Himal Press 
KATHMANDU: Nepal’s total public debt increased by Rs 300.85 billion in fiscal year 2025/26, with more than half of the increase driven by losses from foreign exchange fluctuations.
According to the Public Debt Management Office (PDMO), total public debt climbed to Rs 29,749.90 billion by the end of fiscal year 2025/26. This includes Rs 167 billion in losses resulting from exchange rate fluctuations.
The total public debt is equivalent to 45.07% of the country’s gross domestic product (GDP).
The country’s outstanding public debt stood at Rs 26,749.04 billion at the start of the fiscal year.
Data show that external debt accounted for 53.77% of total public debt, while domestic debt accounted for the remaining 46.23%.
The government had set a target of mobilizing Rs 595.66 billion in public borrowing during the fiscal year. However, it raised Rs 447.18 billion, or 75.07% of the annual target. The low borrowing was due to weak mobilization of external loans during the review period. The PDMO’s monthly report shows the government achieved only 37.88% of its external borrowing target. Against a target of Rs 383.66 billion, it mobilized only Rs 145.16 billion.
Sources say the rapid depreciation of the Nepali rupee against major currencies forced the government to depend less on external sources for public debt.
Domestic borrowing, however, reached 99.08% of its annual target. The PDMO raised Rs 358.66 billion during the period against a target of Rs 362 billion.
The government had allocated Rs 411.01 billion for debt servicing in fiscal year 2025/26. By the end of the fiscal year, it had spent Rs 386.22 billion, or 93.97% of the allocated budget.
Of the total debt servicing expenditure, Rs 312.40 billion went toward principal repayment and Rs 73.82 billion toward interest payments. Of the principal repayment, only Rs 61.84 billion was used to repay external debt.
Debt servicing expenditure amounted to 5.85% of GDP. The budget earmarked for debt servicing in 2025/26 was higher than funds set aside for capital expenditure during the fiscal year.
Although total public debt increased by Rs 300.85 billion during the fiscal year, net borrowing accounted for only Rs 133.85 billion.
