The NEPSE Journal
Market commentary, data deep-dives, and trading notes from the NEPSE Trading desk.
Nepal’s debt profile is shifting rapidly — development bonds rose Rs. 40 billion, overtaking treasury bills, which dropped Rs. 27 billion in one month. The trend reflects a government strategy toward longer-term borrowing and reduced rollover risk but could raise long-term fiscal pressure.
Nepal’s domestic debt increased by Rs. 12.9 billion in a month, hitting Rs. 1.27 trillion, as the government leaned on long-term development bonds while cutting back on treasury bills. The shift helps stabilize short-term pressures but highlights ongoing fiscal dependence.
Commercial banks now hold over Rs. 1.02 trillion of Nepal’s domestic debt, highlighting both fiscal dependence and potential private-sector crowding-out risks. While safe for banks, the trend underscores growing pressure on liquidity and market-driven interest rates.
NRB slashed its domestic debt holdings by Rs. 53.8B in mid-Aug 2025/26, signaling a fiscal shift that places the burden of financing on banks and institutions, reducing inflation risks but raising crowding-out concerns.
Nepal’s development bonds rose to Rs. 913.7B in mid-August 2025/26, with commercial banks holding the lion’s share. The shift from T-bills to bonds reduces short-term pressure but raises long-term interest risks.
Nepal’s treasury bills fell Rs. 27.1 billion in mid-August 2025/26, as the government shifted borrowing preference to long-term development bonds, easing short-term refinancing pressure but potentially raising future debt costs.
Nepal’s domestic debt hit Rs. 1.27 trillion in mid-August 2025/26, driven largely by development bonds (+Rs. 40B), while treasury bills declined. Commercial banks remain the biggest financiers of government borrowing.
Nepal collected Rs. 84.7B in revenue in the first month of FY 2025/26, down 10.5% year-on-year. VAT and excise supported collections, but income tax and non-tax revenue declines show a mixed fiscal outlook.
Excise tax revenue surged 14.8% to Rs. 13.9B in the first month of FY 2025/26, driven by alcohol, tobacco, and import-related duties. Its share in total revenue has expanded to 16.3%, but dependency on such sources may pose future risks.
Nepal’s income tax revenue slipped 1.8% in 2025/26, marking the first decline in years. Weak corporate profits, informal sector growth, and inflationary pressure are key drivers behind the drop.