Nepal’s debt servicing nears annual public borrowing
Summary
Nepal's debt servicing costs are approaching the amount of new public borrowing each year, raising concerns about fiscal space, development spending, and long-term debt sustainability.
Key Points
- Nepal's government is borrowing nearly as much annually to repay existing debt, limiting fiscal space for development.
- Public debt rose from Rs1,433 billion in 2020-21 to Rs2,674 billion in 2024-25, with debt servicing consuming over 73 percent of new debt raised.
- Economists warn increasing debt obligations risk fiscal imbalance, reducing capital expenditure and economic growth potential.
- Currency fluctuations have increased the rupee value of Nepal's external debt, adding to the overall debt burden despite government efforts to manage it.
