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.

Govt to introduce Rs 159b budget

Govt to introduce Rs 159b budget
eKantipur.com, 10-Apr-2007

The government is working to announce a Rs 159 billion budget for the next fiscal year 2007/08, focusing on rehabilitation and reconstruction works, and the agriculture sector.

Of the total sum, the government is planning to spend Rs 90 billion under recurrent expenditure, and Rs 69 billion under capital expenditure, which also includes the principal payment of public debt, said Pushpa Raj Rajkarnikar, member of National Planning Commission (NPC). Speaking at an interaction with the newly appointed ministers, he said the government is targeting to collect Rs 98 billion as revenue, and receive Rs 42 billion as foreign aid.

The remaining Rs 19 billion will be mobilized through domestic debt, he said. Presenting a paper on the forthcoming Interim Plan, he said that the annual economic growth rate is targeted at 5.5 percent for the next three years.

Minister for Peace and Reconstruction Ram Chandra Poudel said the upcoming three-year Interim Plan should entail concrete strategies to lift the people out of poverty and wipe out social discrimination.

“In the context of new political development, the programs must make the deprived and excluded communities feel that they are enjoying the benefits of development,” he said.

Noting that spurring agriculture sector is necessary to improve the living standard of poor people, he asked the government to give subsidies for farmers in certain areas. Observing that scattered habitats in rural areas are a major problem for running development activities, Minister for Physical Planning and Works Hishila Yami stressed on the need to carry out proper and planned settlements.

“Resources have been scattered while operating development works. So, the outcome is not as effective as it should be,” said she.

Feeling that Nepal has a tremendous potential for herbal products, she said the upcoming plan should give a special priority to the pharmaceutical industry.

Minister for Local Development Dev Gurung said the plan should lay emphasis on developing the economy toward industrialization. “The public participation in any development work ought to receive priority. But, the current structure of the state is not favorable for this purpose,” said he. “The upcoming plan should be suitable for running development projects in a new federal Nepal, rather concentrating on the current center-controlled structure,” he said.

Finance Minister Dr Ram Sharan Mahat said the plan must mention a clear investment plan. “The plan should explicitly state what the government's policy is to increase private sector investment,” he said.