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Nepal’s public debt increased by nearly Rs 200bn over the first 10 months of fiscal year 2024/25, reflecting the government’s growing reliance on borrowing to bridge its budget gap. According to the Public Debt Management Office (PDMO), the country’s total public debt rose by Rs 188.3bn during the 10-month period to Rs 2,622bn by mid-May. Such borrowing was at Rs 2,434bn in mid-July last year when the fiscal year began. Total public debt has reached 42.94 percent of the country’s gross domestic product (GDP). The PDMO raises domestic debts using instruments like treasury bills, development bonds, citizen savings bonds and foreign employment savings bonds.

Of the total debt, 51.69 percent is foreign debt, while 48.31 percent was borrowed from domestic sources. The continued rise in borrowing is largely attributed to the government’s failure to meet revenue targets. With lower-than-expected revenue collection and limited grant inflows, the government has increasingly turned to public debt to finance its spending. The country’s budget deficit rose to Rs 209.12bn in the review period. Data from the Financial Comptroller General’s Office (FCGO) shows total government expenditure in 10 months stood at Rs 1,164.04bn, while total revenue amounted to Rs 954.92bn only.

The government’s projected total spending in the current fiscal year is Rs 1,860trn, while it has set a target to raise Rs 1,419trn in revenue and Rs 52bn in grants. The remainder was expected to be covered by borrowing. However, revenue collection has fallen short, and grants are unlikely to meet even half the target, leaving borrowing as the only viable option before the government.

Through the budget for the current fiscal year, the government has set a borrowing target of Rs 547bn—Rs 217bn from foreign sources and Rs 330bn from domestic markets. By mid-May, the government had raised Rs 390.83bn, or 71.45 percent of the target. This includes Rs 301.14bn in domestic debt and Rs 89.68bn in foreign debt. The government has already met 91.25 percent of its domestic borrowing target. However, it has been able to raise only 41.33 percent of the targeted foreign debt. Total debt declined in the 10th month (mid-April to mid-May) by Rs 44.86bn compared to the previous month mainly due to principal repayments by the government.

To manage increasing urbanization and traffic congestion in the Kathmandu Valley, traffic lights were installed at 69 intersections. However, 29 of them have been non-functional for months, with no government agency stepping up to repair them. Of the 69 installations, the Department of Roads was responsible for 46, Kathmandu Metropolitan City for six, and Lalitpur Metropolitan City for seven. Additionally, seven lights were installed in collaboration with various banks, and three by other organizations. Among them, 13 are Pelican crossings.

The 62nd report of the Auditor General highlighted the issue, stating that 29 traffic lights are in disrepair and need urgent attention. The report also recommended the adoption of modern traffic management technologies, such as CCTV, surveillance vehicles, body-worn cameras, and GoPro cameras. Currently, the Valley Traffic Division monitors 415 CCTV cameras installed at 270 locations.

According to Deepak Giri, spokesperson for the Traffic Division, no specific authority has been designated to handle the repair of broken traffic lights. Traditionally, the agency that installed the lights is expected to maintain them. After recent discussions, it was agreed that the Urban Department would assume responsibility for the upkeep of road-installed traffic lights. The department has already issued a tender for their maintenance.

Arjun Prasad Aryal, spokesperson for the Department of Roads, stated that while the department holds jurisdiction over traffic light installation in the Valley, various institutions—including metropolitan cities, ward offices, and financial institutions—have also installed lights independently. Each body is expected to monitor its own installations.

Among the lights installed by the Road Department, only those at Jadibuti and Koteshwor are currently non-operational. Aryal noted that the repair process is time-consuming due to legal requirements under the Procurement Act 2007. This year, the department has issued a Rs 15m tender for repairing and maintaining lights under its jurisdiction.

Rakesh Maharjan, head of the Road Safety and Traffic Branch at the Road Department, added that many lights installed by metropolitan cities remain non-functional and have not been formally handed over to the department. As a result, the department does not consider itself responsible for their maintenance. According to Maharjan, the traffic lights at Tinkune and Jadibuti Chowk were damaged during recent protests. These are currently under repair. Lights with minor issues are fixed quickly, but those with hardware or software malfunctions take longer to repair.

