-ANI): Nepali government has initiated the process of forming a Debt Management Office, which will be tasked with better managing public debt service operations, conducting market and risk analysis on debt and creating consolidated reports on public debt by coordinating with other government agencies.
"This unit will be a branch of a separate division which will be created by splitting the Economic Operations and Policy Analysis Division (EOPAD) at the Ministry of Finance," EOPAD Chief Baikuntha Aryal told Wednesday's Republica daily.
Although many are considering the unit to share the work of Nepal Rastra Bank (NRB), the central bank of the country, in issuing domestic bonds, Aryal flatly refuted such rumors.
"Its main responsibility will be to design debt management strategy and risk monitoring mechanism, compile statistics on debt and establish a network with other government bodies and departments that are doing similar work," he said, stressing,"NRB will continue to remain issue manager of government bonds."
Aryal, however, said the work is still in initial stage and more research is needed before the concept is finalized.
One of the reasons for opening a different debt management office is the government's traditional approach toward credit management despite continuous rise in debt burden which topped 18, 867 Nepali rupees (238 U.S. dollars) per person at the end of last fiscal year ended in mid-July.
Although the figure may startle many in a country where per capita income is 742 dollars, debt is an integral component that supports the government's deficit financing-a means that covers various state expenses and allows the government to conduct development activities. Without this, no country can run its economy smoothly - albeit governments should be careful not to imitate practices of few European countries, like Greece, which are facing sovereign debt crisis due to over borrowing.
Nepal, which raised its first debt from domestic and foreign sources in 1961/62, also borrows frequently from local market by issuing bonds and treasury bills, and from foreign governments and agencies, like the World Bank and the Asian Development Bank. (Xinhua-ANI)