Govt raises internal loan of Rs. 56 billion in six months

By Laxman Kafle,Kathmandu, Feb. 15: The government has raised a total internal loan of Rs. 56.45 billion in six months of the current fiscal year 2022/23.

According to the half-yearly review report of the budget for the current fiscal year recently released by the Ministry of Finance, the government raised Rs. 30 billion domestic borrowing and Rs. 26.45 billion in foreign loan till mid-January, 2023.

The government had set a target of financing Rs. 242.26 billion from foreign loans and Rs. 256 billion from domestic borrowing to cover the deficit in the annual budget.

In the mid-term of the current fiscal year, the revenue mobilisation is less than target and the expenditure is higher than the revenue, so the internal debt mobilization has increased slightly compared to the last fiscal year to manage the resources, the Ministry said.

Internal and external debt mobilisations are the main sources of expenditure for the implementation of the government's annual policies and programmes.

For the current fiscal year, the government had set a target of raising domestic debt of about Rs. 256 billion. Of this, the government planned to manage resources of 14.3 per cent of the annual budget.

But the government has raised only Rs. 30 billion domestic borrowing by the first six months of the current fiscal year. Such mobilisation was Rs. 6 billion during the first six months of the last fiscal year.

During this period, among the domestic borrowing taken by the federal government, one-year treasury bills worth Rs. 15 billion, two-year development bonds worth Rs. 8 billion, three-year development bonds worth Rs. 2 billion and 4-year development bonds of Rs. 5 billion have been issued.

During the review period, a total of Rs. 83.03 billion, including principal Rs.  49.42 billion and interest Rs. 33.61 billion of domestic borrowing, has been paid by the government.

Similarly, the government has paid a total of Rs. 18.85 billion, including Rs. 14.62 billion principal and Rs. 4.22 billion interest of foreign loans during the review period, according to the Ministry.

The government had planned to receive foreign grant equal to Rs. 55.46 billion and foreign loan equal to Rs. 242.26 billion for the current fiscal year.

As of mid-January, the actual receipt of foreign grants received by the government is Rs. 8.11 billion and the total foreign loan is equal to Rs. 26.46 billion.

However, according to the Ministry of Finance, various donor agencies have made commitments of grants equal to Rs. 23.12 billion and concessional loans of Rs. 114 billion.

According to the Ministry of Finance, the implementation of development infrastructure projects could not be effective, so foreign grants and loans could not be taken as per the target.

"Due to weak project management and the slowness of contractors, there has been a slowdown in the implementation of projects supported by foreign aid. As the capital expenditure has decreased, the impact has been on the direct impact in fund release by the development partners. And foreign aid mobilisation has decreased during the review period," said the half-yearly review report of the budget. 

Reviewing the mid-term of the budget for the current fiscal year, the government has reduced the size of budget by Rs. 244 billion.

The new government has reduced the size of the budget by 14 per cent.

Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel reduced the size of the current fiscal year's budget to Rs. 1,549 billion. The then finance minister Janardan Sharma had presented a budget of Rs. 1,793 billion.