The Government of Nepal allocated a substantial Rs 361.62 billion toward public debt repayment in the Fiscal Year 2024/25, according to data released by the Financial Comptroller General Office (FCGO). The amount reflects the nation’s growing financial obligations and its continued reliance on both domestic and foreign loans to meet budgetary needs.
Out of the total repayment, Rs 304 billion was spent on domestic debt, while Rs 45.79 billion went toward multilateral foreign loans, and Rs 11.65 billion was used to settle bilateral foreign loans.
Despite the sizable repayment, Nepal’s total public debt increased to Rs 2.65 trillion by the end of Asar (mid-July), up from Rs 2.43 trillion a year earlier. The current debt composition includes Rs 1.267 trillion in internal debt and Rs 1.382 trillion in external debt, signaling a continued dependency on borrowing to manage fiscal operations.
The government’s persistent revenue-expenditure mismatch is a key driver of its growing debt. In FY 2024/25, revenue and foreign grants amounted to Rs 1.197 trillion, while total government expenditure surged to Rs 1.523 trillion, resulting in a substantial fiscal gap.
To manage this shortfall in the current fiscal year (2025/26), the government has established borrowing targets of Rs 362 billion in domestic loans and Rs 233 billion in external borrowing. These funds are expected to support development projects, administrative operations, and debt servicing.
As Nepal continues to rely on loans to sustain its economic activities, experts have raised concerns over the sustainability of such borrowing patterns. Prudent fiscal management and reforms in revenue generation remain critical to avoiding future debt stress and ensuring long-term economic stability.
