Kathmandu: Office of the Auditor General has advised the government to use public debt only for projects that generate high returns, strengthen infrastructure and productive sectors, and create employment opportunities.
The recommendation was made in the Auditor General’s 63rd annual report, which stresses the need for stricter standards in public debt management.
“The government should establish clear criteria to ensure public borrowing is used only for projects and programs that contribute to long-term capital formation, deliver high returns, support infrastructure and productive sectors, and generate employment,” the report states. “Before accepting loans for projects, there should be a comprehensive evaluation of cost-benefit analysis, expected outcomes, potential risks, and repayment capacity.”
The report also highlighted the growing financial risks associated with fluctuations in foreign exchange rates. It recommended adopting risk management tools, including hedging mechanisms, to reduce the potential burden created by rising foreign currency liabilities.
In addition, the Auditor General suggested the government identify idle or low-yield funds held by state-run entities such as boards, councils, committees, and special funds. According to the report, mobilizing such resources more effectively through internal borrowing could help lower financing costs and improve returns.
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