The House of Representatives (HoR) on Saturday passed the ‘Bill to Raise National Debt’ by a majority vote, endorsing the government’s plan to take on additional borrowing to fund the fiscal operations for FY 2025/26.
Key Budget Highlights:
- Total expenditure planned: Rs 1.964 trillion
- Recurrent expenditure: 60.1%
- Development expenditure: 20.8%
- Projected sources of financing:
- Revenue mobilization: Rs 1.315 trillion
- Foreign grants: Rs 53.45 billion
- Foreign loans: Rs 233.66 billion
- Domestic borrowing: Rs 362 billion
- Total borrowing (foreign + domestic): Rs 595.66 billion
Government’s Position:
Finance Minister Bishnu Prasad Paudel defended the bill, stating that public debt is essential to meet national goals related to production, productivity, development, and prosperity. He emphasized that the new budget aims to reduce the use of debt for recurrent spending, directing it more toward sustainable economic objectives.
Criticism from Lawmakers:
Prakash Sharan Mahat, senior Nepali Congress leader, criticized the bill, expressing concern over the rising public debt burden and ineffective use of loans. He warned that borrowing to fund recurrent expenditures—such as salaries and administrative costs—rather than capital formation or productive investments, could push Nepal toward fiscal unsustainability.
The bill’s passage follows increasing scrutiny of Nepal’s growing public debt, which has recently surpassed Rs 2.65 trillion. Experts and lawmakers have been urging the government to focus on productive use of borrowed funds, especially in infrastructure and capital projects, to avoid falling into a debt trap.
As the government prepares to implement its FY 2025/26 budget, the approval of the debt bill sets the legal framework for borrowing—but questions remain about fiscal discipline, expenditure efficiency, and long-term sustainability.
