Impact of Foreign Debt in Nepalese Economy: Based on Empirical Evidence
-Mr. Ram Chandra Rupakheti Generally, public debt is the debt that the government has raised from internal and external sources which is a major method of government financing. The aim of external borrowing is that the fund should be utilized properly in the productive sectors so that the country’s economy boosts up with the enhancing investment, with a good position exchange rate and controlled inflation. The relationship between external debt and economic growth is long-term in nature. Emerging developing countries like Nigeria, Brazil, and South Africa are taking a huge amount of external debt to boost their economy. Some of the countries like Srilanka are facing a debt crisis anable to pay back the debt. There was a crowding-out effect on private investment due to external borrowing by the government to make it easily available. Some of the researchers found that external debt at a high-interest rate may create a crisis in the economy. Another reason for the deadlock of the economy from the external debt is the mis-utilization of the fund and improper planning and corruption. In this context, the adverse effect of foreign debt may occur in the economy. The impact of public debt on private investment in the context of the Srilankan perspective resulted in a long-term impact. The results show there was the crowding out effect of external debt on private investment in the long...
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