Nepal’s internal debt reached Rs 1.349 trillion by mid-February, although the government is benefiting from historically low interest rates. Due to high liquidity in the banking system and weak demand for private sector credit, the average interest rate on internal debt has dropped to 3.33 percent this year, compared to 8.84 percent in the 2022/23 fiscal year. Finance Minister Rameshore Khanal stated that while cheaper borrowing helps manage the fiscal deficit, limited productive investment from the private sector remains a worrying economic indicator. The interest payment ratio has now declined to about 4.30 percent, easing pressure on the national treasury.
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