Nepal’s public debt quadrupled in the last eight years, growing from Rs540 billion after the earthquake in 2015 to Rs2.38 trillion this month, half of it external debt. It now makes up over 44% of the country’s GDP.&nbsp;
The revenue growth rate fell in the last fiscal year, reducing capacity to cover expenditure. The government is attempting to compensate by borrowing from within and outside the country. 
Officials have attributed <a href="https://nepalitimes.com/news/till-debt-do-us-part">Nepal’s debt load</a> to post-earthquake reconstruction, a bloated federal machinery, and the pandemic.
This year, the government earmarked Rs330 billion to pay back domestic and external loans and interest, which is more than 18% of the budget. Another Rs302 billion is for capital expenditure.
Nepal has reached a point where it is now borrowing more money to pay back its debt. Of the Rs162 billion borrowed internally and externally since last July, Rs116 billion was spent on loan repayment.&nbsp;
While Nepal’s debt burden is still significantly less than India or Japan, for instance, the difference is that debt-financed projects in Nepal have not yielded tangible returns. &nbsp;
The $120 million Prime Minister's Employment Program funded by the World Bank was declared ‘unproductive’ by the Auditor General. The Bank itself found that funds had been misused in the Project for Agriculture Commercialisation and Trade (PACT). The Rs1.5 billion Chobhar Dry Port is in limbo. &nbsp;
Agriculture imports continue to grow despite loans from the World Bank and the IFAD. The Rs22 billion Pokhara International Airport funded by China’s Exim Bank, and Bhairawa Airport built with an ADB loan have no international flights. &nbsp;
Another ADB scheme, the Melamchi Water Supply Project cost more than Rs35 billion, but supply is still cut after a <a href="https://nepalitimes.com/banner/nepal-valley-suffers-quadruple-disaster">flood</a> destroyed its headworks in 2021. The proposed Rs25 billion dam on the Nagmati also financed by the ADB has been called extravagant and risky by critics.
“Loans are currently being wasted on unproductive projects,” says economist Nara Bahadur Thapa. “As debt increases, the government's spending on citizens decreases, leading to more public disillusionment.”&nbsp;
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Nepal’s governments have not just poured borrowed money into high-risk, low-reward projects, but unnecessary ones like view towers, city halls and minister’s villas.
&nbsp;Meanwhile, health, education, agriculture, drinking water, and roads remain in a state of permanent neglect.&nbsp;
“Nepalis are not aware of the country’s debt burden, but are concerned about the government’s mishandling and wastage of loans,” says former Finance Ministry Secretary Rameshore Khanal.
The debt burden reduces the government’s ability to spend on development, and passes on the debt to <a href="https://nepalitimes.com/here-now/matter-of-life-and-debt">future generations</a>. “Domestic debt is similar to a tax that we are forcing on our grandchildren,” says Khanal.
Some economists say a debt of up to 50% of GDP is normal for a country like Nepal. Finance Ministry spokesperson Dhani Ram Sharma says most foreign loans are low-interest and subsidised, but concedes that the government has wasted funds on projects that did not guarantee returns.
“The ministry has become more sensitive to risks associated with securing internal as well as foreign loans without designating the funds to a particular project and ensuring maximum returns,” says Sharma.&nbsp;
Economist Biswo Poudel says that although Nepal’s public debt is not yet unmanageable, planners must exercise caution while borrowing, control wasteful expenses and take initiatives to increase revenue and prevent <a href="https://nepalitimes.com/here-now/fueling-nepal-s-economic-crisis">revenue leakage</a>.&nbsp;
Poudel says the priority should be a debt cap, more care should be given to what loans are for, not to borrow indiscriminately and be profligate. &nbsp;&nbsp;
“If the debt continues to grow without increase in revenue, the economy will be unsustainable,” he adds, “it will be like a Ponzi scheme where we take new loans to pay off old ones.” &nbsp;

