Nepal External Debt by Creditor: Who Nepal Owes Money To

Nepal's public debt is split into two halves: internal (domestic) debt owed to Nepali banks and bondholders, and external (foreign) debt owed to overseas lenders. As of mid-April 2026 (roughly nine months into fiscal year 2082/83 BS), total public debt was about NRs 2.93 trillion, of which external debt was about NRs 1.54 trillion (52.7 percent of the total, and around 25 percent of GDP). At the start of that fiscal year (mid-July 2025) external debt stood near NRs 1.40 trillion, so much of the increase came from a weaker rupee rather than fresh borrowing.

The single most important fact about Nepal's foreign debt is that it is not owed to any one country. Unlike some of its neighbours, Nepal borrows mostly from multilateral development institutions on concessional (below-market) terms, not from commercial banks or a single bilateral lender. According to Nepal's Ministry of Finance and IMF analysis, multilateral creditors hold roughly 87-90 percent of the external stock, and their loans average about 1 percent interest with maturities of around 36 years.

That structure matters for the recurring public anxiety about a 'debt trap.' Because the largest creditors are the World Bank and the Asian Development Bank, and because their money is cheap and long-dated, Nepal's foreign-debt risk profile is very different from a country dominated by short-term commercial or single-bilateral loans. All figures below are indicative and should be checked against the latest Public Debt Management Office (PDMO) bulletin, because rankings and rupee amounts shift with each disbursement and with exchange-rate movements.

The Ministry of Finance's Public Debt Management Office publishes the composition of external debt by creditor. The shares below reflect the FY 2023/24 and FY 2024/25 medium-term debt management strategy (MTDS) reporting and remain broadly representative; treat them as approximate rather than to-the-decimal current.

In descending order of outstanding amount and share, the leading creditors are the World Bank's International Development Association, the Asian Development Bank, the International Monetary Fund, Japan (JICA), India (mainly India EXIM lines of credit), and China (mainly China EXIM Bank), followed by a tail of smaller lenders such as Korea's EDCF, IFAD and the OPEC Fund (OFID). A useful way to picture this is a ranked bar chart: the first two bars (IDA and ADB) dwarf everything else, and the remaining creditors form a long, thin tail.

The International Development Association (IDA) is the concessional (soft-loan) arm of the World Bank Group and Nepal's single largest creditor, holding close to half of the external stock (about 48.86 percent in FY 2023/24 reporting). IDA credits are highly concessional: historically near-zero or very low interest, long grace periods, and maturities that can stretch to 30-40 years. They finance a broad span of sectors including roads, energy, education, health, social protection and post-earthquake reconstruction.

The Asian Development Bank (ADB) is the second-largest creditor, at roughly 32-33 percent of the external stock. ADB has been a partner since Nepal joined in 1966; as of 31 December 2024 it reported having committed 519 public-sector loans, grants and technical-assistance operations totalling about US$9.3 billion to Nepal, with an active sovereign portfolio of dozens of loans and grants worth several billion dollars. ADB lending concentrates on transport (highways and roads), energy and power transmission, urban water and sanitation, and agriculture.

Together IDA and ADB anchor Nepal's foreign borrowing. Their combined share of the external portfolio is on the order of 80 percent, which is why analysts describe Nepal's external debt as 'multilateral-dominated' and comparatively low-risk. Both lend in special drawing rights (SDR) or US dollars, which is why a weaker Nepali rupee mechanically inflates the rupee value of the debt even when no new loans are taken.

The International Monetary Fund (IMF) holds roughly 5 percent of Nepal's external debt. IMF resources are not project loans but concessional balance-of-payments and reform financing, most recently through the Extended Credit Facility (ECF) arrangement approved in January 2022. These funds support Nepal's external buffers and macroeconomic and governance reforms rather than specific bridges or roads.

Japan, channelled through the Japan International Cooperation Agency (JICA), is Nepal's largest single-country (bilateral) creditor, at around 4 percent of the external stock. Japanese ODA loans are very concessional and long-dated and have financed major infrastructure such as the Sindhuli (BP) Highway, Kathmandu's water supply and wastewater systems, and airport and disaster-resilience projects.

India's outstanding debt to Nepal is around 3 percent, mostly through India EXIM Bank lines of credit (LoCs) that fund roads, cross-border rail, power infrastructure, hydropower and post-earthquake housing. India is also a large grant donor to Nepal, so its total development footprint is larger than its loan share alone suggests. As with all creditors here, the exact ranking of Japan versus India can flip year to year as new tranches are disbursed.

This is one of the most-searched questions about Nepal's debt, and the answer surprises many people: China is a relatively small creditor. Chinese loans, mainly through the Export-Import Bank of China (China EXIM Bank), account for only a low single-digit percentage of Nepal's external debt, smaller than the shares of the World Bank, ADB, the IMF, Japan and India. Nepal's borrowing from China is concessional and project-tied, not the kind of large commercial exposure often implied by 'debt trap' headlines.

The most prominent Chinese-financed loan is the Pokhara International (Regional) Airport, built with a China EXIM Bank loan of about US$216 million (originally around US$215.96 million) signed in 2016. Reported terms were 2 percent annual interest with a 7-year grace period and a 20-year repayment schedule; a separate concessional loan financed the acquisition of MA60 and Y12E aircraft on similar low-interest, long-maturity terms. Whether the Pokhara loan should be repaid or converted to a grant has been a live political debate in Nepal.

In short, claims that Nepal is 'drowning in Chinese debt' are not supported by the PDMO's own creditor composition: Nepal owes far more to the World Bank and ADB than to China. That does not mean individual Chinese-funded projects are uncontroversial, but at the portfolio level China is a minor lender relative to the multilateral banks.

Because Nepal borrows so heavily from IDA, ADB and the IMF, its average external borrowing is unusually cheap: multilateral loans average around 1 percent interest with maturities near 36 years, and over 70 percent of the external stock is denominated in SDR with roughly 20 percent in US dollars. This concessional profile is the main reason the World Bank-IMF Joint Debt Sustainability Analysis has assessed Nepal at a low-to-moderate risk of debt distress rather than in crisis.

The catch is currency risk. When the Nepali rupee weakens against the US dollar and the SDR basket, the rupee value of the same foreign loans rises even without new borrowing. In FY 2025/26, for example, a chunk of the jump in reported external debt came from an exchange-rate loss of over NRs 115 billion as the rupee slid from roughly 137 to 150 per US dollar, not from fresh disbursements. This is why headline rupee figures can look alarming even when the underlying dollar debt is stable.

The other genuine concern is disbursement and value-for-money rather than solvency: large committed amounts (especially at ADB) are drawn down slowly, and debt service will rise as grace periods on past loans end. Readers should therefore watch the debt-to-GDP ratio (in the low-to-mid 40s percent range in recent years) and the PDMO's debt-service projections, not just the gross rupee stock.

Nepal's authoritative source for public and external debt is the Public Debt Management Office (PDMO) under the Ministry of Finance, which publishes a Public Debt Bulletin and the Medium-Term Debt Management Strategy (MTDS). These documents give the creditor-by-creditor breakdown, currency composition and debt-service schedule, and they are the numbers quoted (sometimes with a lag) by Nepali media.

For cross-checking against international data, the World Bank's International Debt Statistics (IDS) / International Debt Report and the World Bank-IMF Joint Debt Sustainability Analysis present Nepal's external debt on a comparable global basis. Nepal Rastra Bank (NRB) also reports external-sector and debt figures in its economic bulletins. Because reporting dates, exchange rates and whether 'external' means public-only or public-plus-private can differ, always note the source and the as-of date before comparing two numbers.