SATV, Kathmandu, Apr. 28 - Nepal's public debt has surged to nearly Rs. 3 trillion by mid-April of the current fiscal year 2025/26, reflecting growing borrowing needs and the impact of currency depreciation.

According to the Public Debt Management Office under the Ministry of Finance, total public debt reached Rs. 2,933.79 billion, marking an increase of Rs. 259.75 billion in the first nine months of the fiscal year. 

This rise includes additional liabilities caused by exchange rate fluctuations, particularly the weakening of the Nepali currency against the US dollar.

Out of additional public debt of 259.75, Rs. 119.89 billion has been added under the domestic public debt and Rs. 139.85 billion under the external public debt.

At the beginning of the fiscal year, Nepal’s public debt stood at Rs. 2,674.04 billion. 

Of the current total debt, external debt accounts for Rs. 1,545.67 billion (52.69 per cent), while domestic debt stands at Rs. 1,388.11 billion (47.31 per cent).

During the review period, total outstanding debt increased by 9.72 per cent, with external debt rising by 10 per cent and domestic debt by 9.5 per cent. 

The country’s debt-to-GDP ratio has now reached 48.04 per cent, with external debt contributing 25.31 per cent and domestic debt 22.73 per cent.

Currency depreciation alone added Rs. 115.75 billion to the debt burden, highlighting Nepal’s vulnerability to foreign exchange risks.

58% of public debt target met 

The government has mobilised Rs. 348.15 billion in public debt by mid-April in the current fiscal year, achieving 58.45 per cent of its annual target. 

Progress figures show that more than half of the target has already been met. Out of the total public debt mobilisation, Rs. 283.66 billion has been raised under domestic debt and Rs. 64.48 billion under external debt.

At the start of the fiscal year, the government had set a target of raising a total of Rs. 595.66 billion in public debt loans to meet the budget deficit for the current fiscal year. 

Out of this, Rs. 362 billion is expected to be collected through domestic borrowing and Rs. 233.66 billion through external loans.

The pace of debt mobilisation varies between domestic and external sources. 

Domestic borrowing has reached 78.36 per cent of its annual target, indicating strong internal financing activity. In contrast, external borrowing stands at 27.60 per cent of its target.

In terms of composition, domestic debt dominates total public debt mobilisation so far, accounting for 81.48 per cent, while external debt contributes 18.52 per cent.

Burden of debt servicing

The government has utilised 62.88 per cent of its allocated budget for debt servicing during the review period of the current fiscal year.

By mid-April, the government has spent about Rs. 258.44 billion for the payment of principal and interest payment. 

The data also shows that the government has paid only Rs. 204.16 billion as principal payments and Rs. 54.27 billion as interest of such loans. 

A total of Rs. 411.01 billion had been allocated for the payment of principal and interest of public debt for the current fiscal year.

The government has paid Rs. 163.77 billion for principal payment and Rs. 45.60 billion for interest of domestic loans. 

Likewise, about Rs. 40.39 billion has been paid for principal payment and Rs. 8.67 billion for interest of external debt.

According to the figures, total debt servicing expenditure stands at 4.23 per cent of the country’s GDP as of the review period.