Domestic Borrowings Finance Rs. 40B: Treasury Bills and Bonds in Focus

In the first month of fiscal year 2025/26, the Government of Nepal mobilized Rs. 40 billion through domestic borrowings, underscoring its continued reliance on internal debt to finance budgetary gaps. According to Nepal Rastra Bank’s latest budgetary operations data, the borrowing mix was tilted heavily towards development bonds worth Rs. 40 billion, while no new issuance of treasury bills took place during the period. Other instruments such as national savings certificates, citizen savings certificates, and foreign employment bonds remained dormant.

Analysts note that while domestic borrowings provide the government with an immediate fiscal cushion, heavy dependence on bonds and short-term papers raises concerns about interest burdens and rollover risks in the future. Treasury bills are typically used for short-term liquidity management, but the government’s absence from that market indicates a preference for longer-tenor borrowing amid stable demand from banks and financial institutions.

The Rs. 40B financing highlights a broader fiscal strategy: while revenue collection stood at Rs. 75B in the same period, expenditure commitments (Rs. 44B) and debt repayments pressured the government to rely on debt markets. Experts warn that without stronger expenditure efficiency and disciplined fiscal management, such reliance could escalate public debt levels and crowd out private sector credit.