Kathmandu, April 17: Nepal’s total public debt has exceeded Rs 29 trillion, reflecting a sharp rise in government borrowing and mounting pressure on the country’s fiscal health. According to the Public Debt Management Office, outstanding debt reached Rs 29.33 trillion by the end of the third quarter of the current fiscal year 2025/26 (mid-July to mid-April).
The total includes Rs 13.88 trillion in domestic debt and Rs 15.45 trillion in external liabilities. In just nine months, the government added Rs 348.15 billion in new debt, achieving 58.45 percent of its annual borrowing target of Rs 595 billion.
Currency fluctuations have further worsened the burden. Depreciation of the Nepali rupee increased external debt liabilities by Rs 115.75 billion during the review period. As a result, public debt has grown rapidly from Rs 26.74 trillion at the end of the last fiscal year to nearly Rs 29.5 trillion now.
On a per capita basis, each Nepali now carries a public debt burden of Rs 100,594, based on the latest census population of 29.16 million. External debt accounts for 52.69 percent of the total, while domestic borrowing makes up 47.31 percent.
Public debt has reached 48.04 percent of Nepal’s Gross Domestic Product (GDP), with domestic debt at 22.73 percent and external debt at 25.31 percent.
During the first nine months, the government raised Rs 283.66 billion in domestic loans against a target of Rs 362 billion, and Rs 64.48 billion in external loans compared to a target of Rs 233.66 billion. This translates to 78.36 percent achievement in domestic borrowing and only 27.60 percent in external loans.
Debt servicing costs are also rising. The government spent Rs 258.44 billion on principal and interest payments during the review period, accounting for 62.88 percent of the annual allocation. This includes Rs 163.77 billion in domestic principal repayment, Rs 45.60 billion in interest payments, Rs 40.39 billion in external principal, and Rs 8.67 billion in external interest.
Experts warn that Nepal is entering a “debt trap,” where new borrowing is increasingly used to repay existing obligations rather than fund productive investments. Weak revenue mobilization has compounded the problem, with government income barely sufficient to cover recurrent expenditure, leaving capital spending heavily reliant on loans.
Economists argue that debt should ideally finance productive sectors that generate returns. However, much of Nepal’s borrowing has been directed toward less productive uses. They stress the need for targeted investment in projects that can deliver economic returns and boost revenue.
Public debt has nearly doubled in the past seven years, rising from Rs 14.33 trillion in fiscal year 2019/20. The debt-to-GDP ratio has also climbed from 38.05 percent to over 48 percent in the same period.
Analysts recommend linking domestic borrowing to specific projects to ensure returns and improve transparency. They also urge the government to expedite the completion of major national pride projects so that economic benefits can begin to offset rising debt obligations.
People’s News Monitoring Service
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