Government Borrowing or Public Debt of Nepal
Government Borrowing or Public Debt Government borrowing refers to the process by which a government raises funds to finance its expenditures when its revenue, primarily from taxes, is insufficient to cover spending. It involves borrowing money from domestic or international sources, typically by issuing government securities (treasury bills for short-term, government bonds for long-term) or direct loans. Reason for Government Borrowing 1. Budget Deficit: To bridge the gap between revenue and expenditure. 2. Public investments: To finance large-scale infrastructure. 3. Economic stimulus: To boost the economy during the recession by raising public spending. 4. Emerging Funding: To address urgent needs such as natural disasters like floods and earthquakes; pandemics like COVID-19; or military conflicts. 5. To Control Inflation: To reduce purchasing power, the government issues public loans. Sources of Government Borrowing 1. Internal Borrowing: D...