Federal govt. allowed to borrow up to 5% of GDP in domestic debt for FY 2082/83
They may borrow up to 12% of the combined total of revenue received from federal revenue sharing and their own internal revenue sources during FY 2082/83.
KATHMANDU: The Federal Government of Nepal will be allowed to raise internal loans not exceeding 5% of the Gross Domestic Product (GDP) in the upcoming fiscal year 2082/83, according to the latest recommendation by the National Natural Resources and Fiscal Commission (NNRFC).
In its recommendation, the commission stated: “Considering Nepal’s macroeconomic status, estimated revenue and expenditure, and market liquidity, the government may raise internal loans up to 5% of the projected GDP for FY 2082/83. The borrowing should be aligned with national policies and plans and be used for projects that are prioritized under national pride projects, transformative initiatives, or categorized as first-priority projects in the medium-term expenditure framework. These projects must also demonstrate appropriate internal rates of return and net present value based on cost-benefit analysis.”
Provincial Governments Also Given Borrowing Limit
Provincial governments will also be allowed to mobilize internal debt within a set limit, provided that they establish the necessary structural and procedural frameworks.
They may borrow up to 12% of the combined total of revenue received from federal revenue sharing and their own internal revenue sources during FY 2082/83.
Such borrowing must receive prior approval from the federal government and be aligned with approved projects and plans.
Debt Ceiling for Local Governments
Similarly, local governments may also raise internal loans, provided the required structural and procedural systems are in place.
The ceiling has been set at 12% of the total revenue they receive from the federal and provincial revenue-sharing mechanisms, along with their own internal revenue.
The borrowing must support projects that are consistent with national, provincial, and local policies and development plans.
The NNRFC has made these recommendations to ensure fiscal discipline while enabling all levels of government to invest in essential development projects.
