KATHMANDU, June 1: Although the government has increased the size of the budget year after year, it has failed to boost revenue as expected, causing public debt to rise steadily. Public debt has now climbed to nearly Rs 2.7 trillion.
Finance Minister Bishnu Paudel has proposed a budget for the upcoming fiscal year 2082/83 (2025/26) that includes borrowing around Rs 600 billion. The government plans to raise Rs 233 billion through external loans and Rs 362 billion through domestic loans, bringing the total planned borrowing to Rs 595 billion.
Over the past six years, public debt has grown by approximately Rs 1.6 trillion. The Economic Survey states that the government's current public debt stands at Rs 2.676 trillion.
The government announced a budget of Rs 1.964 trillion for the upcoming fiscal year 2082/83 (2025/26). It plans to raise Rs 1.315 trillion through revenue collection and cover the remaining amount through foreign grants, external loans, and domestic borrowing. Since revenue collection fell short, the government relied on both internal and external loans to fund development projects and other expenditures. This growing gap between revenue and spending has increased the debt burden.
At the beginning of the current fiscal year 2081/82 (2024/25), total public debt stood at Rs 2.435 trillion. By the end of Baisakh (mid-May), the government increased it by Rs 188.3 billion. According to the Ministry of Finance, external loans account for 51.69 percent of the total public debt this fiscal year, while domestic loans make up 48.31 percent.
Public debt exceeds Rs 2.434 trillion, increasing by over Rs 30...
Finance Minister Bishnu Paudel clearly defined the sources of revenue, the amount of income, and how and where the government spends that income. He said, "We have also considered the limits of international aid that the country can receive." He added, "We projected domestic borrowing within the recommendations given by the National Finance Commission."
In recent years, public debt has increased significantly. The government kept internal and external debt at Rs 1.048 trillion until the fiscal year 2075/76 (2018/19), but total debt rose to Rs 2.434 trillion by the end of the fiscal year 2080/81 (2023/24). The government has sharply increased borrowing both domestically and externally in recent years. As a result, the country's public debt liability grows day by day.
In the fiscal year 2076/77 (2019/20), the government recorded public debt at Rs 1.433 trillion. That year, the government increased public debt by more than Rs 300 billion. It raised public debt to Rs 1.7378 trillion in fiscal year 2077/78 (2020/21) and added over Rs 250 billion in fiscal year 2078/79 (2021/22). By fiscal year 2079/80 (2022/23), the government pushed public debt up to Rs 2.29935 trillion.
Although economic activities expanded and revenue improved somewhat, the government did not meet its revenue expectations. The Ministry of Finance stated that revenue collection remains insufficient compared to public expenditure, which has pressured resource mobilization and caused public debt to increase.
The ministry emphasized that the government must manage resources effectively, reduce its dependence on debt, and maintain financial stability. It also explained that weak internal resource mobilization at the provincial and local levels has forced the government to rely more on the federal government, increasing resource pressure and driving up debt.
Parliament has criticized the government for increasing public debt. Stakeholders urge the government to invest borrowed funds in projects that generate returns. Major projects like the Pokhara and Bhairahawa airports have caused problems because the government's loan-funded investments have failed to yield returns.
When loan-funded projects fail to generate returns, risks rise. Experts advise the government to take loans cautiously. Struggling to cover current expenses, the government borrows internally and externally to fund development projects.
Because the government cannot increase revenue collection, it prepares budgets based on borrowing from foreign and domestic sources. While preparing the budget, the government sets clear targets for revenue collection, foreign aid, and the amounts of internal and external loans to be taken.
For the current fiscal year 2081/82 (2024/25), the government allocated a budget of Rs 1.8603 trillion. It plans to raise Rs 1.2603 trillion through revenue and Rs 5.233 billion from foreign grants. The government will cover the remaining Rs 547.67 billion by borrowing internally and externally, as stated in the budget. It planned to raise Rs 217.67 billion through foreign loans and Rs 330 billion through domestic loans. Officials have since revised this plan through a mid-term review.
Generally, the government calls its borrowing from inside and outside the country public debt. It refers to loans taken within the country as internal debt and loans taken from abroad as external debt. The government primarily uses public debt to cover its budget deficit.
