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.
