External debt at US$ 2.51bn

Hydropower loans now account for 94.11% of the total rupee debt

Bhutan’s total outstanding external debt was equivalent to US$ 2.51bn as of June 2017 while total debt outstanding stood at 108.64% of Gross Domestic Product (GDP).

Of the total external debt, US$ 663.22mn was outstanding on convertible currency loans and the remaining Rs 118.77bn was outstanding Indian rupee loans.

The Royal Monetary Authority’s (RMA) annual report released recently revealed that of the total rupee debt 94.11% was outstanding public debt on hydropower projects while 5.89% represented debt taken to finance Balance of Payment transactions with India.

Within the convertible currency loan portfolio, concessional public and publicly guaranteed debt accounted for 95.48% while the remaining 4.52% represented outstanding external debt of the private sector.

According to the report, the disbursements toward the Punatsangchhu I and II and the Mangdechhu hydropower projects continued to boost rupee loan inflows. The total cumulative amount disbursed as of Financial Year (FY) 2016-17 amounted to Rs 44.54bn, Rs 35.98bn and Rs 29.23bn, respectively for the three projects.

The total rupee debt servicing for the year 2016-17 amounted to Rs 9.8bn of which Rs 6.87bn was on account of the RBI SWAP which was availed in FY 2015-16.

Debt servicing for convertible currency debt during the year amounted to US$ 30.84mn.

Overall debt servicing on both convertible currency and Indian Rupee debt for 2016-17 was US$ 182.92mn as compared to US$ 92.03mn in 2015-16 bringing the external debt service ratio to 24.87% in 2016-17 as compared to 14.3% in 2015-16.

The Government of India remains Bhutan’s largest creditor with 73.53% of overall external debt at Nu 118.77bn or 100% of total rupee outstanding debt. This is followed by the Asian Development Bank with US$ 274.55mn, the World Bank with US$ 209.02mn and the Government of Austria with US$ 66.94mn.

The major disbursements in the year continued to be toward hydropower: Rs 2bn for Puna-I, Rs 8.49bn for Puna-II and Rs 941mn for Mangdechhu. A total amount of Rs 6.72bn under the RBI SWAP and its corresponding interest of Rs 153.2mn which was also availed in 2015-16 were paid off during the year.

Dechen Dolkar from Thimphu