Managing the Debt: An Assessment of Nepal's Public Debt Sustainability
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This paper examines the debt sustainability of Nepal. Unlike previous studies, in which macroeconomic variables were predicted independently, this debt sustainability analysis - in an attempt to present a more theoretically consistent analysis - is based on the predicted values of macroeconomic variables from the Nepal Macroeconometric Model. Given the current magnitude and structure of debt, Nepali public debt appears to be sustainable. This debt sustainability analysis shows that the debt-to-GDP ratio over the next 5 years will be stable at the current level. The stress test results indicate that the impacts of external shocks on the debt-to-GDP ratio are generally modest.
- Debt Sustainability Analysis