Kathmandu — Public debt increased by 231 billion 80 million rupees in the last fiscal year 2081/82. With this, the total public debt reached 2 trillion 669 billion rupees, according to the Public Debt Management Office. As of Asad 2081, the government’s outstanding public debt was 2 trillion 438 billion 480 million rupees.

During this period, the appreciation of the US dollar against the Nepali currency has added additional burden to the public debt. As the US dollar has been continuously rising in recent months and the value of other foreign currencies has also increased, the Public Debt Management Office’s report for the month of Asad has shown that the additional public debt liability is increasing every month.

The report states that an additional burden of 66 billion 930 million rupees has been added to the outstanding public debt due to the weakening of the Nepali currency from Asad 2081 to Asad. The Nepali rupee depreciated by 2.97 percent against the US dollar in mid-June 2082 compared to mid-June 2081. In the same period of the previous year, the Nepali rupee depreciated by 1.66 percent until Jestha last year. In mid-June 2082, the buying exchange rate of one US dollar reached 137.44. In mid-June 2081, the exchange rate was 133.36.

The amount of external debt varies due to changes in the exchange rate of the Nepalese rupee against foreign currencies. When the exchange rate of the dollar decreases, Nepal benefits, and when it increases, it loses. Compared to mid-June 2079, in mid-June 2080, due to the devaluation of the Nepalese rupee against foreign currencies, there was a foreign exchange loss of 59 billion 160 million rupees. Due to changes in the exchange rate, there has been a loss in 4 of the last 7 fiscal years, while the rest have been in profit.

Similarly, the total outstanding public debt as of last Ashar is 43.71 percent of the gross domestic product (GDP). The National Statistics Office has projected that GDP will reach Rs 6,107 billion in the current fiscal year. The share of foreign debt in the total public debt as of mid-Ashar is 52.49 percent and internal debt is 47.51 percent.

According to the office, the government collected Rs 455 billion 490 million in public debt last year. The public debt collected last year is 83.25 percent of the annual target. During the period, the receipt of internal debt is Rs 329 billion 990 million (100 percent of the annual target) and external debt is Rs 125 billion 390 million (57.79 percent of the annual target). This year, the government has set a target of raising public debt of Rs 547 billion. Although the receipt of internal debt is high, the external debt is very low, according to the Public Debt Management Office report.

‘If the work is done as per the agreement, the external debt will be received more, if not, no more debt will be received,’ said a source from the Public Debt Management Office. ‘If the Nepal Electricity Authority, the Civil Aviation Authority of Nepal and other bodies complete the work on time, the external debt will be received more, if not, the target will not be achieved.’

In the last fiscal year, the government has paid 362 billion 590 million rupees for the principal and interest payment of the loan. This is 90.01 percent of the annual target. Of this, 304 billion 190 million (90.28 percent) was spent on the principal and interest of the internal debt and 58 billion 400 million (88.62 percent) on the principal and interest of the external debt, according to the office. In the last fiscal year, the government has allocated 402 billion 850 million rupees for debt service expenses. Out of which 362 billion 590 million rupees have been paid.

Looking at the public debt outstanding by the government as of the end of the last fiscal year, every Nepali now has a debt about 91 thousand 7 rupees on their head. According to the National Census 2078 of the National Statistics Office, the population of Nepal is 29,164,578. This figure was derived by dividing the outstanding public debt as of last Ashar by this population.

Economists say that the continuously increasing public debt poses a risk. From the fiscal year 2080/81 to last year, the allocation under the heading of financial management has surpassed the size of capital expenditure. They say that this is the result of the continuous increase in internal and external debt. With the increasing debt repayment obligations, the gap between the level of capital expenditure and the budget allocated for financial management is widening, which risks shrinking the government’s ability to invest in the future. Economists say that the result is also the risk of fiscal imbalance. However, in the current fiscal year, the amount allocated for capital expenditure is more than the budget allocated by the government under the heading of financial management.