months of the current fiscal year. By mid-November, Nepal’s public debt reached 2.518 trillion rupees.  Expenses in the unproductive sector are blamed for the increase in public debt. The ratio of public debt to GDP has reached 44.14 per cent.  According to Nepal Rastra Bank, the ideal public debt to GDP in Nepal is 35.43 per cent. Hence, the public debt seems heading towards a critical phase.