Nepal Hits Domestic Debt Target, Falls Short on External Borrowing

Kathmandu, Nepal – The Nepali government has successfully met its domestic borrowing targets for the fiscal year 2081/82 (2024/25), securing the full 330 billion Nepalese Rupees (NPR) planned. However, it fell short on its external debt goal, managing to raise only 125.39 billion NPR against a target of 217 billion NPR, representing 57.79% of the intended foreign borrowing.

Gopikrishna Koirala, head of the Public Debt Management Office, attributed the lower external debt mobilization to reduced capital expenditure and delays in development projects. These factors, he noted, hindered the government’s ability to receive reimbursements from international lenders. External debt is generally favored by the government due to its lower interest rates and more extended repayment periods, often accompanied by stricter conditions that ensure the funds are utilized for capital investment.

Overall, the government’s total public debt mobilization reached 455.39 billion NPR, which is 83.25% of its 547 billion NPR target. This increased the nation’s total government debt by 231.8 billion NPR, bringing the grand total to 2,669.57 billion NPR. This figure now stands at 43.71% of Nepal’s Gross Domestic Product (GDP).

A breakdown of the total debt reveals that external debt accounts for 52.49%, while domestic debt makes up the remaining 47.51%. The government’s interest payments on its debt have been substantial, exceeding 400 billion NPR. By mid-July, 362.59 billion NPR had been paid in interest, fulfilling 90.01% of the annual budget allocation for debt servicing and amounting to 5.94% of the GDP. The majority of these interest payments, 304.19 billion NPR, were allocated to domestic debt, with 58.40 billion NPR going towards external debt.