Nepal’s debt sustainability

Nepal has enough fiscal space to use more debt for development.

Last year, economic activities in Nepal remained at the lowest level in decades: the growth rate in 2020 was a negative 1.9 percent. Some of the economic sectors are still in shock. The tourism and entertainment industries (major contributors to the Nepali economy) are still in recession. Bottlenecks in international travel and fear of a third wave are causing the tourism and entertainment industries to remain in peril. However, the ongoing vaccination drive—about 23 percent of the population has been jabbed in Nepal—and a drop in fatalities and positive cases is increasing economic activities in South Asia and Nepal.