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काठमाडौंमा वायुको गुणस्तर: ११२

What is the purpose of public debt, where does it go?

Projects that cannot be put into operation after investing billions of loans are not given priority. The government should take public loans in order to invest in the areas of need and justification and should be able to utilize them in the same way.
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The government's public debt is increasing by more than two trillion rupees every year. In just 10 months of the current financial year, 2 trillion 64 billion rupees have been added, and the total public debt has reached 23 trillion 97 billion 43 billion rupees. When calculating the head count, each Nepali has about 80 thousand rupees. The government's public debt is 42.2 percent of gross domestic product (GDP).

What is the purpose of public debt, where does it go?

Compared to GDP, public debt is not a serious issue. Public debt has also exceeded 50 percent of GDP in the past. But the main concern is how the loan being taken by the government is being utilised.

In almost all countries, since the resources are low but the demand is high, there is a practice of taking the budget by managing it through foreign aid and internal and external loans. We have also adopted the same measures for deficit budget management. The government had set a target of mobilizing public debt of 4 trillion 52 billion rupees in the current financial year. After 10 months, the government has received 58.45 percent of the target public debt. During this period, the government got 79.58 percent of its internal debt target and 34.61 percent of its external debt.

So far, the internal debt of the government is 11 trillion 84 billion 48 crores and the external debt is 12 trillion 12 billion 95 crore rupees. Earlier, internal debt was more than external, but since last January, external debt has been more than internal debt. Due to the fact that the government has paid more internal debt compared to external debt, the share of external debt in the total outstanding debt has increased. Despite the risk of exchange rate changes, the interest rates on external loans are cheaper. So from the point of view of investment, foreign loans should be prioritized.

As the public debt continues to rise, so does the principal and interest to be paid. In the financial year 2075/76, the public debt was only 10 trillion 48 billion. The government has spent 2 trillion 33 billion rupees on loan principal and interest payments in just 10 months of the current financial year, while it is more than doubled now. This is the amount spent on principal and interest payments on maturing debt, which is roughly the amount of public debt raised by the government during the same period.

On the other hand, the expenditure on principal-interest payments is much higher than the capital (development) expenditure incurred during the same period. In these 10 months, the government could only spend around 1 trillion 10 billion rupees for development. The government's revenue income for the 10 months of the current financial year is about eight and a half billion rupees. Current expenditure for this period is about seven and a half billion. Another source is the low amount of foreign aid. It is a matter of concern that the revenue income of the government is almost covered by the current expenditure and the public debt payment obligation is increasing every year.

It is natural for the government to take public debt to meet the capacity of the country's economy. Some developed countries are taking more than 80 percent of GDP public debt. But the utilization of the public debt taken in this way is the main concern. Investments made with loans should increase production and productivity. That is, the revenue income of the state should be increased. Employment opportunities should be created, business losses should be helped. As a whole, the country's economy should be strengthened. Projects that cannot be put into operation after investing billions of loans are not given priority. The government should take public loans in order to invest in the areas of need and justification and should be able to utilize them in the same way.

प्रकाशित : जेष्ठ १३, २०८१ ०६:२९
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