Nepal’s Public Debt Rises by Rs. 83.95 Billion in Four Months, Reaching Rs. 2.518 Trillion

Nepal’s public debt climbed by Rs. 83.95 billion during the first four months of the current fiscal year, bringing the total debt to Rs. 2.518 trillion as of mid-November 2024. This accounts for 44.14 percent of the country’s Gross Domestic Product (GDP), as revealed by a report from the Public Debt Management Office (PDMO).

The government raised Rs. 165.71 billion in public borrowings during this period, while repaying Rs. 86.31 billion in interest and principal. However, this borrowing represents only 30.3 percent of the fiscal year’s target of Rs. 547 billion. Internal debt accounted for Rs. 1.252 trillion (21.95 percent of GDP), while external debt stood at Rs. 1.265 trillion (22.19 percent of GDP).

Economists warn that the rising public debt is a growing concern. Economist Dilli Raj Khanal attributed this trend to weak revenue collection and unchecked spending in non-productive sectors. “The government has failed to invest in projects that generate returns while allowing expenses in non-productive areas to grow,” he remarked.

The government has set an annual target of Rs. 330 billion for internal borrowing, with Rs. 144 billion raised so far—43.64 percent of the target. External borrowing during the review period was Rs. 21.72 billion, just 10.1 percent of the Rs. 217 billion target for the year.

Public debt now exceeds capital expenditure allocation, as Rs. 402 billion has been earmarked for interest payments this fiscal year, compared to Rs. 352.35 billion for capital projects. The debt-to-GDP ratio, now at an 18-year high, has surged fivefold over the last decade.

Nepal’s public debt, which stood at Rs. 1.432 trillion in FY 2019/20, rose by over Rs. 1 trillion in just five years, reflecting growing fiscal pressure on the economy.