Nepal’s Public Debt Crosses Rs 2.78 Trillion Amid Rising Borrowing Needs

Nepal’s public debt has surged to Rs 2.788 trillion, driven by weak revenue collection and declining foreign grants, according to the Public Debt Management Office. Of the total, domestic debt accounts for Rs 1.301 trillion, while external debt stands at Rs 1.486 trillion. In the first five months of fiscal year 2025/26 alone, public debt increased by nearly Rs 100 billion, reflecting the government’s growing reliance on borrowing to fund development projects and cover daily expenditures.

For FY 2025/26, the government aims to mobilize Rs 595 billion in loans, with Rs 175.12 billion already raised by mid-December 2025, representing about 29.4 percent of the annual target. Despite a national budget of Rs 1.964 trillion, revenue shortfalls force the government to depend on a combination of domestic and foreign loans as well as foreign grants. Public debt now stands at 45.66 percent of GDP, with external debt making up 53.32 percent of the total.

Public borrowing has accelerated sharply over recent years. From Rs 1.048 trillion in FY 2018/19, total public debt climbed to Rs 2.665 trillion by the end of FY 2024/25. Annual increases of over Rs 200–300 billion have been observed in several years, highlighting the ongoing challenge of managing public resources and reducing dependence on loans amid growing fiscal pressures.