According to the report, Nepal's total public debt liability has reached Rs 2,975.04 trillion as of mid-April 2026. At the beginning of the current fiscal year, the total debt stood at Rs 2,674.04 trillion. In this short period of 10 months, the debt burden has increased by Rs 301 billion.
The increase in debt is caused by not only the additional loans taken by the government, but also the weakening of the Nepali rupee against the US dollar (loss of exchange rate). According to the report, the change in exchange rate alone added an additional liability of Rs 300 billion. Of the current total debt, internal debt is Rs 1,381.22 billion and external debt is Rs 1,593.81 billion.
According to the official data of the National Census 2078, the total population of Nepal is 29,164,578. The average debt of a Nepali would be Rs 102,015 dividing the total debt of Rs 2975.04 billion on the basis of this population. Ten months ago, the per capita debt was around Rs 91,700. During this period, an additional Rs 10,315 debt has been added on the shoulders of every Nepali.
Compared to international standards and the size of the economy (GDP), Nepal's debt situation is already at a critical juncture, even if it has not reached a 'crisis sign'. Currently, Nepal's debt-to-GDP ratio stands at 45.08 percent. In general, it is considered satisfactory for developing countries to have a ratio below 50 percent. However, for a low-productive and high-import-based economy like Nepal, it is risky for this rate to increase. When Neighbouring country Sri Lanka's debt crossed 100 percent of GDP, it had went bankrupt, while India's debt is around 80 percent. Even if the debt of developed countries (such as the US or Japan) is many times more than GDP, their repaying ability is strong. The problem in Nepal is that the loan is not being utilized in the productive sector.
The increase in the size of the debt could have serious implications for Nepal's economy. For example, a large part of the revenue raised by the government is spent on paying the principal and interest on loans. According to the report, the government has already spent Rs 292.52 billion on payment of principal and interest till mid-April. This can lead to a fund shortage for development (roads, bridges, irrigation) projects. Foreign currency (dollars) is needed to pay off foreign debts. As the value of the dollar rises, the debt burden also increases, which raises inflation in the market. Today’s debt burden can lead to uncertain future for coming generation. If this debt is not utilized on building factories and infrastructure today, then future generations will have to bear return less debts. Moreover, a higher share of external debt (53.57%) could increase pressure from foreign donors on Nepal's policymaking and economy.
This report of the Public Debt Management Office clearly shows that caution should be exercised in debt management in Nepal. Taking a loan is not bad in itself, but if the loan is not used for development and production, then the country can fall into a 'debt trap'. The government's over-reliance on internal debt and failure to meet the external debt target also indicates fiscal imbalance. The priority now should be to invest in jobs and production rather than reducing debt.
