Alarming Debt Burden
Summary
Nepal faces an alarming increase in public debt, with debt servicing costs exceeding the national development budget, risking economic growth and sustainability.
Key Points
- Nepal’s government spent Rs 362.59 billion in Fiscal Year 2024/25 on repaying domestic and foreign loan principal and interest, surpassing the entire national development budget.
- Interest rates on loans from major partners like the World Bank have doubled, increasing the cost of ongoing development projects.
- Foreign debt equals over half of Nepal’s total public debt, necessitating prioritization of projects that generate economic returns and timely completion.
- Failure to manage borrowing and spending responsibly risks pushing Nepal into a debt trap with negative implications for future development.
