[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-111643-en":3,"doc-seo-111643-105":29,"detail-sidebar-cat-0-en-105":91},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":20,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":13,"seo_description":14,"update_tm":27,"read_time":28},111643,7971461740909,"Levi","https://ap-avatar.wpscdn.com/davatar_155a257f0dc6eb9ab79c44ca47cae57d",8,"Research & Report","Nepal - Joint Bank-Fund Debt Sustainability Analysis - Debt Distress Risk Assessment","Nepal’s joint IMF-World Bank debt sustainability analysis finds both external and overall public debt at low risk of debt distress, unchanged from the prior year. Mechanical breaches under an export shock scenario are overridden through judgment because exceptionally high remittances and concessional external financing reduce the relevance of debt-to-exports signals. Despite slower GDP growth and a revenue shortfall, public debt is projected to peak around 50 percent of GDP by FY2025/26, supported by valuation effects, lower asset acquisition, and fiscal consolidation. Continued consolidation, concessional borrowing, and structural reforms to strengthen exports and resilience are required.","Public Disclosure  \nPub lic Disc losure Authorized  \nApproved by:  \nManuela Francisco and Mathew Verghis (IDA) and Rupa Duttagupta and Fabian Valencia (IMF)  \nPrepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF)  \n\n| NEPAL: JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS |  |\n| --- | --- |\n| Risk of external debt distress | Low |\n| Overall risk of debt distress | Low |\n| Granularity in the risk rating | No Applicable |\n| Application of judgment | Yes |\n\nBoth external and overall public debts in Nepal are assessed at low risk of debt distress, unchanged from the last year’s Debt Sustainability Analysis (DSA) .1 Present value (PV) of external debt-to-exports ratio and external debt service-to-exports ratio breach the indicative thresholds under an export shock scenario, suggesting a mechanical rating of moderate risk of debt distress. Still, similar to last year’s DSA, staff has applied judgement to override the mechanical signal due to Nepal’s exceptionally high level of remittances, making the high debt-to-exports ratio a less relevant signal of debt distress in Nepal compared to most other countries. At over three times the exports, remittances are the major source of foreign exchange earnings in Nepal, which along with concessional external financing, help the country maintain an adequate level of reserves and meet its debt obligations despite a sizeable trade deficit. All other external and public debt risk indicators are below their respective indicative thresholds in all stress-tests. Public debt stood at 47 percent of GDP in FY2022/23: in line with the projection in last year’s DSA despite much slower GDP growth and a sharp drop in revenue. The better-than-expected result is due to a favorable valuation effect in external debt, lower net acquisition of financial assets, as well as fiscal consolidation efforts by the authorities. Despite continuing macroeconomic headwinds, debt is projected to peak at 50 percent of GDP in FY2025/26 and to gradually subside afterwards. The assessment, however, is contingent upon continued fiscal consolidation effort by the  \n1 Nepal’s debt carrying capacity remains strong, based on Nepal’s composite indicator (CI) score. The CI is calculated at 3. 14, based on the October 2023 World Economic Outlook (WEO) and the 2022 World Bank Country Policy and Institutional Assessment (CPIA) index.  \nauthorities (as envisaged in the ECF-supported program as well as in the FY2023/24 mid-year budget review)—including tax revenue and spending reforms—and continued utilization of external borrowing at concessional terms. Nepal also needs structural reforms to diversify exports, improve productivity and competitiveness, and enhance resilience to shocks, in particular natural disasters.  \n1. Public debt in this DSA comprises debt from the general government, central bank (borrowing on behalf of the government) and government guarantees (Text Table 1) . Nepal’s provincial and local governments have no debt. Their borrowing is permitted by the Public Debt Management Act of 2022 but has not yet commenced, apart from on-lending by the central government. The social security fund and other extra budgetary funds currently are not allowed to borrow, and thus do not have debt either. IMF disbursements in 2020-2023 were used for direct budget support, and bond issuances by the central bank were only for the purpose of monetary policy operations. The government has provided guarantees for the debts of State-Owned-Enterprises (SOEs), and the current stock of guarantees—totaling NPR 46 billion (0 .9 percent of GDP)—is included in the debt stock.2 The majority of the medium- and long-term SOE loans are from the central government, and thus are already covered under central government debt. SOE liabilities not covered by public debt are part of the contingent liability stress test.  \n2. Public debt is defined in the LIC DSF to include the negative balance of the T","cbCaicNuwxa8aqcU","https://ap.wps.com/l/cbCaicNuwxa8aqcU","pdf",3017887,1,24,"English","en",105,"# Risk Assessment Summary\n## External and Overall Debt Distress Risk\n## Role of Judgement and Remittances\n# Debt Outlook and Drivers\n## Public Debt Level and Projection\n## Fiscal Consolidation and Valuation Effects\n# Public Debt Coverage and Definitions\n## General Government, Central Bank, and Guarantees\n## Treasury Single Account (TSA) Treatment\n# Debt-Related Reform and Stress-Test Considerations\n## Concessional Financing and Fiscal Measures\n## Export Diversification and Shock Resilience","[{\"question\":\"What overall conclusion does the DSA reach about Nepal’s debt distress risk?\",\"answer\":\"Both external debt and overall public debt are assessed as low risk of debt distress, consistent with the previous year.\"},{\"question\":\"Why does the analysis override the mechanical moderate-risk signal in an export shock scenario?\",\"answer\":\"Staff applies judgment because Nepal’s remittances are exceptionally high, making debt-to-exports indicators less informative than in most other countries.\"},{\"question\":\"What determines public debt dynamics despite slower growth and revenue declines?\",\"answer\":\"The assessment highlights a favorable valuation effect on external debt, lower net acquisition of financial assets, and ongoing fiscal consolidation efforts.\"}]",1784491057,60,{"code":4,"msg":30,"data":31},"ok",{"site_id":24,"language":23,"slug":32,"title":13,"keywords":33,"description":14,"schema_data":34,"social_meta":86,"head_meta":88,"extra_data":90,"updated_unix":27},"nepal-joint-bank-fund-debt-sustainability-analysis-debt-distress-risk-assessment","",{"@graph":35,"@context":85},[36,53,68],{"@type":37,"itemListElement":38},"BreadcrumbList",[39,43,47,50],{"item":40,"name":41,"@type":42,"position":20},"https://docshare.wps.com","Home","ListItem",{"item":44,"name":45,"@type":42,"position":46},"https://docshare.wps.com/document/","Document",2,{"item":48,"name":12,"@type":42,"position":49},"https://docshare.wps.com/document/research-report/",3,{"item":51,"name":13,"@type":42,"position":52},"https://docshare.wps.com/document/nepal-joint-bank-fund-debt-sustainability-analysis-debt-distress-risk-assessment/111643/",4,{"url":51,"name":13,"@type":54,"author":55,"headline":13,"publisher":57,"fileFormat":60,"inLanguage":23,"description":14,"dateModified":61,"datePublished":62,"encodingFormat":60,"isAccessibleForFree":63,"interactionStatistic":64},"DigitalDocument",{"name":9,"@type":56},"Person",{"url":40,"name":58,"@type":59},"DocShare","Organization","application/pdf","2026-07-20","2026-07-19",true,{"@type":65,"interactionType":66,"userInteractionCount":20},"InteractionCounter",{"@type":67},"ViewAction",{"@type":69,"mainEntity":70},"FAQPage",[71,77,81],{"name":72,"@type":73,"acceptedAnswer":74},"What overall conclusion does the DSA reach about Nepal’s debt distress risk?","Question",{"text":75,"@type":76},"Both external debt and overall public debt are assessed as low risk of debt distress, consistent with the previous year.","Answer",{"name":78,"@type":73,"acceptedAnswer":79},"Why does the analysis override the mechanical moderate-risk signal in an export shock scenario?",{"text":80,"@type":76},"Staff applies judgment because Nepal’s remittances are exceptionally high, making debt-to-exports indicators less informative than in most other countries.",{"name":82,"@type":73,"acceptedAnswer":83},"What determines public debt dynamics despite slower growth and revenue declines?",{"text":84,"@type":76},"The assessment highlights a favorable valuation effect on external debt, lower net acquisition of financial assets, and ongoing fiscal consolidation 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