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Soaring Debt

A little more than one month into its six-month term, Nepal's interim government recalled ambassadors from 11 countries: China, Japan, Malaysia, Qatar, Saudi Arabia, Israel, Russia, Spain, Germany, the UK, the US, and Japan.&nbsp;
Mostly appointed by previous governments, they have to return to Kathmandu by 6 November. The envoys who were retained, even if they were political appointees, tended to be women or from various ethnic minorities.
The recall has met with criticism back home. Prime Minister Sushila Karki is blamed for borrowing a page out of its predecessors’ playbook. Although it was a symbolically inclusive move in a diplomatic corps dominated by established groups, the government may have got its timing wrong.
On Sunday, however, the Supreme Court issued an interim order against government decision to recall the 11 ambassadors. The court questioned the neccesssity and justification of such a move, concerned that it could affect Nepal's relations with the host countries.&nbsp;
Karki has said <a href="https://nepalitimes.com/news/future-imperfect">her priority is to hold elections in March</a>, and by recalling Nepal’s emissaries from important capitals like Washington, London, Bonn, Tokyo, Abu Dhabi and Kuala Lumpur her government has cut channels of communication and support from development partners and with the international community.&nbsp;
Nepal’s anti-corruption GenZ protest and the devolution of the youth movement into <a href="https://nepalitimes.com/here-now/relocate-reallocate-recover">arson, looting, and violence</a> after the targeted killing of protestors in September put the nation in the international spotlight. And the interest was especially keen in neighbouring New Delhi and Beijing.&nbsp;
The Nepal unrest has sparked similar protests across the world from <a href="https://nepalitimes.com/here-now/nepal-genzs-inspired-filipinos">the Philippines</a> to East Timor, Madagascar and Peru. But there is also worry in India where exposure of #nepokids on social media as well as corruption in high places could instigate copycat youth unrest.
And in China, there is still a lingering memory of the deadly protests in 1989 Tiananmen Square. But the Chinese also suspect that some in the GenZ movement have links to free-Tibet. &nbsp;
Foreign policy experts in Nepal reject conspiracy theories about foreign backing for the GenZ, characterising it as mostly triggered by home-grown outrage over chronic corruption of the governing elite.&nbsp;
Throughout its history Nepal has always had to balance the geo-strategic interests of its neighbours: the British in India and the Chinese Empire, and more recently independent India and Communist China.
When former PM K P Oli resigned, he had <a href="https://nepalitimes.com/opinion/comment/when-xi-meets-modi-and-oli">just returned from a visit to Beijing</a> and was a week away from making an official visit to India. A new Nepali prime minister typically makes the first visit to India, but Oli broke that tradition last year by going to China to sign the Belt and Road Initiative (BRI) framework agreement.
"Oli was China's trusted partner supporting <a href="https://nepalitimes.com/news/china-syndrome">Nepal’s participation in BRI</a> and SCO (Shanghai Cooperation Organization)," says geopolitical analyst Sanjay Upadhya. "Now, some in Beijing are apprehensive that there is external support for the youth protests that contributed to Oli’s sudden departure. It is perceived as a strategic setback for China."
Despite an ongoing dispute with India over a 364 sq km border territory, Nepal is heavily dependent economically on India with which it has an open border.&nbsp;
Rulers in Kathmandu have usually leaned over backwards to be closer to China to counterbalance India’s gravitational pull following a strategy of ‘equidistance’ between the two giant neighbours.&nbsp;
Growing American and Western disinterest in the region is making India and China more assertive towards smaller nations. Educator Dovan Rai says, “China is also becoming more aggressive and trying to show its presence in and around South Asia.”
She adds, “Nepal is an important neighbour for China, especially considering issues it regards as sensitive, like the Dalai Lama and Tibet.”
Indeed, the Chinese are said to be suspicious about the links that the <a href="https://nepalitimes.com/here-now/nepal-s-historic-youth-dissensus">GenZ movement</a> was infiltrated by elements linked with Free Tibet or with US-based interests.&nbsp;
What must have especially raised eyebrows at the Chinese Embassy in Kathmandu was that the Dalai Lama’s office in exile in India congratulated Sushila Karki — the first time in history it has sent such a greeting to a new prime minister of Nepal.&nbsp;
Although Nepal’s two neighbours do not see eye-to-eye, both agree and are worried about instability in Nepal, and if it might trigger a refugee crisis, empower extremist factions, or attract Western interference.&nbsp;
Nepal’s September protests were preceded and succeeded by similar movements in the region and around the world. In light of this global eruption of youth frustration, and desire to lead from the front, the hardline governments of Nepal’s two neighbours are undoubtedly wary of the possibility of similar unrest within their own borders.&nbsp;
‘India advocates democratic legitimacy, while China prioritises control and predictability. Recent upheavals demonstrate that neither democracy nor stability alone suffices for sustainable nationhood,’ Upadhya wrote in a recent blog.
With early elections scheduled for 5 March, <a href="https://nepalitimes.com/news/one-month-later">the main challenge for Karki’s transition government</a> is to maintain dialogue and establish consensus between youth groups, political parties, and other agitating forces to participate in polls — all while ensuring there is no covert external influence.&nbsp;
Indeed, with <a href="https://nepalitimes.com/here-now/nepals-democracy-keeps-doubting-itself">Nepal’s democracy</a> at stake as well as new political forces with competing interests set to battle it out in a new political landscape, experts warn that there could be powers that will want to fish in troubled waters.&nbsp;
Explains Dovan Rai: “Along with soft power, foreign countries including our neighbours could intervene in the online information space to promote their interests in Nepal. Fake narratives and disinformation could be spread &nbsp;through digital platforms. We must be careful and vigilant about our digital space.”

