Nepal Public Debt: Total, Internal vs External, and Debt-to-GDP

Nepal's total outstanding public debt is the combined stock of money the federal government owes to lenders inside the country (internal or domestic debt) and abroad (external debt). It does not include private-sector borrowing or the deposit liabilities of banks. The authoritative record-keeper is the Public Debt Management Office (PDMO) under the Ministry of Finance (MoF), whose figures are cross-checked against Nepal Rastra Bank (NRB, the central bank) publications.

By mid-March 2026 (Falgun 2082 BS), total outstanding public debt had reached about Rs 2,878 billion (Rs 2.87 trillion), according to government debt statistics. This was up from roughly Rs 2,858 billion in mid-February 2026 and Rs 2,669.64 billion at the end of fiscal year (FY) 2081/82 (mid-July 2025). Debt has continued to climb through FY 2082/83 (2025/26), with the total nearing the Rs 3 trillion milestone by mid-2026.

A large part of the recent increase comes not from fresh borrowing but from exchange-rate effects: because much external debt is denominated in US dollars and IMF Special Drawing Rights (SDRs), depreciation of the Nepali rupee inflates the rupee value of foreign loans. In the first seven months of FY 2082/83 alone, currency depreciation added an estimated Rs 93 billion to Nepal's debt liabilities, separate from the roughly Rs 255 billion in new loans drawn.

Nepal's public debt is divided into two roughly equal halves. External (foreign) debt is money borrowed from multilateral and bilateral lenders abroad, almost all of it on concessional terms with low interest rates and long maturities. Internal (domestic) debt is raised inside Nepal, mainly through Treasury bills, development bonds, citizen savings certificates and national savings bonds sold to banks, institutions and the public.

As of mid-March 2026, external debt stood at about Rs 1,530 billion (roughly 53% of the total) and internal/domestic debt at about Rs 1,348 billion (roughly 47%). At the end of FY 2081/82 (mid-July 2025) the split was Rs 1,401.42 billion external and Rs 1,268.22 billion internal. For most of the past decade the two have tracked closely, with external debt periodically edging ahead largely because rupee depreciation raises its reported value.

External debt is overwhelmingly multilateral rather than bilateral. Of the foreign portfolio, the World Bank's International Development Association (IDA) is the single largest creditor at roughly 49%, followed by the Asian Development Bank (ADB) at about 33% and the International Monetary Fund (IMF) at around 5%. Multilateral institutions together account for close to 90% of external debt, which is why economists generally describe Nepal's foreign debt as relatively low-risk despite its rising headline size.

The debt-to-GDP ratio compares total public debt to the size of the whole economy (gross domestic product) in a year, and is the standard yardstick for whether a country's borrowing is sustainable. A rising ratio means debt is growing faster than the economy. Nepal's ratio has climbed from the mid-20% range a decade ago to the mid-40% range today.

Reported figures vary slightly depending on which GDP estimate is used as the denominator and which month is measured. At the end of FY 2081/82 (mid-July 2025) the ratio was about 43.7% of GDP. By mid-March 2026 it had risen to roughly 47%, with external debt at about 25% of GDP and domestic debt at about 22%. When measured against a larger revised GDP base later in FY 2082/83, the same debt stock produces a slightly lower ratio near 45%.

For context, Nepal's ratio remains below the roughly 55-60% threshold that the joint World Bank-IMF Debt Sustainability Analysis treats as a caution level for a country of Nepal's profile, and Nepal is still rated at moderate (not high) risk of debt distress. However, the trend is upward, and analysts warn that if debt keeps outpacing revenue growth, servicing costs will squeeze development spending.

Per-capita public debt divides the total outstanding debt by Nepal's population to show the notional burden per person. Using the 2021 census population of roughly 29.16 million and a debt stock nearing Rs 2.9-3.0 trillion in 2026, per-capita public debt works out to roughly Rs 100,000 per person, up from well under Rs 50,000 a decade earlier.

This figure is a useful headline for public discussion, but it should be read with care. It is a gross notional share, not a bill any individual is asked to pay; debt is serviced from government revenue, not by direct household levies. It also does not net out the assets, infrastructure and services that borrowing helped finance, nor does it account for the concessional, low-interest nature of most of the debt.

Even so, the direction is clear: per-capita debt has risen sharply as the total stock has more than doubled since FY 2018/19. Journalists and opposition figures frequently cite the per-person figure around budget season, which is why searches for it spike each Jestha-Ashad (May-July) when the federal budget is presented.

Nepal's public debt was modest for most of the post-2000 period, sitting around Rs 550 billion (about 25% of GDP) in FY 2014/15. It then accelerated after the 2015 earthquake reconstruction, the shift to federalism, and pandemic-era spending, roughly doubling every few years.

The total crossed Rs 1 trillion around FY 2018/19 and reached about Rs 1.43 trillion (around 38% of GDP) by FY 2019/20. It broke the Rs 2 trillion mark for the first time in FY 2021/22, when it stood at roughly Rs 2.01 trillion (about 41% of GDP). By the end of FY 2081/82 (2024/25) it had reached Rs 2.67 trillion, and it approached Rs 3 trillion during FY 2082/83 (2025/26).

Two forces drive the trend. First, persistent fiscal deficits: the government routinely spends more than it collects in revenue and grants, so it borrows to cover the gap, especially for capital projects. Second, currency effects: because a majority of external debt is in foreign currency, every depreciation of the rupee against the dollar automatically enlarges the reported stock even without new loans.

The Public Debt Management Office (PDMO), established under the Ministry of Finance, is the central agency responsible for raising, recording, servicing and reporting Nepal's public debt. It publishes a Public Debt Bulletin and periodic Quarterly Debt Position and monthly government debt statistics, and it prepares the Medium-Term Debt Management Strategy (MTDS) that guides how much to borrow domestically versus externally.

Nepal Rastra Bank (NRB) acts as the government's issuing and paying agent for domestic securities and publishes its own summary sheets of domestic debt, which is why NRB and PDMO figures are usually consistent. GDP figures used in the ratio come from the National Statistics Office (NSO, formerly the Central Bureau of Statistics). External creditors such as the World Bank and IMF also publish independent debt-sustainability assessments.

Because different sources report as of different dates and use different GDP vintages, small discrepancies between headline numbers are normal. For the most authoritative snapshot, the PDMO's latest Public Debt Bulletin and monthly government debt statistics are the primary reference, and this hub is updated to reflect them.

Rising public debt is not automatically bad; it depends on what the money buys and how easily it can be serviced. Because roughly 90% of Nepal's external debt is concessional multilateral lending at interest rates often below 1%, the immediate servicing cost is lower than the headline stock might suggest. Domestic debt, however, carries market interest rates and is a growing share of interest expense.

The main concerns are the pace of accumulation and the composition of spending. If borrowing funds recurrent expenses rather than productive capital projects, it adds to future obligations without raising the economy's capacity to repay. Debt servicing (principal plus interest) already consumes a meaningful slice of the budget, and heavy servicing years can crowd out development and social spending.

For citizens, the practical stakes are indirect but real: sustained deficits and currency depreciation raise servicing costs, which can pressure future taxes, inflation and the exchange rate. The counter-argument is that Nepal's ratio remains moderate by international and South Asian standards, and that well-targeted concessional borrowing for infrastructure can raise long-run growth. The debate over the right ceiling for Nepal's debt is a recurring feature of every budget cycle.