The government is exploring alternative methods to raise public debt amid a financial resource crunch caused by low revenue collection compared to its substantial expenditures.
To address this challenge, the government is preparing to utilize tools like venture capital, project-specific credit instruments, remittance funds, infrastructure funds, project incubation funds, and mutual funds. Speaking at a program on Sunday, Finance Minister Bishnu Prasad Paudel highlighted the government’s commitment to adopting alternative development financing strategies.
“In addition, the government is also considering investments from international multilateral and bilateral organizations, the private sector, non-resident Nepalis, as well as green bonds and climate funds to secure resources for development,” Minister Paudel stated.
The government has historically allocated approximately 14% of its total budget to development activities each year. However, only about 65% of these allocated funds have been effectively utilized, primarily for infrastructure projects. In the first five months of the current fiscal year, just 11.58% of the earmarked Rs 352.35 billion for development projects was spent.
Minister Paudel emphasized the need to focus on generating additional financial resources rather than merely relying on efficient utilization of allocated funds. He acknowledged the challenges in meeting public aspirations for sustainable development through traditional methods of development finance, such as government revenue collection and foreign assistance.
Nepal has faced rising public debt due to the government’s growing unproductive expenditures. In the first five months of the fiscal year, an additional Rs 58.31 billion was borrowed, bringing the total public debt to Rs 2,492.91 billion, equivalent to 43.69% of the country’s GDP.
The government has increasingly relied on domestic borrowing, with internal debt constituting nearly half of the total public debt during the review period.
Finance Secretary Mahesh Bhattarai noted that alternative development financing mechanisms could provide access to more resources for advancing large-scale projects in sectors like energy, transport, education, health, and agriculture.
