Per capita debt soars to 50 pc of income

Post Report

KATHMANDU, June 9 -The total foreign debt of Nepal by the end of third quarter of the current fiscal year has moved upward to mark Rs 200 billion.

According to the statistics prepared by the Ministry of Finance, along wiAth the ballooning total foreign debt, the per capita debt burden of Nepal has also surged considerably in the recent years touching Rs 9,100, which is almost 50 per cent of the estimated per capita income.

Despite the huge foreign debt burden, Nepal has not yet been included in the list of Highly Indebted Poor Countries (HIPCs), prepared by the World Bank and the International Monetary Fund. Furthermore, Nepal has been allocating a substantial portion of the annual budget for debt servicing. The problem of foreign debt servicing has further been aggravated by the continued depreciation of the Nepali currency against the dollar.

Concerned officials at the Foreign Aid Division at the Finance Ministry informed that the inflow of foreign loans in the current fiscal year has increased satisfactorily. The total foreign aid commitment alone in the first ten months of the current year has been around Rs 30 billion. The major cause of such an increase in the foreign aid commitment is due to the huge loan commitment of US $ 120 million from Asian Development Bank, a multilateral lending agency, for the proposed Melamchi Water Development Project. The committed loan amount of the ADB is only about 25 per cent of the total proposed cost of the project.

The swelling mismatch between the internal resources mobilization and total expenditure has been the prime cause for growing foreign loans. Weak internal revenue mobilization, which hardly covers 55 per cent of the total yearly expenditure, forces the government to look into the foreign loans to finance the much-needed development activities.

The government expenditure in the past few years is increasing more rapidly compared to the revenue collection, resulting a multi-fold increment in the foreign loans. The regular expenditure of the government, during the last decade has increased by over four fold, whereas the increment in revenue during the same period was far below. The total foreign loan during the same period has increased by almost three fold to touch Rs 178 billion in 1999/2000, from hardly Rs 60 billion in 1990/91.

Poor revenue mobilization accompanied by skyrocketing expenditure is also clearly reflected in the soaring budget deficit, which during the first nine months of the current fiscal year has scaled to Rs 8.3 billion. In order to bridge the budget deficit, the government, in the same period, has mobilized Rs 3.37 billion of foreign cash loan along with huge internal loans.

Furthermore, huge gap between the Gross Domestic Saving (GDS) and total investment is another cause for growing dependency on the foreign loans. During the last fiscal year, total investment was 21 per cent of the GDP, whereas the GDS was just over 13 per cent. The existing saving-investment gap is being bridged by foreign loans and grants.

Though experts have expressed deep concern over the soaring dependency of foreign loans to finance larger portion of the development expenditure, concerned government officials argue the present foreign loan burden is not much worrisome since almost all the loans are long term in nature carrying nominal interest rates.

Of the total budgeted expenditure of Rs 91.62 billion for the current fiscal year, over Rs 31.62 billion has been proposed to be met through foreign loans and grants, which is 34 per cent of the total expenditure and 65 per cent of the total proposed development expenditure.

Enterprises felicitate HM

Post Report

KATHMANDU, June 9 - Messages of greetings upon the accession of His Majesty King Gyanendra Bir Bikram Shah Dev to the throne are steadily pouring in from various business organizations.

Garment Association of Nepal (GAN) issuing a press release, has extended its sincere felicitations upon the accession of His Majesty King Gyanendra Bir Bikram Shah Dev to the throne. It has also expected that current pace of social and economic development of Nepal would be accelerated during the reign of His Majesty King Gyanendra.

Similarly, a meeting of executive committee of Nepal German Chamber of Commerce and Industry has greeted His Majesty King Gyanandra Bir Bikram Shah Dev upon the accession to the throne and has wished for the successful reign of His Majesty the King .

A press release issued by the Trekking Agents’ Association of Nepal has extended its sincere felicitations to His Majesty King Gyanandra Bir Bikram Shah Dev on the accession of the throne, as well.

In the like manner, Nepal Foreign Employment Entrepre-neurs Association has also issued a press release greeting His Majesty King Gyanendra Bir Bikram Shah Dev upon the accession to the throne.