Government repays Rs 11.84 billion debt

Government repays Rs 11.84 billion debt
eKantipur.com, 15-May-07

To meet its debt obligations, the government has repaid Rs 11.84 billion to both foreign and domestic lenders in the first three quarters of the current fiscal year.

Of the sum, Rs 6.30 billion went for clearing foreign debt which included payment of Rs 4.97 billion for principal and Rs 1.33 billion for interest, shows the data of Financial Comptroller General Office (FCGO).

The budget has allocated over 23 billion rupees for debt servicing -- Rs 15.16 billion for principal and Rs 7.85 billion for interest payment -- for the current fiscal year.

During the first three quarters, the country borrowed Rs 6.75 billion from different multilateral and bilateral donors.

The government used Rs 5.54 billion for repaying domestic debt. In order to support its budgetary program, the government borrowed Rs 9.53 billion from domestic sources in the first nine months.

The government has set a target to borrow Rs 34.18 billion during the current fiscal year to narrow down budget deficit. Of the total target, it has plans to receive Rs 16.90 billion loan from donors and Rs 17.90 billion from domestic lenders.

By last mid-July, the government's external debt had reached Rs 233 billion, and domestic debt had scaled up to Rs 94.73 billion. Its total debt, which amounted to Rs 327.71 billion, is over 56 percent of the gross domestic product. Every Nepali citizen carries a debt burden of over Rs 13,000.

Commenting on the rising debt, an official at FCGO said there is no need to sound alarm bells over the increasing public debt, as it has not yet crossed the sustainable limit. "We do not need to borrow to repay the loans yet. Thus, we are in a comfortable position," he said.

Chiranjiwi Nepal, an economist, said that even though debt poses little immediate threat to the economy, it can adversely affect both the financial markets and government's development efforts after a few years if the current economic scenario persists.

Notwithstanding fast-growing debt, the government has not put any laws in place to well-manage it, said he. "There is a huge imbalance between the revenue's ratio to the GDP and expenditure's. This shows that the government's financial management is terribly poor," he said.

He also urged the government to announce the necessary public debt polices at the earliest to manage the debt properly.