Govt. spends over NPR 300 billion on debt servicing in 10 months

KATHMANDU, MAY 25: In the first ten months of the current fiscal year 2024/25, the government raised nearly NPR 400 billion in public debt, while spending around NPR 308.14 billion on debt servicing, covering both principal and interest payments.

According to a report published by the Public Debt Management Office, the total public debt at the beginning of the fiscal year stood at NPR 2.434 trillion. During the review period, it increased by NPR 188.30 billion, bringing the total debt to NPR 2.622 trillion. This figure amounts to 42.94% of the country’s Gross Domestic Product (GDP).

Of the total public debt, external debt accounts for 51.69% (NPR 1.556 trillion), while domestic debt comprises 48.31% (NPR 1.267 trillion). The office noted a slight decrease in overall debt liabilities compared to Chaitra (mid-March to mid-April) due to higher principal repayments than new borrowings in Baisakh (mid-April to mid-May). By mid-April, total public debt had reached NPR 2.672 trillion.

While progress has been made in achieving the annual target for domestic borrowing, the collection of external loans has lagged behind. “Out of the targeted NPR 547 billion in total public borrowing for the current fiscal year, NPR 390.83 billion had been mobilized by mid-May—representing 71.45% of the annual target,” the report stated. “Of this, domestic borrowing accounts for 91.25% of the target achieved, whereas external borrowing stands at just 41.33%.”

In terms of composition, domestic debt makes up 77.05% of total debt mobilized during the first 10 months of this fiscal year, with external debt contributing 22.95%.

The government had set a target to raise NPR 330 billion in domestic debt this fiscal year, of which NPR 301.14 billion has already been raised, leaving NPR 28.85 billion yet to be mobilized. Similarly, out of a target of NPR 217 billion in external loans, NPR 89.68 billion has been secured so far, with NPR 127.31 billion remaining.

For 2024/25, the government allocated NPR 402.85 billion for debt servicing. Of this, NPR 308.14 billion had been spent during the review period—representing 76.49% of the total allocated budget. According to the report, total debt servicing cost accounted for 5.05% of GDP during the review period.