Government Deposits Surge 17.7% While Net Claims Decline by 6.6%

Nepal’s government banking position saw a notable shift in August 2025, with government deposits rising by 17.7 percent year-on-year to Rs. 226.6 billion, according to Nepal Rastra Bank’s latest Monetary Survey. At the same time, net claims on the government declined by 6.6 percent, signaling a liquidity build-up within the public sector and reduced borrowing from the financial system.

The rise in deposits reflects improved fiscal cash management and possibly underutilization of budgeted capital expenditure in the early months of the fiscal year. As ministries and provincial governments receive allocations but delay spending, the unspent funds tend to accumulate in treasury accounts — boosting deposits but slowing fiscal stimulus.

Conversely, the decline in net claims — which measure the difference between what the government owes to the banking sector and what it deposits — shows that the government has become a net saver for the time being. This shift has contributed to higher liquidity in government accounts, even as it temporarily reduces money available to the private sector.

Economists note that such trends often occur at the start of Nepal’s fiscal year, as revenue collection outpaces spending. However, if the deposit buildup persists, it could tighten liquidity in the financial market, since large idle funds in government coffers limit circulation within the banking system.