TREND AND PATTERN OF PUBLIC DEBT AND ITS IMPACT ON GROWTH IN NEPAL

Abstract

Government is taking loan from two sources, internal and external. In internal sources, development bonds, treasury bills, national saving certificate and saving certificates are used. Similarly, in external sources Nepal is receiving debt by two sources, bilateral and multilateral. The main objective of the study is to investigate and analyze the trend and pattern of public debt in Nepal and specific objectives are; to assess the trend and pattern of public debt in Nepal, to analyze the burden of public debt and debt servicing capacity and to examine the effect of external debt on output growth in Nepal. This study is based on historical, analytical as well as descriptive research design. In order to show the trend and structure of external borrowing and its effect on gross domestic product, data from 2013/14 to 2022/23 has been taken into account through purposive sampling method. This study is based on secondary data and was collected from various sources such as government’s budget and economic surveys. The study found that the total debt was Rs. 443700 million in FY 2013/14 and has increased to Rs. 1139796 million in the FY 2022/23. Internal debt was only Rs. 184199 million in the FY 2013/14 and has gone up to Rs. 440047 million in 2022/23. Where as external debt was Rs. 259501 million in 2013/14 and increased tremendously up to Rs. 699749 million in 2022/23. The study found that the amount of total debt servicing was Rs. 29957.3 million in 2013/14 and has increased to Rs. 47309 million in 2022/23. This shows as an increasing trend of total debt servicing. The volume of external debt servicing was Rs. 13542.1 million in 2013/14 and has increased to Rs. 14420 million in 2022/23 and the internal debt service was Rs. 16415.2 million in 2013/14 and has gone up to Rs. 32889 million in 2022/23. The analysis of this study found that there exist significant positive relationship between External Debt, Internal Debt and Total Debt with Gross Domestic Product (GDP). Higher external debt is associated with higher domestic output and vice versa.