KATHMANDU, Jan 4: Weak revenue collection and a steady drop in foreign grants have pushed Nepal’s public debt higher. In just the first five months of the current fiscal year, the country’s public debt has increased by nearly Rs 100 billion, taking the total debt close to Rs 2.8 trillion.
As revenue struggles to even cover recurrent expenses, borrowing for development projects continues to rise.
According to the Public Debt Management Office, public debt increased by Rs 114.48 billion between mid-July 2025 and mid-December 2025, the period from mid-July to the end of mid-December in fiscal year 2025/26. With this increase, the government’s total public debt has reached Rs 2.788 trillion. Of this, domestic debt stands at Rs 1.301 trillion, while external debt has reached Rs 1.486 trillion.
Public debt exceeds Rs 2.434 trillion, increasing by over Rs 30...
For the current fiscal year 2025/26, the government has set a target to mobilize Rs 595 billion in loans. By mid-December 2025, it had already raised Rs 175.12 billion, which is 29.40 percent of the annual target. Despite the growing size of the national budget, revenue growth has not kept pace, forcing the government to rely more on borrowing each year.
In the previous fiscal year, public debt rose by Rs 231.54 billion. With revenue proving insufficient to meet current expenses, the government has little option but to borrow to fund development works.
As the government struggles to finance daily expenditures, it continues to depend on both domestic and external loans for development spending. Budget after budget has been framed on the assumption of increased borrowing due to weak revenue performance.
For fiscal year 2025/26, the government has unveiled a budget of Rs 1.964 trillion. It plans to raise Rs 1.315 trillion through revenue, while the remaining amount is to be managed through foreign grants, foreign loans, and domestic borrowing. The budget targets nearly Rs 600 billion in public debt this fiscal year, including Rs 233 billion in foreign loans and Rs 362 billion in domestic loans.
Overall, the government plans to borrow Rs 595 billion this year. The Ministry of Finance says that insufficient revenue mobilization compared to public spending has increased pressure on resource management, leading to a rising public debt burden.
Reducing dependence on loans by improving external resource management remains a major challenge. Public debt has now reached 45.66 percent of gross domestic product. By mid-December 2025, external debt accounted for 53.32 percent of total public debt, while domestic debt made up 46.68 percent.
Public debt has risen sharply in recent years. Up to fiscal year 2018/19, total domestic and external debt stood at just Rs 1.048 trillion. By the end of fiscal year 2024/25, total public debt had climbed to Rs 2.665 trillion.
By the midpoint of the current fiscal year, debt has already crossed Rs 2.75 trillion, showing a sharp rise in borrowing in recent years. In fiscal year 2019/20, public debt stood at Rs 1.4334 trillion, with an increase of more than Rs 300 billion in a single year. It rose to Rs 1.7378 trillion in fiscal year 2020/21. In fiscal year 2021/22, public debt increased by nearly Rs 250 billion, reaching Rs 2.29935 trillion by fiscal year 2022/23.
