In the fiscal year 2024-25, the government successfully raised 100 percent of its targeted domestic debt but managed to mobilize only about 57.79 percent of the planned external debt, according to the Public Debt Management Office’s report up to mid-July. The government had set a target of Rs 330bn for domestic borrowing, which was fully achieved. However, out of Rs 217bn targeted for external borrowing, only Rs 125.39bn was raised, falling short by approximately Rs 9.16bn.
Gopikrishna Koirala, head of the Public Debt Management Office, explained that lower capital expenditure and delayed completion of development projects prevented full utilization of external debt. He said the government initially spends from its own resources on annual projects and later seeks reimbursement from lenders, but delays in project completion blocked such reimbursements and external borrowing.
External debt generally carries lower interest rates and longer repayment periods compared to domestic debt, which is often used for operational expenses. Moreover, lenders impose stricter conditions on external loans, requiring them to be focused on capital investment, making external borrowing more effective.
The government’s total public debt mobilization target was Rs 547bn, but only Rs 455.39bn (83.25 percent) was realized during the fiscal year. The total government debt increased by Rs 231.8bn to
Rs 2,669.57bn, equivalent to 43.71 percent of GDP. Of this, external debt accounted for 52.49 percent and domestic debt 47.51 percent.
Outstanding repayments stand at Rs 1,263.45bn for domestic debt and Rs 1,401.35bn for external debt, representing 22.14 percent and 24.56 percent of GDP, respectively. Interest payments on government debt exceeded Rs 400bn during the fiscal year. Rs 362.59bn had been paid by mid-July, reaching 90.01 percent of the annual budget allocation for debt servicing. Interest payment accounts for 5.94 percent of GDP. Specifically, Rs 304.19bn was spent on interest for domestic debt and
Rs 58.40bn for external debt.
