Nepal’s growing public debt has emerged as a serious concern, threatening the country’s ability to achieve its Sustainable Development Goals (SDGs). The external debt burden alone has surged to nearly NPR 1.4 trillion (14 kharba), while the overall public debt has climbed to NPR 2.65 trillion (26.54 kharba), amounting to 43.47% of the national GDP, according to the Public Debt Management Office.

In the first 11 months of the current fiscal year 2081/82 (up to mid-June 2025), the government borrowed an additional NPR 220.58 billion. Of the total debt, NPR 1.27 trillion is domestic and NPR 1.38 trillion is owed externally.

Vice Chair of the National Planning Commission, Prof. Dr. Shivaraj Adhikari, warned that the swelling external debt could jeopardize progress toward social development and fiscal sustainability. “Many developing countries are struggling with debt repayment, and Nepal is no exception,” he said. “Over 10% of our revenue now goes to paying interest alone, which is deeply troubling.”

This year alone, the government is expected to spend NPR 103.12 billion on interest and NPR 299.72 billion on loan repayments—outpacing allocations for sectors like health and education.

Nepal will need around NPR 21.165 trillion (211.65 kharba) in total—or roughly NPR 3.023 trillion annually—between 2024 and 2030 to meet its SDG commitments. Experts argue that while international loans continue to flow, their rigid terms often neglect the local needs and empowerment of low-income countries.

At the start of the current fiscal year, the total public debt stood at NPR 2.43 trillion. Finance Minister Bishnu Paudel has proposed taking an additional NPR 595 billion in loans for FY 2082/83, including NPR 233 billion in foreign and NPR 362 billion in domestic loans.

Over the past six years, public debt has increased by approximately NPR 1.6 trillion. The government has consistently relied on both domestic and foreign borrowing to fund development projects and cover its recurrent expenditures due to insufficient revenue collection.

For the upcoming fiscal year 2082/83, the government unveiled a budget of NPR 1.964 trillion, of which only NPR 1.315 trillion is expected from internal revenue. The remaining gap will be filled through foreign aid and loans.

Despite some recent improvement in revenue driven by expanded economic activity, it still falls short compared to expenditure demands. The Ministry of Finance acknowledges that the rising debt is a result of revenue-expenditure mismatch and underutilized internal resources, especially at provincial and local levels, increasing reliance on the federal government.

A historical overview shows a sharp rise in borrowing in recent years. In FY 2075/76, total debt was NPR 1.048 trillion. By the end of FY 2080/81, it had jumped to NPR 2.43 trillion. In FY 2076/77 alone, debt increased by over NPR 300 billion. The following year it rose to NPR 1.737 trillion, and FY 2078/79 saw another NPR 250 billion jump. By FY 2079/80, it had hit NPR 2.299 trillion.

Experts warn that unless debt-funded projects yield returns, they could further burden the economy. They advise the government to adopt a cautious and well-structured borrowing approach. Each year’s budget outlines targets for revenue, foreign aid, and loans, but execution and outcomes remain a challenge.

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