There are approximately 107 major intersections in the Valley, all of which require traffic lights. However, the department is prioritizing high-traffic intersections, with new lights under construction at Radhe Radhe Chowk and Char Dobato Chowk in Bhaktapur. Maharjan emphasized that installing traffic lights is costly. The price varies depending on the number of connected roads, with a single intersection costing upwards of Rs 5m. Generally, traffic light hardware lasts five to seven years.

The department is also upgrading old traffic lights with modern, automated digital systems, which are more expensive but efficient. Historical data from the Road Department shows that a total of 115 traffic lights have been installed in the Valley to date—65 by the Road Department, 38 by Kathmandu Metropolitan City, five by Lalitpur Metropolitan City, and five by Mahalaxmi Municipality. However, records for many intersections are incomplete.

Of the 69 lights currently supposed to be in operation, only 40 are functional. The lack of maintenance and accountability has left traffic police to manually manage many busy intersections. This has led to increased traffic congestion, frequent rule violations, and overall traffic disorder in areas without functional traffic lights.

Pokhara International Airport was in the spotlight this week. China CAMC Engineering, the contractor responsible for building the airport, has strongly rejected a report prepared by a subcommittee of the Public Accounts Committee (PAC), which alleges serious irregularities in the airport’s construction. 

The Chinese state-owned company called the report inaccurate and lacking in professional, objective analysis. Despite this reservation from the Chinese firm, the PAC has decided to forward the report to the Commission for the Investigation of Abuse of Authority (CIAA).

The CIAA now faces the task of investigating the case, using the PAC report as a reference. Several corruption complaints in the airport’s construction have already been registered. However, public confidence in the CIAA remains shaky, with many accusing the constitutional body of selective investigations and of operating under executive influence. 

The report has also sparked political divisions. CPN-UML leader and former civil aviation minister, Yogesh Bhattarai, raised doubts about its findings of the report, while subcommittee chair, Rajendra Lingden, accused the Chinese company of undermining Nepal’s sovereignty through its public response. Disagreements like this have become almost routine when issues involving China, India or the United States arise—whether it’s the Belt and Road Initiative or the Millennium Challenge Corporation—exposing the deep influence foreign powers hold over Nepal’s political parties.

Meanwhile, royalist forces are preparing to launch what they call a “powerful movement” starting May 29. Their demands include restoring the monarchy, declaring Nepal a Hindu state and scrapping the federal structure—a direct challenge to the current federal republican system. It remains to be seen whether the government will engage with the protesters through dialogue or resort to force, as it did during the March 28 royalist demonstrations that turned violent.

Leaders from the Rastriya Prajatantra Party told ApEx that they are preparing to bring thousands of people into the streets of Kathmandu. Former King Gyanendra Shah is said to be backing the campaign, including providing financial support for logistics.

Royalist groups have been reaching out to leaders and cadres within the major parties who may sympathize with their cause, especially those who support the idea of a Hindu state if not the monarchy itself. They approached the Rastriya Swatantra Party (RSP) seeking support. But the RSP reportedly refused to join the movement. The royalists are also reaching out to civil society figures, intellectuals and especially young people, a demographic that largely did not experience Gyanendra’s direct rule.

Compared to previous efforts, the royalists are now employing a broader strategy to rally public support. Still, there are growing fears that the protests could again turn violent. Veteran leftist leader Narayan Man Bijukchhe went so far as to suggest that the movement could escalate into “a war” if India or the United States were perceived as backing efforts to restore the monarchy.

In other developments, the long-running tug-of-war between the Nepali Congress and CPN-UML over the appointment of Nepal Rastra Bank’s governor has ended with Bishwo Poudel taking the helm. Prime Minister KP Sharma Oli reportedly agreed to the appointment after NC President Sher Bahadur Deuba threatened to pull out of the coalition. While Poudel has a strong educational background and extensive experience in national and international institutions, his close ties with the NC—he ran as the party’s candidate in the 2022 elections—have drawn criticism. The appointment may have helped stabilize the coalition for now, though. 

Senior leader of CPN (Maoist Center), Janardan Sharma, met NC President Deuba this week, and Deuba also held a phone conversation with Maoist Chairman Pushpa Kamal Dahal. NC leaders have been quick to tell the media that there are no problems within the ruling alliance. Yet discontent lingers, particularly from the camp of senior leader Shekhar Koirala, whose supporters continue to express dissatisfaction with the government’s performance.

