The Government of Nepal has allocated nearly Rs. 100 billion solely for interest payments on domestic and foreign debt in the fiscal year 2083/84 budget. The allocation highlights the growing burden of public debt servicing on government finances.
According to the budget, the government has set aside Rs. 99.79 billion for interest payments. Of this amount, Rs. 82.25 billion will be used to service domestic debt, while Rs. 17.54 billion has been allocated for interest payments on foreign loans.
The government will pay Rs. 14.96 billion in interest to multilateral lenders, including approximately Rs. 6 billion to the Asian Development Bank (ADB) and Rs. 7 billion to the World Bank. An additional Rs. 2.58 billion has been allocated for interest payments on bilateral loans obtained from countries such as Japan, Saudi Arabia, and France.
According to the Public Debt Management Office, Nepal's total public debt had reached Rs. 2.975 trillion as of mid-April 2026, equivalent to 45.08% of GDP.
Despite introducing a budget of over Rs. 2.124 trillion, the government plans to continue borrowing to finance development expenditures and meet debt obligations. Finance Minister Dr. Swarnim Wagle has stated that Nepal's debt level remains manageable relative to GDP.
He noted that while the government plans to borrow around Rs. 650 billion next fiscal year, more than half of that amount will be used to repay existing debt principal and interest, resulting in a much lower net increase in debt.
Principal Repayment Commitments
The government has also earmarked significant resources for repayment of loan principal. In the upcoming fiscal year, Nepal plans to repay approximately Rs. 140 billion in foreign loan principal.
Among multilateral lenders, the government will repay:
- Rs. 22 billion to the Asian Development Bank (ADB)
- Rs. 23 billion to the International Development Association (World Bank Group)
- Rs. 8.40 billion to the International Monetary Fund (IMF)
- Rs. 1.60 billion to OPEC Fund
- Rs. 1 billion to the European Investment Bank (EIB)
Additional repayments have been allocated for IFAD, AIIB, Nordic Development Fund, and other international institutions.
For bilateral creditors, the government has allocated Rs. 14.91 billion for principal repayments, including loans from Japan, Saudi Arabia, Kuwait, France, Belgium, and other countries.
The government estimates total debt servicing expenses, including both principal and interest, at Rs. 418 billion in FY 2083/84.
New Foreign Borrowing Plans
To finance development projects and manage existing obligations, Nepal plans to secure fresh foreign loans from several development partners.
The largest borrowing targets include:
- Asian Development Bank (ADB): Rs. 112 billion
- World Bank: Rs. 89.87 billion
- International Monetary Fund (IMF): Rs. 6.30 billion
- AIIB: Rs. 4 billion
- IFAD: Rs. 3.13 billion
- Other multilateral programs: Rs. 9.53 billion
The government also plans to obtain bilateral loans from:
- China: Rs. 1 billion
- India: Rs. 2.07 billion
- Japan: Rs. 6.07 billion
- Saudi Development Fund: Rs. 1.62 billion
- European Union: Rs. 10.04 billion
Debt and Interest Overview
| Particulars | Amount (Rs.) |
|---|---|
| Total Interest Payment | 99.79 Billion |
| Domestic Debt Interest | 82.25 Billion |
| Foreign Debt Interest | 17.54 Billion |
| Total Public Debt | 2.975 Trillion |
| Debt-to-GDP Ratio | 45.08% |
| Foreign Principal Repayment | 140 Billion |
| Total Debt Servicing (Principal + Interest) | 418 Billion |
| Planned Total Borrowing | 650 Billion |
The figures indicate that a substantial portion of Nepal's future borrowing will be used to service existing debt obligations rather than finance new development initiatives, highlighting the growing importance of debt management and fiscal sustainability in the country's economic policy.
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