KATHMANDU, Dec 25: The weakening of the Nepali currency against the US dollar has significantly increased the country’s public debt liabilities, with the overall burden rising by Rs 115 billion in the first five months of the current fiscal year.
Records from the Public Debt Management Office (PDMO) show that the government took net additional borrowing of Rs 36 billion between mid-July and mid-December. However, total liabilities increased by more than three times that amount, largely due to the sharp depreciation of the Nepali currency against the US dollar.
Data from Nepal Rastra Bank (NRB) show that the exchange rate stood at Rs 137.35 per US dollar in mid-July and continued to rise for most of the review period, reaching a record high of Rs 144.97 on December 13. Economists say the depreciation of the domestic currency makes foreign debt servicing and international payments more expensive for both the government and the private sector.
Public debt exceeds Rs 2.434 trillion, increasing by over Rs 30...
According to the PDMO, Nepal’s public debt stood at Rs 2.674 trillion at the start of the fiscal year 2024/25 and increased to Rs 2.788 trillion by mid-December. This pushed the public debt-to-GDP ratio to 45 percent.
During the review period, the government borrowed Rs 147 billion domestically and repaid Rs 114 billion under the same heading, resulting in a net increase of Rs 33 billion. As a result, domestic debt rose to Rs 1.301 trillion.
Similarly, the government borrowed Rs 27.45 billion from international development partners over the past five months, while it repaid Rs 24.04 billion. Although the net increase in external borrowing was only about Rs 3 billion, external debt liabilities rose by Rs 81 billion due to exchange rate fluctuations.
Most of Nepal’s external loans are concessional, carrying interest rates of less than one percent per annum. A large portion of these loans is denominated in US dollars or Special Drawing Rights (SDRs), the International Monetary Fund’s reserve asset.
In addition to the rise in the US dollar, the country also faced increased liabilities due to the depreciation of the Nepali currency against the SDR. PDMO data show that the exchange rate weakened to Rs 198.39 per SDR from Rs 187.73 during the review period.
