Understanding Nepal’s Rising Public Debt – Key Facts and Implications
Summary
Nepal’s public debt has surged to Rs 2.859 trillion, close to 47% of GDP, due to increased borrowing, a depreciating rupee, and revenue shortfalls, raising concerns about a potential debt trap affecting public services and economic growth.
Key Points
- Nepal's public debt reached Rs 2.859 trillion or 46.81% of GDP by mid-February 2026, nearly doubling in six and a half years.
- The rapid debt increase is driven by new borrowings to repay old loans, rupee depreciation, and insufficient domestic revenue collection.
- Debt servicing consumes over 10% of the annual government budget, limiting funds for essential sectors like education, healthcare, and infrastructure.
- Experts urge restricting borrowing to high-return investments and improving transparency and fiscal discipline to avoid a long-term debt trap.
