Public debt reaches Rs. 2.97 T in FY 2025/26

By A Staff Reporter, Kathmandu, July 26: Nepal's public debt climbed to Rs. 2.97 trillion in the fiscal year 2025/26, with more than half of the increase driven by the depreciation of the Nepali rupee against the US dollar.

According to the Public Debt Management Office under the Ministry of Finance, total public debt reached Rs. 2,974.90 billion, marking an increase of Rs. 300.86 billion from the previous fiscal year.

This increase includes additional liabilities caused by exchange rate fluctuations, particularly the depreciation of the Nepali rupee against the US dollar.

Of the additional public debt of Rs. 300.86 billion, Rs. 107.19 billion was added under domestic public debt and Rs. 193.66 billion under external public debt.

At the beginning of the fiscal year, Nepal's public debt stood at Rs. 2,674.04 billion. 

Of the current total debt, external debt accounts for Rs. 1,599.48 billion (53.77 per cent), while domestic debt stands at Rs. 1,375.41 billion (46.23 per cent).

During the review period, total outstanding debt increased by 11.25 per cent, with external debt rising by 13.77 per cent and domestic debt by 8.45 per cent.

The country's debt-to-GDP ratio has reached 45.07 per cent, with external debt accounting for 24.23 per cent and domestic debt 20.84 per cent.

According to the report, currency depreciation alone added Rs. 167 billion to the debt burden, accounting for about 55 per cent of the total increase in public debt during the fiscal year. 

The rise underscores Nepal's growing exposure to foreign exchange risks, as a large share of its borrowings is denominated in foreign currencies.

Mobilisation reaches 75 % of target

The government mobilised Rs. 447.16 billion in public debt in the last fiscal year, achieving 75 per cent of its annual target.

Of the total public debt mobilisation, Rs. 358.66 billion was raised through domestic borrowing, while Rs. 88.50 billion came from external borrowing.

The government had planned to raise Rs. 595.66 billion in loans to finance the budget deficit during the fiscal year. Of this amount, Rs. 362 billion was expected to come from domestic borrowing and Rs. 233.66 billion from external loans.

The pace of debt mobilisation differed significantly between domestic and external sources.

Domestic borrowing reached 99.08 per cent of its annual target, indicating strong internal financing activity. In contrast, external borrowing reached only 37.88 per cent of its target.

Debt servicing absorbs 94 % of budget

The government utilised 94 per cent of its allocated budget for debt servicing during the last fiscal year.

By mid-July, the government had spent about Rs. 386.22 billion on the repayment of principal and interest.

The data show that the government paid Rs. 312.40 billion in principal repayments and Rs. 73.82 billion in interest payments.

A total of Rs. 411.01 billion had been allocated for the repayment of principal and interest on public debt for the fiscal year.

The government paid Rs. 250.56 billion in principal and Rs. 61.37 billion in interest on domestic loans.

Likewise, it paid Rs. 61.84 billion in principal and Rs. 12.44 billion in interest on external debt.

According to the figures, total debt servicing expenditure stood at 5.85 per cent of the country's GDP during the review period.