Nepal's Public Debt Reaches Rs 2.472 Trillion as Economic Pressures Mount

Nepal's public debt liability surged by Rs 41.11 billion in the last month, bringing the total debt to Rs 2.472 trillion, according to recent data from the Public Debt Management Office (PDMO).

Between mid-July and mid-August, the government secured loans amounting to Rs 43.59 billion. Of this total, Rs 40 billion was sourced through domestic borrowing, while the remaining Rs 3.59 billion came from external loans.

During the same period, the government repaid Rs 19.27 billion in principal and interest on existing debt. This included the settlement of Rs 17 billion in domestic liabilities and Rs 2.27 billion for external obligations. Despite these repayments, the rising value of the US dollar added an additional burden of Rs 16.79 billion to the government's debt due to the depreciation of the Nepali currency.

At the close of the fiscal year 2023/24, Nepal's public debt stood at Rs 2.431 trillion, comprising Rs 1.250 trillion in external loans and Rs 1.180 trillion in domestic loans. The current debt now represents 43.34 percent of the country's gross domestic product (GDP), with external loans accounting for 22.24 percent.

The government's failure to balance its expenditures with sluggish revenue collection has resulted in a significant increase in public debt in recent years. In just five years, the debt burden has doubled. By the end of FY 2018/19, the cumulative internal and external debt stood at Rs 1.048 trillion, rising to Rs 2.434 trillion by the end of FY 2023/24.

Economists have raised concerns about the growing debt burden, particularly as it is primarily used to cover administrative costs rather than high-return projects. However, the government maintains that the current debt level remains within a manageable range. Finance Minister Bishnu Prasad Paudel emphasized the need for caution in mobilizing borrowings, stressing the importance of focusing on projects that yield substantial returns.

For the current fiscal year, the government has set a target to raise Rs 547 billion in debt, comprising Rs 330 billion in domestic debt and Rs 217 billion in external loans.