Himal Press 
KATHMANDU: Total public debt has doubled over the past seven years.
According to the Public Debt Management Office (PDMO), total public debt stood at Rs 1,433.40 billion by the end of fiscal year 2019/20. By the third quarter of the current fiscal year, total public debt has reached Rs 2,933.79 billion.
Increasing public expenditure, declining foreign grants, and weaker revenue mobilization have forced the government to turn to public debt to meet resource shortfalls. As a result, the share of public debt to gross domestic product (GDP) has climbed from 36.46% in 2019/20 to 48.04% in the third quarter of 2025/26.
According to the PDMO, domestic debt now accounts for 22.73% of GDP, while foreign debt makes up 25.31%.
Of the total outstanding debt, Rs 1,268.22 billion, or 47.31%, is domestic, while Rs 1,405.82 billion, or 52.69%, is external.
In the first nine months of the current fiscal year, total public debt increased by Rs 259.74 billion from Rs 2,674.04 billion recorded at the beginning of the fiscal year in mid-July 2025.
Currency depreciation has further exacerbated the burden, adding Rs 115.75 billion to the foreign debt stock due to the weakening of the Nepali rupee against major international currencies.
Debt servicing costs have also surged. The government spent Rs 258.44 billion on principal and interest payments in the first nine months of the fiscal year. This translates to 4.23% of the total GDP.
According to PDMO, the government spent Rs 204 billion on principal repayment and Rs 54.27 billion on interest. Of this, Rs 163.77 billion went toward domestic principal repayment and Rs 45.60 billion toward interest, while external debt servicing included Rs 40.39 billion in principal and Rs 8.67 billion in interest payments.
The government has set a target of mobilizing Rs 595.66 billion in public debt in the current fiscal year. This includes Rs 362 billion in domestic borrowing and Rs 233.66 billion in foreign loans. By the third quarter, it has mobilized Rs 348.15 billion, or 58.45% of the annual target.
Progress in domestic borrowing has been relatively strong, with Rs 283.66 billion, 78.36% of the targeted amount, raised by the third quarter. However, progress in foreign debt mobilization has lagged, with only Rs 64.48 billion, or 27.6% of the targeted amount, mobilized by mid-April.
