Dr. Yuba Raj Khatiwada, Economic Advisor to Prime Minister KP Sharma Oli, has underscored the need to link internal borrowing to specific development projects to ensure transparency and accountability in public spending.

Speaking at a programme in Kathmandu on Sunday, May 4, Khatiwada said while internal loans were previously allocated by sector during his tenure as finance minister, such a broad approach is no longer sufficient. Going forward, he stressed, loans must be explicitly tied to well-defined projects.

“Our current revenue is insufficient even to cover recurrent expenditures,” Khatiwada said. “To drive development and sustain a 6–7% economic growth rate, borrowing is not just an option—it is a necessity. Every finance minister faces the unavoidable task of borrowing to achieve more than 5 percent growth.”

He also cautioned against arbitrary budget cuts. “There’s a growing trend of slashing the budget by Rs 250–300 billion, which runs counter to the intent of the Appropriation Act. A reduction of up to 10 percent may be acceptable, but anything beyond that is neither legally sound nor economically prudent,” he warned.

Khatiwada noted that the government’s proposed bill to establish a fund for alternative financing reflects this shift toward project-specific borrowing and improved fiscal discipline.