Foreign Liabilities Fall 7.3%: Nepal’s External Debt Pressure Eases

Nepal’s external financial position has strengthened notably, with foreign liabilities dropping by 7.3% year-on-year to Rs. 161.2 billion by mid-August 2025, according to Nepal Rastra Bank’s latest monetary survey. This decline reflects reduced external borrowing and improved repayment performance by the government and financial institutions.

The drop in liabilities — which include foreign deposits, IMF-related obligations, and external loans — suggests that Nepal has been able to manage its international debt commitments more efficiently amid rising foreign reserves. The share of short-term liabilities has fallen as well, indicating that the country’s external exposure is becoming more sustainable.

This easing of external pressure coincides with a significant rise in foreign assets, which surged 34% over the same period. As a result, Nepal’s net foreign assets (NFA) expanded sharply, reinforcing the nation’s balance of payments surplus and exchange rate stability.

Economists view this development as a positive sign of macroeconomic resilience. Reduced foreign debt burden means lower repayment risks and greater room for domestic fiscal flexibility. However, experts also caution that sustained remittance inflows and prudent external borrowing remain crucial to maintaining this stability, especially if import demand rises later in the year.