Kathmandu. FY 2082. In the first 11 months of ’83, the Nepali rupee depreciated sharply compared to the US dollar and the Special Drawing Rights (SDR). It has suffered a loss of Rs 153.48 billion. <\/p>\n
According to the exchange rate schedule published by Nepal Rastra Bank, the Nepali rupee has depreciated by 9.8 percent against the US dollar in the last 11 months.\u00a0Nepal’s foreign debt liabilities and debt service expenses, principal and interest payments have increased significantly till mid-June despite not taking additional foreign loans due to the devaluation of the Nepali currency. <\/p>\n
Supply chains around the world have been negatively impacted by the continued attacks on Iran under the leadership of the US and Israel in the Middle East and the Gulf. The prices of goods and services have become expensive. The partial disruption of fuel supplies has had a cascading effect on the global economy. U.S. President Donald Trump’s higher tariffs on international trade have also contributed to higher prices of goods and services. All these factors have led to the weakening of the purchasing power of the Nepali currency and the strengthening of the US dollar. <\/p>\n
According to the data published in the monthly bulletin published by the Ministry of Finance, 90.84 percent of the outstanding foreign loans are from multilateral agencies such as World Bank, Asian Development Bank and the remaining 9.16 percent are bilateral loans (JICA, China, Belgium, etc.). <\/p>\n
Of the total foreign debt of Nepal, special rights (SDR) and dollar denominated accounts are 92.55 percent. When the value of the dollar rises, the government has to spend more Nepali rupees to pay the same amount of dollars, which is why the debt repayment cost in the budget is constantly increasing. When the dollar becomes expensive, the price of imported goods increases and puts pressure on the balance of payment situation and foreign exchange reserves. <\/p>\n
Rising public debt and the strengthening of the dollar have both short-term and long-term implications for citizens’ daily lives. Since Nepal is an import-based economy, the cost of fuel, food, medicines and consumer goods increases when the dollar becomes expensive. In the first 11 months of the last fiscal year, 26.1 percent of the total government expenditure was spent on paying the principal and interest of the loans. As a result, the budget allocated for development projects such as roads, drinking water, education and health has decreased. <\/p>\n
The government’s emphasis on development bonds (73.7 percent) to raise domestic debt could drain liquidity in financial markets, making bank interest rates more expensive for the private sector. <\/p>\n
In order to pay the principal interest on the loan, the government will have to increase the rates of customs duty, VAT or direct tax in the future. The state lacks resources to expand senior citizen allowances, health insurance and programmes targeting the poor as a large chunk of the budget goes towards debt repayment. Not only this, more money will have to be spent to buy foreign currency for citizens going abroad for foreign studies, travel and treatment. <\/p>\n
There is no immediate debt crisis as foreign loans are very concessional, very low interest rates and repayment period of 30 to 40 years. Nepal is still in the low-risk category by international standards as the ratio of public debt to GDP is around 45 percent. <\/p>\n
The main question is where the loan is being spent. If you borrow money to cover current expenses or spend on unproductive projects, it will not create capital and can cripple the economy in the long run.\u00a0 The decline of 12 percent in the receipt of foreign aid to Rs 102.35 billion in the current fiscal year shows that the mobilization of foreign aid and loans has become weak.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. FY 2082. In the first 11 months of ’83, the Nepali rupee depreciated sharply compared to the US dollar and the Special Drawing Rights (SDR). It has suffered a loss of Rs 153.48 billion. According to the exchange rate schedule published by Nepal Rastra Bank, the Nepali rupee has depreciated by 9.8 percent against […]<\/p>\n","protected":false},"author":5,"featured_media":228719,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45031,45060,45159],"tags":[],"class_list":["post-308588","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banner-news-en","category-corporate-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/308588","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=308588"}],"version-history":[{"count":1,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/308588\/revisions"}],"predecessor-version":[{"id":308589,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/308588\/revisions\/308589"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/228719"}],"wp:attachment":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=308588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=308588"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=308588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}