[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-111262-en":3,"doc-seo-111262-105":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},111262,1649267921044,"Ava Thompson","https://us-avatar.wpscdn.com/avatar/1800007509477c92dfb?_k=1782875107921204101",8,"Research & Report","Nepal: Joint Bank-Fund Debt Sustainability Analysis - Low Risk","Nepal’s joint Bank-Fund debt sustainability analysis concludes that both external debt and overall public debt face low risk of debt distress, unchanged from the prior DSA. Although a combined-shock scenario mechanically flags the external debt-to-exports ratio as moderate, staff judgment overrides this signal due to exceptionally high remittances. Remittances exceed exports, strengthening foreign-exchange earnings and reserves alongside predominantly concessional financing. Public debt is 48.1% of GDP in FY2024/25 and is projected to peak at 49.6% in FY2025/26 before gradually declining, supported by fiscal consolidation and public financial management reforms.","Public Disclosure Authorized  \nPub lic Disc losure Authorized  \nApproved by:  \nManuela Francisco and Sebastian Eckardt (IDA) , and Rupa Duttagupta and Koshy Mathai (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 | Not Applicable |\n| Application of judgment | Yes |\n\nBoth external and overall public debt in Nepal are assessed to be at low risk of debt distress, unchanged from last year’s Debt Sustainability Analysis (DSA) .1 While the present value (PV) of the external debt-to-exports ratio breaches the indicative threshold under a combined shock scenario—mechanically suggesting a moderate risk rating—staff judgment is applied, as in the previous DSA, to override the mechanical signal given Nepal’s exceptionally high remittances inflows. Remittances, which amount to more than three times the value of exports, constitute the primary source of foreign exchange earnings and render the debt-to-exports ratio a less relevant indicator of debt distress in Nepal’s case. Together with predominantly concessional external financing, they support the country to maintain an adequate level of reserves and meet its debt obligations despite a sizeable trade deficit. All other external and public debt risk indicators remain below their respective indicative thresholds across all stress-tests. Public debt stood at 48.1 percent of GDP in FY2024/25, lower than projected in last year’s DSA. This better-than-expected outcome reflects primary expenditure control, and an improvement in the negative Treasury Single Account (TSA) balance, despite an increase in the net acquisition of financial assets. Looking ahead, public debt is projected to peak at 49.6 percent of GDP in FY2025/26 before gradually declining over the medium term. This trajectory is predicated on sustained fiscal consolidation—as envisaged under the ECF-supported program and reaffirmed in the FY2025/26 budget—including  \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 2025 World Economic Outlook (WEO) and the 2024 World Bank Country Policy and Institutional Assessment (CPIA) index.  \nreforms to mobilize domestic revenue. Structural reforms will also be essential to support debt sustainability over the medium term. These include measures to diversify exports, enhance productivity and competitiveness, and strengthen resilience to shocks, particularly those related to 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 currently hold no debt. Although the Public Debt Management Act of 2022 permits subnational borrowing, no such activity has commenced to date—apart from on-lending arrangements by the central government. Similarly, the Social Security Fund and other extra-budgetary units are not authorized to borrow and therefore carry no debt. IMF disbursements during 2020–2025 were used for direct budget support. Bond issuances by the central bank over this period were exclusively for monetary policy operations and do not constitute public debt. The government has issued guarantees for the debts of State-Owned Enterprises (SOEs), with the stock of guarantees amounting to NPR 52.5 billion by the end of FY2024/25 (0 .86 percent of GDP), which is included in the debt stock.2 Most medium-and long-term SOE loans are sourced from the central government and are already accounted for under central government debt. Remaining SOE liabilities not captured in public debt are reflected in the contingent liability stress test.  \n2. Public debt is defined in the LIC DS","cbCaivqdJuSuGekt","https://ap.wps.com/l/cbCaivqdJuSuGekt","pdf",1096129,1,29,"English","en",105,"# Risk assessment\n## External debt distress risk\n## Overall public debt distress risk\n# Debt metrics and assumptions\n## Remittances and debt-to-exports relevance\n## Public debt composition and definitions\n## Treasury Single Account (TSA) and contingent liabilities\n# Outlook and drivers","[{\"question\":\"What is Nepal’s overall risk of debt distress in this analysis?\",\"answer\":\"The overall risk of debt distress is assessed as low, unchanged from the previous DSA.\"},{\"question\":\"Why is the external debt-to-exports ratio not treated as the final signal of risk?\",\"answer\":\"Staff judgment is applied to override the mechanical moderate signal because Nepal’s exceptionally high remittances—over three times exports—provide major foreign-exchange support and make the ratio less relevant.\"},{\"question\":\"How is public debt measured, and what role does the Treasury Single Account (TSA) play?\",\"answer\":\"Public debt includes the negative balance of the Treasury Single Account (TSA) as part of government gross debt under the LIC DSF framework. Fragmentation and cash-management weaknesses contribute to a negative TSA balance, though other cash balances may not offset it in the debt measure.\"}]",1784489356,73,{"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-low-risk","",{"@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-low-risk/111262/",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 is Nepal’s overall risk of debt distress in this analysis?","Question",{"text":75,"@type":76},"The overall risk of debt distress is assessed as low, unchanged from the previous DSA.","Answer",{"name":78,"@type":73,"acceptedAnswer":79},"Why is the external debt-to-exports ratio not treated as the final signal of risk?",{"text":80,"@type":76},"Staff judgment is applied to override the mechanical moderate signal because Nepal’s exceptionally high remittances—over three times exports—provide major foreign-exchange support and make the ratio less relevant.",{"name":82,"@type":73,"acceptedAnswer":83},"How is public debt measured, and what role does the Treasury Single Account (TSA) play?",{"text":84,"@type":76},"Public debt includes the negative balance of the Treasury Single Account (TSA) as part of government gross debt under the LIC DSF framework. Fragmentation and cash-management weaknesses contribute to a negative TSA balance, though other cash balances may not offset it in the debt measure.","https://schema.org",{"og:url":51,"og:type":87,"og:title":13,"og:site_name":58,"og:description":14},"article",{"robots":89,"canonical":51},"index,follow",{"doc_id":7,"site_id":24},{"code":4,"msg":5,"data":92},[93,97,101,105,110,115,120,123,128,131,135],{"id":20,"doc_module":4,"doc_module_name":45,"category_name":94,"show_sort_weight":95,"slug":96},"Story & Novel",90,"story-novel",{"id":46,"doc_module":4,"doc_module_name":45,"category_name":98,"show_sort_weight":99,"slug":100},"Literature",80,"literature",{"id":52,"doc_module":4,"doc_module_name":45,"category_name":102,"show_sort_weight":103,"slug":104},"Exam",70,"exam",{"id":106,"doc_module":4,"doc_module_name":45,"category_name":107,"show_sort_weight":108,"slug":109},5,"Comic",60,"comic",{"id":111,"doc_module":4,"doc_module_name":45,"category_name":112,"show_sort_weight":113,"slug":114},6,"Technology",50,"technology",{"id":116,"doc_module":4,"doc_module_name":45,"category_name":117,"show_sort_weight":118,"slug":119},7,"Healthcare",40,"healthcare",{"id":11,"doc_module":4,"doc_module_name":45,"category_name":12,"show_sort_weight":121,"slug":122},30,"research-report",{"id":124,"doc_module":4,"doc_module_name":45,"category_name":125,"show_sort_weight":126,"slug":127},9,"Religion & Spirituality",20,"religion-spirituality",{"id":126,"doc_module":4,"doc_module_name":45,"category_name":129,"show_sort_weight":126,"slug":130},"World Cup","world-cup",{"id":132,"doc_module":4,"doc_module_name":45,"category_name":133,"show_sort_weight":132,"slug":134},10,"Lifestyle","lifestyle",{"id":136,"doc_module":4,"doc_module_name":45,"category_name":137,"show_sort_weight":106,"slug":138},19,"General","general"]