Impact of public finance on nepal's economic growth rate

Abstract

This study investigates the dynamic relationship between public finance variables and Nepal’s economic growth rate over the decade spanning fiscal years 2014/15 to 2023/24. Anchored in causal-comparative research design and employing secondary data from Nepal Rastra Bank and other official sources, the research assesses how internal debt, external debt, gross capital formation, inflation rate, and population growth rate interact to influence real gross domestic product (RGDP) as a proxy for per capita income. Using statistical tools such as descriptive analysis, Pearson correlation, multiple regression, and ANOVA testing, the study reveals that internal debt and gross capital formation positively contribute to economic growth when managed efficiently, while external debt and inflation exhibit a dampening effect. The population growth rate shows a moderate but statistically insignificant relationship with RGDP, highlighting the need for labor-market-aligned demographic planning. With a regression model explaining 96.1% of GDP variation, the findings emphasize the importance of targeted fiscal strategies, sound debt management, and capital productivity for sustained economic development. The research offers valuable implications for policymakers, financial analysts, and development planners seeking to optimize fiscal tools for inclusive growth in Nepal.

Keywords: Public Finance, Economic Growth, Monetary Management