With the current loan deferment period set to expire on June 30, 2025, the Ministry of Finance has initiated consultations with the Royal Monetary Authority (RMA) and the Financial Institutions Association of Bhutan (FIAB) to evaluate the situation and determine an appropriate course of action. The outcome of this assessment will guide any decision on whether the deferment period should be extended, particularly for sectors still recovering from the economic downturn.
Meanwhile, stakeholders, particularly in the tourism and hospitality sectors, are expressing mixed views. A General Manager of a resort in Paro shared that while business is gradually recovering, the sector has not fully stabilized. “We’re extremely grateful for the support provided so far, but an extension of just a few months would allow many resorts to fully regain operational stability,” he said.
Another hotelier running a budget property admitted he was unaware that the deferment period ends this June. “The last few years have been extremely difficult. A short extension would give us some breathing space,” he said.
However, not all hoteliers view the deferment as entirely beneficial. One hotel owner, who preferred to remain anonymous, expressed concern about the long-term implications. “Initially, the deferment gave us relief. But we’ve come to realize that postponing repayments without a clear repayment strategy can lead to a much heavier burden down the line. If we’re not careful, our debts could become a burden passed on to our grandchildren.”
From an economic perspective, experts acknowledge that while loan deferment can provide short-term financial relief and help businesses avoid defaults, it often leads to interest accumulation, extended loan tenures, and increased total repayment amounts. “Deferment is useful as a temporary measure during periods of economic stress,” said one financial expert. “However, it must be strategically planned with a clear repayment roadmap to avoid compounding financial pressure.”
Economists emphasize that deferment should not be treated as a long-term solution. “In most cases, prolonged deferments without structural adjustments are counterproductive. They delay the inevitable and increase overall debt servicing costs,” an expert noted.
Several sectors—including tourism, hospitality, manufacturing, services, and trade—have formally requested the government to consider extending the current deferment, citing ongoing recovery challenges.
During the 15th Meet-the-Press session, Finance Secretary Leki Wangmo acknowledged these concerns. “The Ministry of Finance has begun consultations with the RMA and FIAB to assess the economic conditions and the performance of non-performing loans (NPLs) across sectors,” she said. “The government will announce its decision after this comprehensive review is completed.”
Responding specifically to the tourism sector’s concerns, the Secretary emphasized that the government is actively working to stimulate demand. “To enhance tourist arrivals and extend visitor stays, we introduced airfare subsidies for COTI (countries other than India) tourists starting in December 2024,” she said.
Sherab Dorji from Thimphu
