IDEAS home Printed from
   My bibliography  Save this article

An Assessment of the Impact of External Debt on Economic Growth of Nepal


  • Gunakar Bhatta

    (Nepal Rastra Bank)


Countries at early stages of development have small stocks of capital and require foreign borrowing for their investment needs and meet their external resource gap. Nepal's dependence on foreign assistance, nearly for the last five decades, can be viewed from the same perspective. The present article is a preliminary work in the direction of analyzing the relationship of external debt and economic growth of Nepal. The examination of debt burden indicators suggests the increasing burden of external debt, with a significant increase in the size and magnitude of such debt during 1990s. The empirical observation shows the external debt flow having positive effect on economic growth. This indicates that external debt should not be viewed only as a burden but also as a major source of financing for a developing economy like Nepal. However, the analysis of external debt stock and debt servicing shows that the equally important that external borrowing be made to supplement but not replace domestic savings in the long run.

Suggested Citation

  • Gunakar Bhatta, 2003. "An Assessment of the Impact of External Debt on Economic Growth of Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 15, pages 243-262, April.
  • Handle: RePEc:nrb:journl:v:15:y:2003:p:243-262

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nrb:journl:v:15:y:2003:p:243-262. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dr. Bishnu Prasad Gautam). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.