KATHMANDU: The government has raised over Rs 366 billion in debt during the first nine months of the current fiscal year 2024/25, bringing the country’s total outstanding public debt to Rs 2.67 trillion by March.
The figure was revealed in the latest public debt report published by the Public Debt Management Office.
At the start of the fiscal year, Nepal’s total public debt stood at Rs 2.43 trillion 49 billion. With an addition of Rs 2.33 trillion in new borrowing over the past nine months, the total debt liability has now reached Rs 2.67 trillion.
According to the report, the current public debt is 46.75 percent of the country’s Gross Domestic Product (GDP).
The composition of the debt shows that foreign loans account for 51.19 percent, while domestic loans make up 48.81 percent. Out of the total outstanding debt, Rs 1.3 trillion is internal debt, and Rs 1.3 trillion is external debt.
The government had set a target of raising Rs 5.47 trillion in debt for the current fiscal year. By March, 66.93 percent of this target has been met, with Rs 3.66 trillion raised so far.
Of this, Rs 2.91 trillion was generated through domestic borrowing, which is 88.22 percent of the annual internal debt target of Rs 3.30 trillion. In contrast, only Rs 74.95 billion has been raised in external loans, representing just 34.54 percent of the annual external debt target of Rs 2.17 trillion.
As borrowing has increased, so has the burden of repayment. The report states that by the third quarter of the fiscal year, the government has already spent more than Rs 252.48 billion in debt servicing, which includes the repayment of both principal and interest.
This is 62.67 percent of the total debt servicing budget of Rs 402.85 billion for the year. Based on GDP, the total debt servicing cost amounts to 4.43 percent.
Out of the total amount spent on debt servicing, Rs 212.93 billion has been paid towards domestic debt, including Rs 170.9 billion in principal and Rs 42.84 billion in interest.
Likewise, Rs 39.43 billion has been paid for external debt obligations, including Rs 32.93 billion for principal and Rs 6.61 billion for interest.
The report also highlights that the depreciation of the Nepali currency has added pressure on foreign debt.
By mid-April, exchange rate fluctuations have increased Nepal’s foreign debt liability by Rs 70.9 billion. Nepal borrows in five foreign currencies under the Special Drawing Right (SDR) mechanism, namely the US dollar, euro, pound sterling, Chinese yuan and Japanese yen.
The increase in SDR exchange rates this fiscal year has significantly impacted Nepal’s debt obligations.
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