Spread the love

Kathmandu, August 7: The government is spending about Rs. 3.5 trillion annually to pay the interest and instalments on loans by taking fresh loans, contributing to an increase in the total loan amount.

In the last fiscal year 2081/82, the government spent Rs 3.62 billion 59 million to pay back interest and instalments on internal and external debt.

Meanwhile, when large amounts of money are spent on debt servicing and interest payments, the World Bank, Nepal’s main development partner, has doubled interest rates, adding to the government’s financial challenges.

The World Bank has doubled the interest rate on loans to Nepal from 0.75 percent to 1.5 percent. Many of the projects are being built with World Bank loan assistance.

Moreover, the World Bank has reduced the loan payback tenure from 50 years to 40 years.

The government is unable to meet the general sector expenditure from its revenue. The government is solely dependent on foreign donors for the development sector expenditure. With the new loan policy of the World Bank, the project costs in Nepal will become expensive, and the economy is going to be affected very badly, say economic observers.

Since the adoption of federalism, the government’s general sector expenditure has increased tremendously.

People’s News Monitoring Service.