Kathmandu: The government borrowed Rs 240.08 billion in the first five months of the current fiscal year, grappling with mounting recurrent expenditures and sluggish revenue collection.
Data from the Public Debt Management Office (PDMO) reveals that between mid-July and mid-December, the government raised Rs 181.05 billion through domestic borrowing and Rs 59.03 billion via external loans.
A widening budget deficit has driven the surge in borrowing. The Financial Comptroller General Office (FCGO) reported a negative treasury balance of Rs 93 billion during the review period. Total government receipts stood at Rs 574.76 billion, including foreign grants of Rs 7.34 billion—falling significantly short of the annual target of Rs 52.32 billion. Tax and non-tax revenue collections reached just 39 percent of the fiscal year’s target.
Of the borrowed funds, 76 percent went toward interest payments and debt servicing, with Rs 182.40 billion allocated for financial management—over three times the capital expenditure of Rs 56.93 billion.
Economists have criticized the government for failing to channel borrowed funds into productive investments, instead directing them toward recurrent expenses. “Unproductive spending is contributing to the mounting debt burden,” said Dipendra Bahadur Chhetri, former governor of Nepal Rastra Bank (NRB).
The National Statistics Office reported an economic growth rate of just 3.4 percent in the first quarter of the fiscal year, far below the government’s target of 6 percent for FY 2024/25.
The country’s total debt has now reached Rs 2.536 trillion, with internal debt accounting for Rs 1.234 trillion and external debt Rs 1.301 trillion. Depreciation of the Nepali currency against the US dollar added an additional Rs 11.61 billion to the debt burden.
Public debt now represents 44.46 percent of Nepal’s gross domestic product (GDP), with external loans accounting for 22.81 percent and internal loans 21.64 percent. A decade ago, the debt-to-GDP ratio was 22 percent—half of the current level.
Economists warn that without a shift toward productive spending, the country risks further economic strain and an unsustainable debt trajectory.