Kathmandu: While the government has succeeded in raising the entire target of internal debt for the fiscal year 2024/25, it managed to secure only 57% of the external debt.
According to National News Agency Nepal, the Public Debt Management Office’s report on public debt indicated that the government fully met its target of collecting Rs 330 billion for internal debt. However, it only secured Rs 125.3 billion of the targeted Rs 217 billion for external debt, falling short by Rs 91.6 billion.
The Office’s Chief, Gopikrishna Koirala, cited low capital expenditure and project delays as major reasons for the shortfall in external debt. He explained, “Since capital expenditure is insufficient and many projects could not be completed on time, we could not optimally raise all the external debt.”
Koirala further elaborated that government projects are initially funded by internal resources and then reimbursed by lenders. Due to project execution delays, full reimbursement requests were unfeasible, resulting in lower actual external debt.
The interest rate on external debt is lower compared to internal debt, and it benefits from a longer repayment period. Additionally, external debt is considered more effective as it is specifically tied to capital projects, with lenders stipulating that funds be used for infrastructure or development projects.
The government’s target for total public debt mobilization was Rs 547 billion, of which Rs 455.39 billion was achieved, meeting 83.25% of the target. By the fiscal year’s end, the total government debt stood at Rs 2,669 billion, representing 43.71% of the GDP.
As of mid-July 2025, foreign loans made up 52.49% of total public debt, while internal loans accounted for 47.51%. The government currently owes Rs 1,263 billion in internal debt and Rs 1,401 billion in external debt. Relative to GDP, internal debt represents 22.14%, and external debt accounts for 24.56%.
In the last fiscal year, over Rs 400 billion was spent on fiscal management, covering principal and interest payments, amounting to 90.01% of the allocated annual budget for debt servicing and 5.94% of the GDP. Of this, Rs 304 billion was spent on internal debt servicing, while Rs 58.40 billion went towards external debt repayment.