As Nepal’s public debt continues to grow, the expenditure required to service its interest has also surged, now surpassing the allocated budget for development spending.
According to a report from the Public Debt Management Office, Nepal’s total public debt stood at approximately Rs 2,500 billion as of mid-December, up from Rs 2,434 billion at the start of the current fiscal year. Over the first five months, an additional Rs 58.31 billion was added, bringing the total debt to Rs 2,492.91 billion, which accounts for 43.69% of the country’s Gross Domestic Product (GDP).
In Mangsir (mid-November to mid-December), the government made debt payments totaling Rs 58.24 billion, while receiving loans worth Rs 21.23 billion. The report also noted a decrease in debt obligations by Rs 25.64 billion as of December 15 due to exchange rate fluctuations.
International debt obligations accounted for Rs 1,217.66 billion, or 21.34% of total public debt, while external debt amounted to Rs 1,274.75 billion, making up 22.35% of the overall debt.
For the current fiscal year, the government had aimed to mobilize Rs 547 billion, and by mid-December, it had raised Rs 192.29 billion, or 35.15% of the annual target. Internal loans mobilized so far total Rs 164 billion (49.7% of the target), while external loans amount to Rs 28.291 billion (13.04% of the target).
The government allocated Rs 402 billion to pay both principal and interest on public debt in the current fiscal year, and as of December 15, it had paid Rs 170.49 billion. The total debt service expenditure amounts to 2.99% of GDP.
Notably, the budget for servicing public debt now exceeds the amount allocated for capital expenditure. The government allocated Rs 352.35 billion for capital projects, while Rs 402 billion was earmarked for debt servicing. As of mid-December, the expenditure for servicing debt is approximately 4.5 times higher than capital expenditure, with the Comptroller General’s Office reporting only Rs 40.8 billion spent on capital projects.
