Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Nepal’s public debt has surged to 43.47% of its Gross Domestic Product (GDP), driven by rising internal and external borrowing, according to the Public Debt Management Office under the Ministry of Finance. As of May 2025, the country’s total public debt stands at NPR 2,654.68 billion (USD 20 billion), up from NPR 2,434.09 billion at the start of the fiscal year 2081/82, marking an increase of over NPR 220 billion.
The office reported that the government aimed to mobilize NPR 547 billion in public debt this fiscal year, with NPR 414.19 billion secured by May, achieving 75.72% of the annual target. Internal debt accounts for 76.95% of this, while external debt constitutes 23.95%, with progress at 15.45% and 45.72%, respectively.
The reliance on internal borrowing reflects efforts to finance infrastructure and development projects amid global economic uncertainties.
Debt servicing costs are straining the budget, with NPR 329.69 billion paid toward principal and interest by May, representing 81.82% of the NPR 402.85 billion allocated for fiscal year 2081/82. This equates to 5.4% of GDP. For the upcoming fiscal year, the government has earmarked NPR 357 billion for debt servicing, nearly matching the NPR 407 billion allocated for development expenditure, highlighting fiscal pressures.
Foreign currency fluctuations have further escalated Nepal’s debt burden, according to the Debt Management Office. With the country’s GDP estimated at USD 46 billion in 2024, per World Bank data, the rising debt-to-GDP ratio raises concerns about long-term sustainability, despite Nepal’s debt remaining below the 60% threshold often flagged by economists. The government must balance development goals with fiscal discipline to mitigate risks from global economic volatility and currency depreciation.
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