The government has achieved just 15.79 percent of its annual external borrowing target in the first six months of fiscal year 2025/26. According to the Public Debt Management Office, Nepal received Rs 36.89 billion in foreign loans against a yearly target of Rs 233 billion. The shortfall has been attributed to delays in major infrastructure projects and weak project execution. To compensate, the government increased domestic borrowing, raising Rs 177 billion internally. While ample liquidity has kept domestic interest rates low, economists caution that heavy reliance on internal borrowing could crowd out private-sector credit if conditions tighten later in the year.
