The Nepali government is considering amending the Public Debt Management Act to allow the issuance of government debt instruments in foreign currency. This move aims to enable the government to raise funds from international capital markets to address the country’s increasing financial requirements.
If the draft amendment is approved, the Public Debt Management Office could issue government securities in domestic or foreign currency, making them accessible to both local and foreign investors. This step marks a departure from Nepal’s traditional reliance on external loans from organizations like the World Bank and the Asian Development Bank.
The proposed change is part of an effort to diversify Nepal’s sources of financing and reduce its dependence on concessional loans. By tapping into international markets for debt, the government seeks to manage its debt portfolio more effectively and optimize borrowing costs.
In recent years, Nepal has seen a significant portion of its public debt being serviced through domestic borrowing, which has proven to be more costly due to higher interest rates and shorter repayment periods. The amendment, if implemented, could potentially rebalance the country’s debt structure and enhance its financial sustainability.
