Debt Without Development

Nepal's public debt has reached Rs 2.974 trillion, equivalent to 45.07 percent of the country's gross domestic product (GDP). During the last fiscal year alone, the government added Rs 385 billion to its debt stock. Although it had planned to borrow nearly Rs 596 billion, it secured only about three-quarters of that target. Repayments and foreign exchange adjustments reduced the net increase, but the overall debt burden still rose sharply. More than half of Nepal's outstanding public debt now comes from foreign loans, with the remainder financed through domestic borrowing. A closer look at the figures reveals another concern: while the government nearly met its domestic borrowing target, it secured less than 38 percent of its foreign borrowing goal, forcing it to rely heavily on the domestic market. Debt servicing is also becoming an increasing burden. Nepal spent more than Rs 411 billion on principal and interest payments during the fiscal year, equivalent to 5.85 percent of GDP. Every rupee used to repay debt is a rupee unavailable for schools, hospitals, roads, irrigation and other public services.