Government to Raise Additional Rs 10 Billion Through Development Bond

Kathmandu. The government is preparing to raise an additional Rs 10 billion in domestic borrowing through a seven-year Development Bond as part of its ongoing efforts to manage budgetary resources.

The Public Debt Management Office has announced that the auction for Development Bond 2090 will be conducted on Wednesday, with the bond scheduled for issuance the following day.

This will be the government’s third domestic borrowing initiative through development bonds since the beginning of the current fiscal year. Earlier, the government had already raised Rs 20 billion through two separate development bond issuances. With the latest issue, domestic borrowing through development bonds will reach Rs 30 billion in the first phase of the fiscal year.

The government has set a target of raising Rs 410 billion through domestic borrowing during the current fiscal year. Of this amount, Rs 300 billion is planned to be mobilized through development bonds, while the remaining amount will be raised through treasury bills, citizen saving bonds, and foreign employment saving bonds.

The interest rate for the seven-year development bond will not be fixed in advance. It will be determined through a competitive bidding process. Individuals and institutions participating in the auction will be able to submit competitive or non-competitive bids according to the prescribed system.

Meanwhile, Nepal’s total public debt has moved closer to the Rs 3 trillion mark. According to the Public Debt Management Office, total government debt reached Rs 2.97 trillion by the end of fiscal year 2082/83, increasing by nearly Rs 300 billion within one year.

Of the total debt, around Rs 1.6 trillion is external debt, while domestic debt stands at more than Rs 1.37 trillion. The rising dependence on domestic borrowing reflects the government’s growing reliance on internal sources for budget management as foreign loan mobilization remains below expectations.

With sufficient liquidity in the banking system, government bonds have increasingly become an attractive and relatively secure investment option for banks and institutional investors.

However, economists have cautioned that continued expansion of domestic borrowing could increase future debt servicing obligations and put additional pressure on government finances if not managed carefully.