Banking Khabar / Nepal’s public debt has remained on an upward trajectory. At the start of the current fiscal year 2082/83 (2025/26), total public debt stood at NPR 26.74 trillion. By mid-January (end of Poush), it had increased by NPR 132 billion to exceed NPR 28.06 trillion.
At present, Nepal’s total public debt is equivalent to around 46% of the country’s Gross Domestic Product (GDP). According to the Public Debt Management Office (PDMO), external debt accounts for a slightly larger share of the total. About 53%of the debt-NPR 14.87 trillion-is external, while the remaining 47%-NPR 13.19 trillion-is domestic debt.
In terms of GDP ratio, domestic debt stands at approximately 21.6%, whereas external debt has reached 24.35%, indicating that the burden of external debt is marginally higher than that of domestic borrowing.
Over the past six months alone, the government has spent nearly NPR 152 billion on principal repayments and more than NPR 34 billion on interest payments, according to the PDMO. By mid-January, total debt servicing costs had risen to slightly over 3 percent of GDP.
For the current fiscal year, the government has set a target to raise NPR 595 billion in public debt. By the mid-year point, more than NPR 214 billion had already been mobilized, representing about 36 percent of the annual target. A significant portion of the debt raised during the past six months has come from domestic sources, which accounted for around 83 percent, while external borrowing made up only 17 percent.
The government aims to raise NPR 362 billion through domestic borrowing this fiscal year, of which more than NPR 177 billion had been collected by mid-January. On the external front, against a target of NPR 233 billion, only about NPR 37 billion has been secured so far.
Along with the growing debt stock, the burden of principal and interest payments is also increasing. For the current fiscal year, the government has allocated NPR 411 billion in the budget for debt servicing. By mid-January alone, payments exceeding NPR 187 billion had already been made, with domestic debt accounting for the largest share, while external debt servicing has also involved substantial expenditure.
Economists warn that unless due attention is paid to the effective use of borrowed funds, long-term returns, and the country’s repayment capacity, rising public debt could place increasing fiscal pressure on the government in the coming years.
