Government Meets Internal Debt Target But Falls Short on External Borrowing by Over Rs. 91 Billion

The government successfully achieved its internal debt target of Rs. 330 billion for the fiscal year 2024/25 but managed to secure only 57.79 percent of the targeted external borrowing. According to the Public Debt Management Office, just Rs. 125.3 billion was raised against the Rs. 217 billion external debt target, leaving a shortfall of Rs. 91.6 billion. This gap has been largely attributed to insufficient capital expenditure and delays in project implementation, which prevented the government from seeking timely reimbursements from foreign lenders.

Unlike internal borrowing—often directed toward recurrent expenditures—external debt is typically tied to capital projects and must be spent on infrastructure and development-related works. Officials emphasized that the failure to execute such projects on time resulted in underutilization of available external credit. Despite the relatively lower interest rates and longer repayment terms associated with external debt, project delays hindered the government's ability to draw funds efficiently.

Out of the total Rs. 547 billion debt target for the fiscal year, the government was able to mobilize Rs. 455.39 billion, meeting 83.25 percent of the overall goal. By mid-July 2025, the country’s total public debt had reached Rs. 2,669 billion—43.71 percent of the GDP—with foreign and domestic debts accounting for 52.49 percent and 47.51 percent, respectively. Over Rs. 400 billion was spent on debt servicing, covering both principal and interest, amounting to nearly 6 percent of the GDP.