Mounting Debt: Nepal must shift to production and exports

Nepal's rising public debt is hard to ignore as the rupee just hit a record low versus the US dollar, which is putting a strain on the government finances. On January 25, the Nepal Rastra Bank set the exchange rate at Rs 147.41 per dollar. That's about a Rs 10 drop in value over the last six months. This drop matches the Indian rupee's struggles since Nepal's money is pegged to it. India's market isn't doing fine, as money is flowing out and rising prices are up along with the rise in the US Treasury yields, which has made the dollar stronger all across the globe. For Nepal, which borrows money from other countries, the falling rupee means it costs more to pay back debts, making the country’s finances riskier. The Public Debt Management Office says Nepal's debt hit Rs 28.06 trillion in mid-January. It was Rs 26.74 trillion at the end of last year. Money borrowed from inside the country is at Rs 13.19 trillion, but debt from other countries is at Rs 14.87 trillion. This is the first-time in recent years that foreign debt has been higher than domestic borrowing. In the first part of the year. The government borrowed Rs 214.55 billion and spent Rs 152.89 billion on debt payments. The drop in the rupee's value alone added Rs 70.68 billion to what Nepal owes, which shows how much exchange rates mess with Nepal's financial situation.