Nepal’s Public Debt Crosses Rs 2.65 Trillion, Depreciating Rupee Adds Rs 73 Billion Burden

Nepal’s total public debt has surpassed Rs 2.65 trillion as of mid-June 2025, up from Rs 2.62 trillion a month earlier, according to the Public Debt Management Office. During the first 11 months of the current fiscal year, the government borrowed Rs 414.19 billion and repaid Rs 266.65 billion in principal, resulting in a net debt increase of Rs 220.58 billion.

A key contributor to this rising debt burden is currency depreciation. The exchange rate rose from Rs 134 to Rs 138 per US dollar, adding around Rs 73 billion in additional debt liabilities as foreign loans are denominated in original currencies.

Domestic debt currently stands at Rs 1.72 trillion (22.31% of GDP), while external debt has reached Rs 1.82 trillion (24.23% of GDP), bringing total public debt to approximately 43.47% of GDP.

So far, the government has met 95% of its domestic borrowing target but only 46% of its external borrowing goal—largely due to delays in capital expenditure projects that typically unlock foreign loans.

Debt servicing has already consumed Rs 329.6 billion this fiscal year—Rs 223.35 billion in loan repayments and Rs 106.25 billion in interest—out of a budgeted Rs 402.85 billion.

Experts warn that public debt, which has grown at an average of 19% annually over the past eight years, may become unsustainable if not managed prudently. They call for limiting loans for administrative costs, improving project returns, and prioritizing productive investments to avoid a debt trap.