Nepal’s Public Debt Reaches 26.67 Trillion, Over 3.5 Trillion Borrowed by March 2025

Kathmandu, April 19, 2025: The Nepal government has borrowed over NPR 3.5 trillion in the first nine months of the fiscal year 2081/82 (2024/25) while spending more than NPR 2.5 trillion on principal and interest payments. According to a report by the Public Debt Management Office, the total public debt has reached NPR 26.67 trillion by the end of March 2025, up from NPR 24.34 trillion at the start of the fiscal year.

2.33 Trillion Debt Added in Nine Months

The report states that NPR 2.33 trillion in new debt was incurred in the first nine months. The total public debt comprises NPR 13.01 trillion in domestic debt and NPR 13.65 trillion in external debt. This debt accounts for 46.75% of Nepal’s Gross Domestic Product (GDP), with external debt constituting 51.19% and domestic debt 48.81% of the total.

67% of Debt Target Achieved

The government aimed to raise NPR 5.47 trillion in public debt this fiscal year, of which NPR 3.66 trillion (66.93%) was mobilized by March 2025. This includes NPR 2.91 trillion in domestic debt (88.22% of the target) and NPR 74.95 billion in external debt (34.54% of the target). The annual targets are NPR 3.3 trillion for domestic debt and NPR 2.17 trillion for external debt.

Over 2.5 Trillion Spent on Debt Servicing

By March 2025, NPR 2.52 trillion was spent on principal and interest payments, representing 62.67% of the annual budget allocation for debt servicing. Of this, NPR 1.70 trillion went toward domestic debt principal and NPR 42.84 billion toward interest. For external debt, NPR 32.93 billion was paid as principal and NPR 6.61 billion as interest. This expenditure accounts for 4.43% of GDP.

Currency Fluctuations Add 70 Billion to Debt

The Public Debt Management Office noted that fluctuations in foreign exchange rates added NPR 70.09 billion to the debt burden by March 2025. Nepal’s external debt is denominated in five foreign currencies under the Special Drawing Rights (SDR) framework: US Dollar, Euro, Pound Sterling, Chinese Yuan, and Japanese Yen. The rise in SDR exchange rates has further increased the external debt liability.

Challenges and Concerns

The continuously rising public debt and the growing expenditure on debt servicing are putting pressure on Nepal’s economy. Experts warn that the failure to utilize borrowed funds in productive sectors could pose risks to long-term economic stability. The government needs to focus on effective debt management and utilization in the coming days to address these challenges.