Thanks to strong revenue growth
and poor capital budget spending, the size of Nepal’s public debt has been
continuously getting smaller – from more than 50 per cent of the Gross Domestic
Product (GDP) in 2006 to about 26 per cent in 2015.
“We had budget surplus every
year during the last decade. Because we couldn’t spend it in development
projects, the money was used for repaying the loans,” said Dr. Govinda Nepal,
Prime Minister KP Sharma Oli’s economic advisor Tuesday.
He said that the downward trajectory
of public debt was a good indicator since it testified the country’s increased
capacity to pay loans it obtained from various institutions at home and abroad.
Macroeconomic indicators
released today by the International Monetary Fund (IMF) showed that Nepal’s
public debt was much lower in comparison to other low-income countries.
The low-income countries –
altogether 45 nations – have on average public debt equal to 47 per cent of their
GDP.
Economist Dr. Dilli Raj Khanal
stated that from sustainable development point of view Nepal was in a
comfortable position. “As the size of our public debt is small, we can have the
luxury to obtain international loans to finance large development projects.”
He informed that the loan size
of all low-income countries had shot up after the World Bank and IMF-led financial
adjustment initiatives in the mid 80s. “Nepal also included the Poverty
Reduction Strategy Paper of those institutions in the 10th Periodic
Plan. It increased the loan component until they revised their policies in the late
90s.”
Dr. Nepal said that although the
budget surplus indicated the inefficiency of government and public development
agencies in spending the capital budget, it improved the public debt indicator
as the excess fund was used to repay the loan.
Former Finance Minister Dr. Ram
Sharan Mahat presented this indicator as an achievement of the country in the
last one-and-a-half decades.
Meanwhile, development budget expenditure
still remains poor so far in this Fiscal Year.
“Budget execution rates for the
2015/16 budget remain lower than in the previous years; despite huge reconstruction
needs Rs. 62 billion (2.2 per cent of GDP) has accumulated in the government
account so far this fiscal year,” said IMF in its report.
The IMF said that though the
more than four month long trade disruption hampered government revenue collection,
there had been a recovery and over the past three months, revenue collection was
at par with the figures a year ago.
In its report, IMF said that the
outflow of migrant workers declined in recent months, possibly due to the
weaker growth in oil-exporting host countries like Malaysia
and Saudi Arabia .
In contrast, remittances rose markedly following the earthquakes in April and
May last year.
“Remittance inflow in February
this year was 4 per cent higher than in the same month last year.”
The remittance inflow increased
by 9 per cent in the first seven months of the current fiscal year as compared
to the same period of the last fiscal.
About 3,258 million US dollars
came to Nepal in the form of remittance in the first seven months of the last
fiscal compared to 3,554 million US dollars this year.
According to the experts, once
the reconstruction process is expedited, the country will receive even higher amount
of remittances.
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