Kathmandu: According to recent data released by the Public Debt Management Office, Nepal's public debt has reached a staggering NPR 2.221 trillion by the end of the fiscal year 2079/80 BS (2022-23). This debt includes both internal loans amounting to over NPR 1,100 billion and external loans worth NPR 1,093 billion.

The country witnessed a significant increase in public debt during the last fiscal year, with the overall debt size rising by over NPR 200 billion. At the end of the previous year, the public debt stood at NPR 2,012 billion, indicating a substantial escalation in just one fiscal year. The increase in public debt during this period was mainly driven by a rise in both internal and external loans.

The internal loan surged by NPR 140 billion, reaching NPR 1,100 billion, while the external loan skyrocketed by NPR 675 billion, reaching NPR 1,093 billion. This substantial increment in debt poses serious financial challenges for the nation.

Alarming observations are made when comparing the principal and interest liabilities of the public debt to the country's capital expenditure. In the fiscal year 2022-23, Nepal's capital expenditure was around NPR 233 billion and 690 million. Shockingly, the government's payment last year for the principal and interest of the public debt came close to the country's development expenditure.

During the same fiscal year, the government spent a staggering NPR 222 billion 742 million and 100 thousand to pay off the principal and interest of the public debt. Out of this amount, NPR 179 billion 725 million and 300 thousand were allocated to service the principal and interest of internal loans, while NPR 43 billion 16 million and 800 thousand were utilized to service the principal and interest of external loans.

The increasing burden of servicing public debt raises concerns about the country's financial stability and ability to finance essential development projects and welfare initiatives. The government must prioritize prudent fiscal management and explore strategies to reduce reliance on external borrowing while also enhancing revenue generation to address the growing debt burden. Failure to do so may lead to detrimental consequences for Nepal's economic growth and long-term sustainability.