Nepal’s debt, domestic as well as international, has tripled in the last five years as the government borrowed heavily to fund the infrastructure and development requirements generated especially after the 2015 earthquake causing heavy damage to its infrastructure. 

The situation was compounded last year when the global pandemic hit the world further limiting the government’s revenue source. 

In 2015, the country’s debt was NPR 544.91 billion which has risen to NPR 1.51 trillion in 2020, according to the data published in a report in The Kathmandu Post. However, experts say, at this stage, the government should not worry about debt as long as it remains under 50- 60 percent of GDP.

The focus should be on the best utilization of borrowed money, they said. 

Furthermore, the government managed to collect just 75.6 percent of targeted revenue in the last fiscal year 2019-20. It collected revenue of Rs841 billion against the target of Rs1.11 trillion, the official said.

The situation isn’t likely to improve in the 20-21 fiscal year too. The government has already cut short its revenue target from NPR 1.01 trillion to NPR 931 billion in a mid-term revenue estimation. 

With limited revenue, borrowing seems the only way for the Himalayan country to fund its big infrastructure projects. 

“For a country like Nepal which can collect limited resources from the revenue, we have to rely on domestic and external debt to finance big infrastructure projects,” said Min Bahadur Shrestha, former vice-chairperson of Nepal’s National Planning Commission.