KATHMANDU: Nepal’s total public debt has climbed close to the Rs 3 trillion mark, reaching Rs 2.96 trillion by mid-June of the current fiscal year 2025/26, according to the latest report of the Public Debt Management Office.
The report shows that Nepal’s total public debt stood at Rs 2.961 trillion as of the end of Jestha, an increase of Rs 287.14 billion compared to the beginning of the fiscal year.
Of the total increase, approximately Rs 117.25 billion was added during the past three months following the formation of the government led by Prime Minister Balen Shah.
Debt reaches nearly 45 percent of GDP
According to the report, Nepal’s total public debt now accounts for 44.87 percent of the country’s Gross Domestic Product (GDP).
External debt constitutes 53.49 percent of the total debt stock, amounting to Rs 1.58 trillion, while domestic debt accounts for 46.51 percent, or Rs 1.37 trillion.
External borrowing falls short of target
The government had set a target of mobilizing Rs 595.66 billion in loans during the current fiscal year. However, by the end of Jestha, only Rs 418.12 billion, or 70.20 percent of the target, had been secured.
While domestic borrowing achieved 93.55 percent of its target, external loan mobilization remained significantly below expectations at just 34.01 percent.
Of the total borrowing secured during the review period, domestic loans accounted for 81 percent, while foreign loans made up only 19 percent.
Currency depreciation increases debt burden
The Public Debt Management Office noted that fluctuations in exchange rates have significantly increased Nepal’s foreign debt obligations.
According to the report, depreciation of the Nepali currency alone added Rs 153.47 billion to the country’s debt burden by the end of Jestha.
The exchange rate impact accounted for 53.45 percent of the overall increase in public debt during the review period.
Government spends over Rs 351 billion on debt servicing
As public debt continues to rise, debt servicing costs have also increased substantially.
The government spent a total of Rs 351.74 billion on principal and interest payments during the first 11 months of the current fiscal year.
Of that amount, Rs 229.60 billion was used to repay domestic debt principal, while Rs 55.61 billion was spent on interest payments for domestic loans.
Similarly, the government paid Rs 54.84 billion in principal and Rs 11.67 billion in interest on external loans during the same period.
The figures highlight growing pressure on public finances as Nepal faces challenges in mobilizing foreign loans while managing rising debt-servicing obligations.
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