KATHMANDU: In the fiscal year 2081/82 (2024/25), the government successfully raised 100% of its targeted domestic debt but managed to mobilize only about 57.79% of the planned external debt, according to the Public Debt Management Office’s report up to mid-July.

The government had set a target of Rs 330 billion for domestic borrowing, which was fully achieved. However, out of Rs 217 billion targeted for external borrowing, only Rs 125.39 billion was raised, falling short by approximately Rs 9.16 billion.

Gopikrishna Koirala, head of the Public Debt Management Office, explained that lower capital expenditure and delayed completion of development projects prevented full utilization of external debt.

He said the government initially spends from its own resources on annual projects and later seeks reimbursement from lenders, but delays in project completion blocked such reimbursements and external borrowing.

External debt generally carries lower interest rates and longer repayment periods compared to domestic debt, which is often used for operational expenses. Moreover, lenders impose stricter conditions on external loans, requiring them to be focused on capital investment, making external borrowing more effective.

The government’s total public debt mobilization target was Rs 547 billion, but only Rs 455.39 billion (83.25%) was realized during the fiscal year.

The total government debt increased by Rs 231.8 billion to RS 2,669.57 billion, equivalent to 43.71% of GDP. Of this, external debt accounted for 52.49% and domestic debt 47.51%.

Outstanding repayments stand at Rs 1,263.45 billion for domestic debt and Rs 1,401.35 billion for external debt, representing 22.14% and 24.56% of GDP, respectively.

Interest payments on government debt exceeded Rs 400 billion during the fiscal year. Rs 362.59 billion had been paid by mid-July, reaching 90.01% of the annual budget allocation for debt servicing. Interest payment accounts for 5.94% of GDP.

Specifically, Rs 304.19 billion was spent on interest for domestic debt and Rs 58.40 billion for external debt.