KATHMANDU, May 9: The government is raising Rs 86 billion in domestic debt in the last quarter of the current fiscal year – FY2018/19, departing from the practice of mobilizing internal loans in multiple phases by publishing calendar typically at the beginning of a fiscal year.
The government so far was shying away from going to the domestic market to collect debt in the current fiscal year amid poor spending of the budget and high interest rates. However, the Ministry of Finance on Wednesday gave its nod to the Nepal Rastra Bank (NRB) to raise Rs 86 billion from the domestic market to meet possible shortfall in financing of budget expenditures.
The central bank raises the domestic debt from the market on behalf of the government.
NRB unveils domestic borrowing calendar
The domestic debt that the government is raising is nearly half of what it has targeted in the current fiscal year. In the budget speech for the current fiscal year, Minister for Finance Yuba Raj Khatiwada had said that the government will raise Rs 172 billion in domestic borrowing to meet shortfall of resources to finance its expenditures.
The NRB will raise Rs 50 billion by issuing development bonds, while remaining Rs 36 billion will be mobilized by issuing Treasury Bills.
Ram Sharan Kharel, the economic advisor to Finance Minister Khatiwada, said that the finance ministry has decided to raise the debt in line with the government’s requirements for funds to finance its expenditures.
“Earlier, the government used to raise the domestic debt even when there was not much spending. However, the government did not raise the debt until now this time around as its treasury was in a comfortable position,” said Kharel. “As there will be more pressure on expenditures to make payments in the last quarter, we have to mobilize internal debt to manage the fund,” he added.
In the last fiscal year, the government had collected a total of 144.75 billion in domestic debt, 100 percent of the target set in the budget speech.
