
KATHMANDU: The government fulfilled its Rs 330 billion internal debt target for last fiscal year 2024/25 but secured just Rs 125.3 billion of its Rs 217 billion external borrowing requirement, the Public Debt Management Office (PDMO) said.
PDMO Chief Gopikrishna Koirala attributed the shortfall to insufficient capital expenditure and delays in project completion. He explained that the government initially funds annual programmes from internal resources and later seeks lender reimbursement, but untimely project execution prevented full claims.
External loans generally carry lower interest rates and longer repayment periods than internal borrowing and are earmarked for infrastructure and development projects to promote capital formation. By contrast, internal debt is often used for recurrent expenditure, and heightened government borrowing can crowd out private-sector credit, with knock-on effects on financial and foreign-exchange markets.
For fiscal year 2024/25, the government set a total public debt mobilisation target of Rs 547 billion but achieved Rs 455.39 billion, or 83.25%. By March 31, 2025, total government debt stood at Rs 2,669 billion—up Rs 231 billion from the previous year and equivalent to 43.71% of GDP. As of mid-July 2025, foreign loans accounted for 52.49% of total public debt and internal loans 47.51%. Outstanding internal debt was Rs 1,263 billion (22.14% of GDP) and external debt Rs 1,401 billion (24.56% of GDP).
During the year, the government spent over Rs 400 billion on debt servicing, covering principal and interest—90.01% of the allocated budget and 5.94% of GDP. Of this, Rs 304 billion was allocated to internal debt and Rs 58.4 billion to external debt repayments.