KATHMANDU, July 23: Nepal’s public debt has surged to Rs 2.974 trillion in fiscal year (FY) 2025/26, equivalent to 45.07 percent of the country’s gross domestic product (GDP), according to the Public Debt Management Office (PDMO). The figure reflects an additional borrowing of Rs 385 billion during the review year.
At the start of FY 2025/26, public debt stood at Rs 2.674 trillion. The government had targeted mobilizing Rs 595.66 billion in debt during the year but managed to raise only Rs 447.17 billion — 75.07 percent of the annual target. Repayments and foreign exchange adjustments reduced the net addition to Rs 385 billion.
Public debt exceeds Rs 2.434 trillion, increasing by over Rs 30...
Officials attribute the rise in the debt burden to both increased borrowing and foreign exchange fluctuations. Of the total debt stock, foreign debt amounts to Rs 1.599 trillion, while domestic debt stands at Rs 1.375 trillion. Foreign debt now accounts for 53.77 percent of the total, with domestic debt making up 46.23 percent.
Debt mobilization patterns show a sharp contrast between domestic and foreign borrowing. The government nearly met its domestic debt target, raising Rs 358.67 billion against a goal of Rs 362 billion — 99.08 percent achievement. In contrast, foreign debt mobilization fell short, with only Rs 88.50 billion raised against a target of Rs 233.66 billion, representing just 37.88 percent of the goal.
As a result, 80.21 percent of the debt mobilized during the year came from domestic sources, while foreign borrowing contributed only 19.79 percent. Analysts note that delays in securing external loans for development projects forced the government to rely heavily on internal resources.
Debt servicing costs also escalated during the fiscal year. The government allocated Rs 411.1 billion for principal and interest payments, of which Rs 311.94 billion was spent on domestic debt and Rs 74.29 billion on foreign debt. Overall debt service expenditure reached 5.85 percent of GDP, underscoring the growing fiscal pressure.
