Parliament Passes Public Debt Bill 2025 Amid Budget Debate

The Public Debt Bill, 2082 (2025) has been passed by a majority in the House of Representatives.

Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel introduced the bill, emphasizing the necessity of borrowing to boost production, increase productivity, and fulfill national development goals.

During the discussion, Minister Paudel clarified that the debt would not be used for general expenditures but rather for capital investments. He acknowledged suggestions from lawmakers to avoid borrowing for recurrent expenses.

“Debt is necessary to increase production and productivity,” said Minister Paudel. “In both the current and upcoming fiscal budgets, the share of domestic revenue to fund expenditures has increased, while the portion covered by loans has decreased.”

He also pointed out that a significant amount of the previous borrowings were spent on interest and principal repayments.

Concerns Raised by Lawmakers

Former Finance Minister and Member of Parliament Dr. Prakash Sharan Mahat expressed serious concern over the rising volume of public debt, especially since a large portion fails to contribute to capital formation.

“Every year, internal debt is increasing,” said Dr. Mahat. “The government must clearly justify whether loans are needed for capital or recurrent expenses. Borrowing to manage general expenses is unsustainable.”

Dr. Mahat highlighted that a significant share of domestic loans is currently being used for salaries and allowances through the budget. He stressed the need to curb such practices.

He also warned that while internal borrowing from banks and financial institutions might not cause immediate issues due to current liquidity, the situation could worsen in the future. If liquidity dries up, it may hinder investments in other sectors and increase interest rates.

He recommended exploring alternative sources like bonds to raise internal debt more sustainably.

Additional Views

Another lawmaker, Hit Raj Pandey, criticized the government for failing to utilize debt for capital formation.

“We are spending borrowed money on general expenses. That needs to shift towards capital expenditure that boosts production,” Pandey argued.

He proposed that loans should only be taken for projects with clear returns and stressed the importance of using public loans in sectors like mineral exploration and processing.

Madhav Sapkota, another Member of Parliament, emphasized increasing domestic production and capital expenditure. He stressed that any borrowing must be based on the country’s current economic condition and that the government should clearly define its purpose for taking loans.

Outcome of the Session

All amendment proposals made to the Public Debt Bill, 2082 were rejected by a majority vote. The bill was then passed by the House of Representatives.