As revenue collection remains weak and foreign grants continue to decline, Nepal’s public debt burden has been increasing steadily. Within just the first five months of the current fiscal year, the country’s public debt has risen by nearly Rs 100 billion, pushing the total debt close to Rs 28 trillion. With revenue struggling even to cover recurrent expenditure, the government has been increasingly relying on loans to finance development activities.
According to the Public Debt Management Office, between mid-July and mid-December of the current fiscal year 2082/83, public debt increased by Rs 114.48 billion. As a result, the government’s total public debt liability has reached Rs 27.88 trillion. Of this amount, domestic debt accounts for Rs 13.01 trillion, while external debt stands at Rs 14.86 trillion.
For the current fiscal year, the government had set a target of mobilizing Rs 595 billion in loans. By mid-December, it had received Rs 175.12 billion, which is 29.40 percent of the annual target. Although the size of the national budget has continued to expand, public debt has been rising every year due to revenue growth falling short of expectations.
In the previous fiscal year, the government’s public debt increased by Rs 231.54 billion. Despite difficulties in meeting recurrent expenditure through revenue, the government remains compelled to borrow for development works.
Due to challenges in financing recurrent expenditure, the government has been taking both domestic and external loans to fund development spending. Persistent failure to boost revenue collection has led to continued dependence on internal and external borrowing while formulating annual budgets.
For the current fiscal year 2082/83, the government has announced a budget of Rs 1.964 trillion, with a plan to collect Rs 1.315 trillion through revenue. The remaining amount is expected to be managed through foreign grants, external loans, and domestic borrowing. The budget envisions raising nearly Rs 600 billion in public debt this fiscal year, including Rs 233 billion in foreign loans and Rs 362 billion in domestic loans.
Overall, the government plans to borrow Rs 595 billion in the current fiscal year. The Ministry of Finance has stated that insufficient revenue mobilization compared to public expenditure has put pressure on resource management, leading to an expansion in the size of public debt.
There remains a significant challenge to make external resource management more effective and gradually reduce reliance on borrowing. Public debt has now reached 45.66 percent of the country’s gross domestic product (GDP). As of mid-December, external debt accounts for 53.32 percent of total public debt, while domestic debt comprises 46.68 percent.
In recent years, Nepal’s public debt burden has increased substantially. Until fiscal year 2075/76, total domestic and external debt stood at just Rs 1.048 trillion. By the end of fiscal year 2081/82, total public debt had surged to Rs 26.65 trillion.
By the middle of the current fiscal year, public debt has exceeded Rs 27.8 trillion, indicating a sharp rise in both domestic and external borrowing in recent years. In fiscal year 2076/77, public debt stood at Rs 1.433 trillion, increasing by more than Rs 300 billion in a single year. It rose to Rs 1.737 trillion in fiscal year 2077/78. In fiscal year 2078/79, public debt increased by nearly Rs 250 billion, and by fiscal year 2079/80, total public debt had reached Rs 2.299 trillion.
