Govt. accumulates debt of Nu 28bn as it completes two years

Govt. accumulates debt of Nu 28bn as it completes two years

The total debt as of September this year stands at Nu 214, 908mn which is 116.3% of the GDP. However, total hydro debt accounts for about 75% of the total public debt, which is self-liquidating, said Finance Minister Namgay Tshering.

According to Lyonpo, the debt of the government in the two previous years amounted to Nu 28bn which is 120% of the GDP. Of this, Nu 214bn is external debt and Nu 8.3bn domestic debt. “The total amount of Nu 16,390.23mn is annual hydro-debt and Nu 12,390.21mn is non-hydro-debt,” he said.

Nganglam MP Choida Jamtsho questioned the finance minister on the yearly plan for the source of lending, the amount and the purpose of the debts for the following three years.

Responding, Lyonpo Namgay Tshering said that 75% of hydro-debt is external and about Nu 53bn is domestic debt. There is only 25% of non-hydro external debt.  “Of 25% of the non-hydro external debt, the government is still paying the debt of Nu 7bn made by the first government during the rupee crises”.

He added that Mangdechhu project has a debt of Nu 2.3bn, Punatsangchhu I, Nu 2.2bn and Punatsangchhu II, Nu 7.5bn. Nikachhu hydro power project has a debt of Nu 4.2bn. In total 13% of the debt comes from hydro power projects.

However, Lyonpo said that they are left with three years and International Development Association (IDA) resource for the next three years is about US$ 106mn through a mix of instruments among others.

Lyonpo added that the indicative resource available for commitment from the Asian Development Bank (ADB) for the next three years is about US$ 285mn.

According to the National Budget FY 2020-21 report, Bhutan’s total public debt stands at Nu 193bn as of March this year, which is an increase of Nu 8.5bn from June 2019. The debt to GDP ratio is 100.8%.

The report states that hydro debt is expected to increase by around Nu 17bn by the end of this financial year. The increase is due to the inclusion of Mangdechhu Hydropower Project’s interest during the construction and also because of the loan disbursements during this financial year for the ongoing hydropower projects.

Similarly due to projects and program borrowings from the ADB, World Bank and International Fund for Agricultural Development (IFAD), non-hydro debt is expected to increase from Nu 44.1bn to Nu 54.9bn by the end of this financial year. The depreciation of the Ngultrum against USD is also expected to contribute towards increase in non-hydro debts.

The report states that in the upcoming financial year, the government will start paying off the debt for Mangdechhu Hydropower Project. Around Nu 2.4bn will be paid to the government of India, which comprises 44.1% of external debt servicing for the fiscal year 2020-21.

Kinley Yonten from Thimphu