KATHMANDU: The government is set to pay Rs 15.57 billion in interest to 13 foreign creditors, including bilateral and multilateral lenders, in the upcoming fiscal year 2025/26.
According to the “Integrated Expenditure and Financial Budget Estimates” prepared by the Ministry of Finance, Rs 11.71 billion will be paid to eight multilateral creditors while Rs 3.86 billion will be paid to four bilateral lenders. This interest payment on foreign debt will place a significant burden on the federal consolidated fund.
In addition to foreign debt interest, the government will pay nearly six times more on domestic debt interest, amounting to Rs 92.96 billion.
The Public Debt Management Office reports that as of the end of April, Nepal’s total public debt reached Rs 2.622 trillion. Of this amount, Rs 1.266 trillion is domestic debt, and Rs 1.355 trillion is external debt. The total public debt represents 42.94 percent of Nepal’s Gross Domestic Product (GDP).
The government’s budget estimates detail the interest payments to be made to various foreign creditors in the next fiscal year. Below is a summary of interest payments by major donors:
| Donor Institution | Interest Payment (Rs) |
| Asian Development Bank (ADB) | 5,000,000,000 |
| International Development Association (IDA) | 6,000,000,000 |
| OPEC Fund | 200,000,000 |
| European Economic Community | 10,000,000 |
| International Fund for Agricultural Development (IFAD) | 120,000,000 |
| Nordic Development Fund | 31,500,000 |
| European Investment Bank (EIB) | 130,000,000 |
| Asian Infrastructure Investment Bank (AIIB) | 220,000,000 |
| Japan (Bilateral) | 148,000,000 |
| Kuwait (Bilateral) | 130,000,000 |
| Saudi Fund for Development (Bilateral) | 65,000,000 |
| France (Bilateral) | 20,000,000 |
No detailed interest payment figures for the International Monetary Fund (IMF) have been included in the budget estimates.
The government projects a total budget size of Rs 1.964 trillion for fiscal year 2025/26. Expected revenues from taxes amount to Rs 1.315 trillion and foreign grants Rs 53.45 billion, creating a budget shortfall of Rs 595.66 billion.
To fill this deficit, the government plans to borrow Rs 233 billion externally and Rs 362 billion domestically.
Interest payments on public debt have consistently increased in recent years. In FY 2019/20, interest payments grew by 25.81 percent, followed by increases of 32.90 percent in FY 2020/21, 30.01 percent in FY 2021/22, a significant 61.63 percent in FY 2022/23, and 12.71 percent in FY 2023/24.
This rise has been driven primarily by increased domestic borrowing combined with steady or rising interest rates.
As of the end of April this fiscal year, the government has borrowed Rs 390.83 billion — Rs 301.14 billion from domestic sources and Rs 89.68 billion from foreign lenders. During the same period, repayments totaled Rs 381.14 billion, which includes Rs 50.33 billion in domestic interest and Rs 7.09 billion in foreign interest.
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