Introduction to Nepal’s Economic Collapse
The recent cessation of financial assistance by the US government has had catastrophic effects on Nepal’s economy. President Donald Trump’s decision to halt nearly Rs 95 billion in aid programs has left the Nepalese government struggling to maintain basic services, particularly in the areas of health, education, and agriculture.
Rising Public Debt in Nepal
As the financial situation deteriorates, Nepal finds itself in a crucial predicament with the rapid increase in public debt. According to the latest reports, the country’s public debt surged from Rs 24.034 lakh crore in July last year to Rs 26.011 lakh crore by February. This alarming rise signifies a jump to 45.77 percent of Nepal’s GDP, a drastic increase from 22 percent just a decade ago.
Government Response and Future Challenges
In an attempt to address the economic fallout, the government has reduced its budget by approximately ten percent, reflecting the dire lack of resources. Furthermore, a target to raise public debt of Rs 5 trillion 47 billion this financial year has been set, but only Rs 4 trillion 2 billion has been allocated for repayment. Experts have warned that the rising debt levels pose significant challenges to the economy. Dr. Thakur Prasad Bhatt, a governance expert, emphasizes that inefficiencies in loan utilization only exacerbate the crisis.