Neighbourhood watch on Nepal

Climber, expedition leader and later a supplier of bottled oxygen to Himalayan mountaineers, Henry Barclay Todd died on 3 November 2025 in his favourite place on earth, Kathmandu.&nbsp;
Todd was larger than life, a metaphor often used, yet it could not be more fitting. Standing nearly 2m tall, and possessing an unshakeable will, he lived life on a grand scale, both in body and spirit.&nbsp;
Todd was a pillar in the Himalayan climbing community, supporting many mountaineers across Nepal and Pakistan, making it possible for them to fulfil the dream of standing on the world’s highest peaks. He believed deeply in the strength, skill, and potential of the Sherpa people, and offered them opportunities that might otherwise have remained out of reach.&nbsp;
“Thank you, Henry. Your trust changed my life. Rest in peace, my leader, my teacher, my friend,” said Dorjee Gyelzen Sherpa in his tribute.
Born in 1945 to Royal Air Force officer Henry Todd and May Todd of the Women’s Royal Air Force, Henry spent his early years in Singapore. He led a lively childhood with his two brothers, far removed from the mountains that would later define his path.&nbsp;
A gifted swimmer like his father, Henry never pursued the sport professionally. Instead, after returning to Dundee as a teenager and attending seven different schools, he set off for London, where he began working for an insurance company before finding his true calling in adventure.
Henry Todd first came to Nepal in the mid-1980s and made his first attempt on Ama Dablam in 1987, an expedition that marked the beginning of an extraordinary and colourful climbing career. <a href="https://www.himalayandatabase.com/" target="_blank">The Himalayan Database</a> lists 61 expeditions that he led in Nepal alone — there were more in the Karakoram, Argentina and the Alps.&nbsp;
But Todd would joyfully say that a few hard Scottish ascents held a more personal meaning to him than even the greatest Himalayan summits.
Over the decades, he crossed paths with many legendary climbers like Anatoli Boukreev, Jerzy Kukuczka, Doug Scott and Chris Bonington as well as celebrities including members of Pink Floyd and Nobel Prize laureates whom he befriended.&nbsp;
He had a gift to never name-drop, but would simply mention that he had had lunch with Minnie Driver (niece of his long-time friend Andra) or that he had bought his first car from Donald Sutherland. For Todd, these were not bragging rights, they were simply part of the colourful tapestry of his life.
Todd’s life was filled with extraordinary experiences from surviving plane crashes, avalanches and earthquakes to quietly solving countless problems, which was one of his favourite past-times. His hands, famously large and steady, were always ready to help whether in the chaos of the mountains or the calm of a base camp.&nbsp;
With his sharp sense of humour and the beloved exclamation “Whoopie!”,he could bring lightness even to the toughest moments. He never tired of taking on challenges or helping when someone was in need, and he enriched so many people’s lives with his endless stories.
His legacy is immense. He helped build the human backbone of Himalayan climbing, enabling generations of climbers to test themselves in the world’s highest places. With his passing, an era of bold, spirited Himalayan guiding has come to a close.
Todd survived by a loving family, many close friends and a global community of climbers and Sherpas who will never forget him and his endless tales.&nbsp;
His family said in a statement: ‘Henry’s strength, warmth and unyielding belief in others will live on far above the clouds. He was indestructible in our eyes and in our hearts, he always will be.’
There will be a memorial service at Pashupati Temple in Kathmandu on 8 November 2025 around lunchtime.

