Leveraging public debt for fiscal sustainability

As the constitution gives expenditure powers to the sub-national governments, public debt could be crucial for them to deliver development.

The Nepalese economy, which was slowly returning to normalcy in the aftermath of Covid-19, has been dealt a heavy blow by the ongoing liquidity crisis, supply disruptions created by the Ukraine War, depletion of foreign reserves, and rising interest rates and inflation. The nation has taken several measures to check the deterioration of economic indicators by restricting or banning certain imports, introducing a tighter monetary policy, and so forth. The tensions exhibited by the macroeconomic indicators could stretch into the foreseeable future if thought-through reforms are not brought about.