To highlight the impact of climate change in Nepal and other Himalayan nations, the government recently organized the Sagarmatha Sambaad, a high-level climate dialogue. But the event fell short of expectations. Heads of government were absent, and the event was criticized for prioritizing ruling party leaders and cadres over subject matter experts. Media access was blocked, hampering independent reporting. International media outlets also largely ignored the event. 

Former President Bidya Devi Bhandari is making an official visit to China. The trip is seen as politically significant, as she appears to be actively re-engaging in politics. During her presidency, Bhandari cultivated close ties with Chinese leaders and played a key role in pushing forward several of China’s strategic interests in Nepal. Senior UML leaders will accompany her, and speculation is growing that China may quietly support her return to party leadership.

Regionally, India-Pakistan tensions have prompted a diplomatic response. Leaders from India’s ruling Bharatiya Janata Party are visiting Kathmandu, where they plan to meet with political leaders, civil society figures and journalists as part of a broader outreach strategy likely aimed at countering other international influences in Nepal’s shifting political landscape.

Economist Bishwo Poudel has assumed the office of the Nepal Rastra Bank (NRB) as its 18th Governor on Tuesday. His appointment, following nearly one and half months of leadership vacuum and a politically charged process, has placed him under intense scrutiny.

As a former Nepali Congress (NC) parliamentary candidate, Poudel steps into a role that demands not only economic acumen but also a clear demonstration of independence. He must now navigate a complex landscape shaped by political expectations, economic stagnation, and international obligations. The challenges ahead are significant and will require bold, balanced, and credible policy responses to restore confidence, revive growth and protect the NRB’s integrity as an autonomous institution.
 

Poudel’s political background has reignited concerns about the politicization of the NRB governorship—a role that, while historically influenced by political appointments, is expected to rise above party interests. The prolonged selection process reflects a troubling prioritization of political loyalty over institutional continuity. For Poudel, the first and perhaps most important test is to assert his independence. He must earn public and investor trust by making transparent, evidence-based decisions that put the country’s economic well being above political considerations. Failing to do so risks deepening skepticism about the central bank’s autonomy and complicating efforts to stabilize the economy.

One of the most urgent challenges before him is reviving credit growth. Although more than Rs 600bn in investable funds are sitting idle in the banking system and interest rates are at record lows, credit disbursement has remained weak for the past many months. This signals a deeper issue: a lack of confidence among borrowers and subdued demand for investment. The resulting liquidity trap has stifled economic activity and blunted the impact of monetary policy. To address this, Poudel will need to introduce targeted measures to stimulate lending. This could include easing regulatory barriers, supporting innovative financial products, and channeling credit into high-potential sectors such as agriculture, tourism, and small and medium enterprises (SMEs). Working closely with banks and financial institutions to better assess and manage lending risks can help mobilize this idle capital into productive use, while unlocking growth and job creation.

Another critical issue is Nepal’s inclusion on the Financial Action Task Force (FATF) greylist because of the shortcomings in anti-money laundering (AML) and counter-terrorism financing efforts. This designation will damage Nepal’s global financial standing, discourage foreign investment and hamper integration with international markets. The new governor must work closely with the Ministry of Finance and relevant regulatory bodies to strengthen the AML framework, enhance enforcement and ensure alignment with international standards. Removal from the greylist would not only restore investor confidence but also signal the NRB’s capacity to meet complex global obligations.

Despite a relatively strong external sector—marked by healthy remittance inflows, solid foreign exchange reserves and a balance of payments surplus—domestic economic activity has remained sluggish since the lifting of the post-covid stimulus. This disconnect highlights deeper structural challenges such as bureaucratic red tape, policy uncertainty and weak engagement with the private sector. Poudel must prioritize efforts to rebuild private sector confidence. Targeted incentives, such as credit guarantees for SMEs or support for green investments, could stimulate private sector involvement and energize the real economy. It is important to strike the right balance: reviving growth without stoking inflation, and implementing short-term stimulus that aligns with long-term development goals.

By promoting forward-thinking policies and fostering collaboration across institutions, Poudel has the chance to steer Nepal’s economy toward. His legacy at the central bank will be defined not just by the policies he takes, but by his ability to preserve the central bank’s independence and credibility.