Henry Barclay Todd, 80

The autumn mountaineering season is not over yet, and already there have been 12 fatalities on Himalayan peaks in Nepal.
Of the 1,450 climbing permits issued, 436 were for Mt Ama Dablam (6,812m), 374 for Mt Manaslu (8,163m) and 186 for Himlung Himal (7,126m). There were deaths on all three mountains.
The death of two French climbers on Ama Dablam happened before unseasonal blizzards hit the mountains. But Cyclone Montha from the Bay of Bengal brought on high winds and up to 1m of snow in the peak trekking and mountaineering season.
This increased avalanche conditions, and made helicopter evacuation of stranded and injured climbers difficult. Lower down the mountains, more than 1,000 trekkers from Nepal and around the world were stuck in the Annapurnas, Manaslu circuit and the Khumbu.
However, there have also been allegations that it was not just the weather that delayed rescues. Multiple levels of bureaucracy and the need for flight permits to restricted areas like Manang and Manaslu critically delayed evacuation flights.
Italian climbers Farronato Stefano and Caputo Alessandro were found dead in their tent at Panbari Himal Camp I (6,887m) in the Manaslu area. They had been trapped by heavy snowfall since 28 October, and their bodies were found on 4 November by a team from the expedition organisers, Sherpa Alpine Trekking Service. The team was made up of high level mountain guides and expedition leader Valter Perlino.
The team had been climbing to Camp 3 but decided to descend to base camp because of thrombosis in Perlino’s left foot. The two climbers who would eventually get trapped decided to break at Camp I, a decision that would prove fatal after the projected six-day snowfall arrived two days early.
“They were sleeping in a tent and were buried under 2.5 metres of compacted snow. It happened during the night between Thursday and Friday. While they were sleeping, absurd,” said Perlino.
A deadly incident took place the morning of 3 November, when five foreigners and two Nepalis died in an avalanche on Yalung Ri at 5,630m in the Rolwaling. They were part of a larger group of 15 that were acclimatising for an attempt on the nearby Dolma Khang (6,332m).
Local authorities in Gauri Shankar Conservation Area say calls were immediately made to helicopter companies as well as various ministries in Kathmandu that have to issue permits to fly to the region bordering China.
But the permits for rescue flights to Rolwaling Valley were delayed by eight hours. Rescue flights in these areas require permission from the Ministry of Tourism, the Ministry of Defence, the Home Ministry, and the Civil Aviation Authority of Nepal (CAAN).
Experts say this should be exempted in times of emergency when time is of the essence. CAAN spokesperson Pratap Babu Tiwari claimed to not know of the avalanche on Yalung Ri and deflected questions to the permission department.&nbsp;
There was a similar tragedy on Himlung Himal in Manang as well. Australian Chin-Tark Chan, 49, was climbing with 8K Expeditions and fell ill on 27 October at about 6,800m, developing snow blindness and loss of mobility. The guides immediately called the US insurance company Global Rescue for authorisation of a longline rescue.
Global Rescue refused, saying a rescue at that height would violate Nepal’s aviation rules and put the pilot at unacceptable risk. They asked the guides to transport Chan to Camp 3 at 6,400m to a permitted altitude. Seeing it was a life-or-death situation for its client, 8K called in an aerial rescue anyway, but the helicopter could not land due to bad weather. Chan died slightly below Camp 3 on 29 October.
Global Rescue said in a statement that it was ready to send in a helicopter after Chan had been transported to Camp 3, but several hours were lost for that attempt, and the weather did not get better in the next few days.
To underscore just how dangerous helicopter rescues in the Himalaya can be in bad weather, a chopper from Altitude Air skidded off the helipad at Lobuche below Mt Everest while trying to rescue trekkers in whiteout conditions.&nbsp;
CAAN announced a ban on flights during blizzards or dense fog. While rescue missions are often heroic and courageous, they should not be foolhardy if conditions are unsafe and the risk to pilots and rescuers too high. This autumn was a lesson for future expeditions and for the Nepal government.&nbsp;
The Italian duo on Panbari were caught out by snow that arrived two days ahead of schedule, but the group on Yalung Ri should have postponed their ascent after multiple warnings from the Department of Hydrology and Meteorology to avoid high altitudes.

