Public debt reaches 2,500 billion; interest payment exceeds development budget

KATHMANDU, DECEMBER 24 : With the growing size of public debt each year, Nepal’s expenditure on interest servicing has now surpassed its development budget.

According to a report by the Public Debt Management Office, Nepal's total public debt reached approximately Rs 2,500 billion as of mid-December. At the start of the current fiscal year on July 16, the debt stood at Rs 2,434 billion. Over the next five months, an additional Rs 58.31 billion was added, bringing the total to Rs 2,492.91 billion—equivalent to 43.69% of the country’s Gross Domestic Product (GDP).

In Mangsir (November–December), the government paid Rs 58.24 billion toward debt obligations, while receiving Rs 21.23 billion in loans. Exchange rate fluctuations further reduced debt obligations by Rs 25.64 billion as of December 15, compared to the previous month, the report noted.

The report highlighted that Nepal's international debt obligations amounted to Rs 1,217.66 billion, representing 21.34% of the total public debt. Meanwhile, external debt obligations were Rs 1,274.75 billion, accounting for 22.35% of the total public debt.

For the current fiscal year, the government targeted mobilizing Rs 547 billion but had raised Rs 192.29 billion as of December 15, achieving 35.15% of its annual target. Internal loans totaled Rs 164 billion, or 49.70% of the annual target of Rs 330 billion, while external loans amounted to Rs 28.29 billion, or 13.04% of the target of Rs 217 billion.

The government allocated Rs 402 billion for public debt servicing (principal and interest) for the fiscal year, of which Rs 170.49 billion had been paid as of December 15. Debt servicing expenditure so far is equivalent to 2.99% of the GDP.

The budget allocated for public debt servicing exceeds the capital expenditure earmarked for development and construction. While Rs 402 billion was allocated for public debt servicing, only Rs 352.35 billion was set aside for capital expenditure.

As of December 15, the government’s expenditure on debt servicing was approximately 4.5 times higher than its capital expenditure. The Comptroller General's Office reported that capital expenditure stood at just Rs 40.8 billion by that date.