KATHMANDU: According to a report published by the Public Debt Management Office, the government has spent nearly one-fifth of its revised annual budget on servicing public debt in the first 11 months of the current fiscal year 2024/25.
By the end of Jestha (mid-June), the government paid a total of Rs 329.60 billion in principal and interest on both domestic and external debt. This amount accounts for 19.46 percent of the revised budget of Rs 1.692 trillion for the ongoing fiscal year.
Public debt includes liabilities raised through internal and external borrowing and the corresponding obligations created from it. According to the office, this repayment consists of Rs 266.65 billion paid in principal and Rs 62.95 billion paid in interest over the 11-month period.
Within the total repayment, domestic debt repayment remains the dominant portion. The government repaid Rs 223.36 billion in domestic loan principal and Rs 54.37 billion in interest.
In terms of external debt, Rs 43.30 billion was repaid as principal, while Rs 8.58 billion went toward interest payments. These repayments together amount to 5.4 percent of the national gross domestic product (GDP), indicating the rising fiscal pressure posed by the country’s growing public debt.
The Ministry of Finance had allocated a total of Rs 402.85 billion for debt servicing for the entire fiscal year. Of that amount, 81.82 percent had already been spent by the end of Jestha. The remaining debt servicing budget stands at around Rs 73.24 billion.
According to the Public Debt Management Office, Nepal added over Rs 220 billion in new public debt during the same 11-month period, bringing the country’s total outstanding public debt to Rs 2.654 trillion. This figure represents a sharp rise from Rs 2.434 trillion recorded at the end of the last fiscal year.
The trend of high borrowing and rising debt servicing costs signals growing fiscal stress, especially as nearly one-fifth of the national budget is now being consumed by loan repayments. With one month still remaining in the fiscal year, the government will be under pressure to balance remaining expenditures alongside this significant debt burden.
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