Deadly autumn in Himalayan climbing

Traditional donors have sharply scaled back their aid commitments to developing countries over the past year. Some, like the United States, have virtually eliminated their aid programs. According to the Organisation for Economic Co-operation and Development (OECD), official development assistance (ODA) from member countries <a href="https://www.oecd.org/en/about/news/press-releases/2025/04/official-development-assistance-2024-figures.html" target="_blank">declined by 7.1%</a> in 2024, its first annual drop in six years. This trend was not limited to a few major donors. Of the 33 members of the OECD’s Development Assistance Committee (DAC), 22 slashed their aid budgets, and only four countries met the United Nations’ target of allocating 0.7% of gross national income to ODA. The outlook for the coming year offers little hope for improvement, as major DAC donors have announced additional cuts. Most notably, US President Donald Trump’s administration has suspended most foreign aid and dismantled the Agency for International Development (USAID), which dispersed most US government aid dollars. Meanwhile, the United Kingdom plans to <a href="https://www.bbc.com/news/articles/clyrkkv4gd7o" target="_blank">reduce aid spending</a> from 0.5% of GNI to 0.3% by 2027. Similar retrenchment across Europe and North America is reshaping international assistance, disrupting humanitarian and climate-related programs, and creating financing gaps in critical sectors such as health, education, and clean energy. In our 2017 book <a href="https://www.cambridge.org/core/books/going-beyond-aid/B48F59C6D8D2790D403A1A0C44B37612" target="_blank">Going Beyond Aid</a>, we urged developing-country governments to reduce their dependence on foreign aid, not only because it was becoming an unreliable source of funding, but also because other, better ways of financing development were becoming more available. That message is more urgent than ever. As reliance on aid becomes untenable, the international community must mobilise a broader array of financing sources to advance green and sustainable growth. This includes national development banks, industrial investment funds, sovereign wealth funds, and institutional investment in public markets, as well as innovative mechanisms such as debt swaps and public-private partnerships (PPPs). These tools can unlock domestic resources, attract long-term investors, and create synergies between public goals and private capital. Equity investment offers a promising avenue for engaging non-traditional development partners while reducing developing countries’ dependence on debt. Government investment funds, public and private financial institutions, and other private actors can participate by taking equity stakes in public enterprises, financing infrastructure projects, or joining PPPs. Such participation not only alleviates debt burdens but also improves the performance and management of public assets. As government-funded, mission-driven institutions, public development banks (PDBs) have the potential to provide patient capital for green and sustainable investment in emerging and developing economies (EMDEs). Building on the <a href="http://www.dfidatabase.pku.edu.cn/index.htm" target="_blank">pioneering database</a> of public development and financial institutions created by the Institute of New Structural Economics at Peking University, future research can identify effective ways to harness these institutions to fuel low-carbon growth. Responding to growing demand from the economies of the Global South, development partners have increasingly adopted an “entire value chain” approach to the green transition in recent years. This strategy facilitates