Kathmandu. Vice Chairman of the National Planning Commission, Prof. Dr. Shivaraj Adhikari, has said that external debt burden poses a risk to the achievement of sustainable development goals and has pointed out the need for immediate reform in the financial system.
Speaking at a national consultation program organized in Kathmandu in the context of the Fourth International Conference on ‘Finance for Development’ to be held in Seville, Spain from Ashad 16 to 19, Vice Chairman Adhikari said this.
He said that immediate reform in the financial system is necessary as the increasing burden of external debt in developing countries has affected social development programs. He informed that governments in developing and emerging countries around the world are spending more money on debt service than on the health and education of their citizens.
Also, those countries are spending more than 10 percent of their total revenue on interest payments, indicating that more is being spent on debt service than on health and education, and this is putting the development journey of developing and emerging countries, including Nepal, at risk.
He clarified that the current international financial system is not inclusive and equitable enough in terms of the real needs and priorities of developing and low-income countries.
He informed about the economic situation of Nepal, stating that a total of 111.84 trillion rupees will be invested during the 16th Plan period, of which 30.2 percent from the public sector, 30.2 percent from the private sector, He claimed that 67.2 percent investment will be required from the sector, and 2.6 percent from the cooperative sector.
Nepal reported that it is estimated that about 21.165 trillion rupees (annual average: 30.23 trillion rupees) of investment will be required for the implementation of the Sustainable Development Goals from 2024 to 2030.
Also, there will be an average fiscal gap of 755 billion rupees (11.1 percent of the gross domestic product on average) during the period from 2024 to 30, and out of this, the annual average fiscal gap in the public sector is estimated to be 426 billion rupees and the fiscal gap for the private sector is 329 billion rupees, so the largest fiscal gap is seen in infrastructure, sustainable cities, education, health, and water and sanitation, according to the goals. .
Vice President Adhikari noted that while the Sustainable Development Goals are an important agenda that has been agreed upon globally, the lack of local needs and priorities in developing and emerging countries during the implementation of those goals will affect external debt.
He said, ‘The lack of financial resources required for the implementation of SDGs (Sustainable Development Goals) is the main challenge for developing and low-income countries, and debt is becoming the main means to raise the necessary financial resources for the implementation of SDGs. However, as the use of this debt is focused on achieving global goals rather than local priorities, investment in services such as education, health, employment, and drinking water is decreasing in developing and low-income countries. Due to investment focused on such global goals, the limited resources of the state cannot be used in areas related to the real living standards of the people, which leads to social inequality and regional imbalances. .’
He stressed the need for balanced management and transparent use of debt, respect for local priorities, and the creation of an inclusive financial system, saying that it is essential to adopt local priority-based planning for sustainable, equitable and effective development in developing countries.
He said that while credit flows to support global development agendas, its structures and terms and conditions ignore local needs and empowerment in developing and low-income countries. He called for a review of the current international financial development model, saying that the process of achieving the Sustainable Development Goals should not be weak and uneven.
He said that new thinking, new structures, and a reimagining of the international financial system that is locally friendly for developing and low-income countries are needed to achieve the Sustainable Development Goals. He also informed that Nepal is preparing to raise its voice in favor of debt justice and local needs-oriented development models in international forums.
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