Hydropower debt forms the chunk with 61.6% of the GDP
The total public debt stock as of 31 December 2023 stood at Nu 279.93 billion (B). The debt stock comprises external debt of about Nu 251.83B and domestic debt of about Nu 28.10B.
According to the Ministry of Finance (MoF), the total public debt stock increased by about Nu 6.9B, that is about 2.6% from the preceding quarter as compared to the quarter ending 2023.
Similarly, the external debt stock increased by about Nu 4.9B, that is about 2.0% while the internal debt increased by about Nu 2B, that is about 7.7%, resulting in an increase in the total public debt stock.
According to the Ministry, the external debt is classified based on the contracting party, by purpose, the currency of borrowing, and the creditor.
The contracting party could be the government, corporation, or central bank. A hydro loan or non-hydro loans are two category of the purpose of the loan. And an external loan is contracted either in Rupees (INR) or convertible currency (CC), depending on the creditor, according to the Ministry.
The hydropower debt as of 31 December 2023 stood at about Nu 167.06B constituting 66.3% of total external debt and 61.6% of the Gross Domestic Product (GDP) estimate for the fiscal year (FY) 2023-24.
The hydro debt comprises the debt stock of six hydropower projects of MHPA, Puna-I, Puna-II, Nikachu, Dagachu, and Basoschu (upper stage and lower stage), according to the Ministry.
Similarly, the non-hydro debt stood at about Nu 84.76B constituting 33.7% of total external debt and 31.3% of estimated GDP.ย The total external INR and CC debt as of December last year stood at about Nu 161.83B, and accounting for 64.3% of total external debt, of which 93.8% was hydropower debt.
The Ngultrum value of CC debt stock increased by about Nu 1.82B consisting of 2.1% owing to the ongoing project loan disbursement during the last quarter of 2023 and the depreciation of BTN against USD. The total CC debt stock as of 30 September 2023 was about Nu 88.17B.
The domestic debt mainly comprised of Treasury bill stock of about Nu 6B and government bonds of about Nu 22.10B.
For instance, a series of government bonds were issued including a 10-year government bond of Nu 700 million (M) in February 2021, followed by a 10 year government bond of Nu 3,000M in February 2022.
Further, a 7 year government bond of Nu 1,500M in April 2022 was also issued followed by a 12 year government bond of Nu 4000M in June 2022 and a 10 year government bond of Nu 1250M each in January and February 2023 respectively, amongst others.
As of 31 December 2023, the non-hydro budgetary debt stood at about Nu 94.32B, constituting 33.7% of total public debt and 34.8% of estimated GDP.
However, the Public Debt Management Policy 2023 requires the Non-Hydro Budgetary debt stock to be within 55% of GDP annually and is, therefore, within the threshold, according to the Ministry.
Meanwhile, the government of India (GoI) remains the countryโs largest creditor. As of December last year, about 63% of Bhutanโs external debt was owed to GoI mainly on account of debt contracted for financing hydropower projects in the country.
Sherab Dorji from Thimphu