transfers of low-carbon technologies, diffusion of digital innovations (including trade in services), and industrial modernisation, enabling countries included in China’s Belt and Road Initiative (BRI) to accelerate their shift toward sustainable development. Empirical research supports this approach. An analysis covering 139 countries <a href="https://ember-energy.org/latest-insights/the-first-evidence-of-a-take-off-in-solar-in-africa/" target="_blank">finds</a> that, following policy directives to incorporate green and low-carbon principles into the BRI, carbon intensity (CO₂ emissions per unit of GDP) among participating countries declined significantly between 2013 and 2022. These findings are consistent with another <a href="https://ember-energy.org/latest-insights/the-first-evidence-of-a-take-off-in-solar-in-africa/" target="_blank">recent study</a> showing how China’s solar-energy expansion has helped transform Africa’s power sector. Investment in infrastructure and industrial development can also generate positive spillover effects. Evidence from Sub-Saharan Africa <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/jors.70023" target="_blank">shows</a> that the presence of at least one Chinese-financed infrastructure project in a second-order administrative region (comparable to a municipality) is associated with a 5% increase in nighttime luminosity – a widely used proxy for economic activity. Neighbouring regions experienced a 10-15% rise in luminosity, indicating that the benefits of such projects extend well beyond the immediate investment site.  <figure><img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251104131124_1a11d248a89b0785bc7d7f1d9f721e7e7a2563cbd579c3c672a0900220c19171.jpg" data-media-id="editor_7" data-image-id="20251104131124_1a11d248a89b0785bc7d7f1d9f721e7e7a2563cbd579c3c672a0900220c19171" data-rendition-name="original" width="720" height="405" loading="lazy" alt="development aid and China"></figure>  These outcomes underscore the critical role of infrastructure investment, particularly in energy and transportation projects. By improving electricity access, affordability, and connectivity, they reduce energy poverty, bolster public services, and stimulate economic activity in underserved areas. To meet the evolving challenges of development finance, both traditional and non-traditional donors and creditors should move beyond aid and adopt multidimensional strategies that combine trade, investment, infrastructure, green technology, and digital connectivity, including fintech solutions, to support EMDEs. Importantly, such collaborations should be viewed as a mutual learning process in which partners assume complementary roles and shared responsibilities. To be sure, there have been missteps along the way. China’s financing of coal-fired power plants before 2021, for example, had slowed reduction in CO₂ emissions. But these outcomes, once recognised as policy errors, can help strengthen accountability and foster self-correcting mechanisms within the international development ecosystem. Through ongoing learning and adaptation, global partners can build a more resilient, inclusive, and sustainable framework for development finance. © <a href="https://www.project-syndicate.org/">Project Syndicate</a> Justin Yifu Lin, a former World Bank chief economist and Senior VP, is the honorary dean of the National School of Development and director of the Institute of New Structural Economics at Peking University. Yan Wang is Senior Academic Researcher at Boston University’s Global Development Policy Center.

foreign-debt

Soaring Debt

Neighbourhood watch on Nepal

Henry Barclay Todd, 80

Deadly autumn in Himalayan climbing

Development finance must shift away from aid