Total Public Debt at Nu 267.4bn as of March end, 2023

Total domestic debt stock stood at Nu 26.55bn, accounting for 12.9% of the estimated GDP and 9.9% of total public debt stock

The total public debt increased by Nu 2.57 billion (bn) in the three months period from January to March-end this year taking the total public debt to Nu 267.4 bn as of March this year, compared to a total public debt of Nu 264.83bn at the end of December last year (2022).

According to the public debt situation quarter report as of March end, the total public debt accounted for 132.1% of the FY 2022-23’s Gross Domestic Product (GDP) estimate.

The debt stock comprises of external debt of Nu 240.85bn, and the domestic debt of Nu 26.55bn. Scaled by the GDP estimate for FY 2022-23, the total public debt stood at 132.1%. The total public debt stock increased by 1% from the preceding quarter, and the external debt stock increased by 1.4% while the internal debt declined slightly by 2.4%.

The report states that the external debt stock increased by Nu 3.228mn, accounting for 1.4% of the rise compared to previous quarter.

The report bifurcates the external debt into external debt by contracting agency and external debt stock by hydro-power and non-hydro-power debt.

The report further divides the external debt of contracting agencies into three categories, including government debt, corporate debt, and Central Bank debt as of March-end of this year.

External Debt

The report states that the total external debt for the first quarter of 2023 amounted to Nu 240.85bn which is an increase of 1.4% compared to previous quarter and accounts for 119% of the GDP and 90% of the total public dept.

Under the classification of external debt by contracting agencies, the government debt amounted to Nu 222.18mn, which accounts for 91.8% of the total external debt.

Under the government debt, it includes borrowings for budgetary activities, hydro-power projects, and loan availed by the government and on-lent to public corporations.

The public corporation’s debt amounted to Nu 12.67bn and accounts for 5.3% of the total public debt.

“The corporate debt relates to borrowings directly contracted by public corporations,” the report states.

The central bank debt amounted to Nu 7bn and the standby credit facility with the Government of India (GoI) made up 2.9% of the total external debt in the first quarter of 2023.

As of March-end this year, the hydro-power debt stood at Nu 167.74bn, constituting 69.6% of the total external debt and 82.8% of the FY 2022-23 GDP estimate. The hydro-power debt stocks comprise the dept stock of six hydropower projects: MHPA, Puna-I, Puna-II, Nikachu, Dagachu, and Baoschu, both upper and lower stages.

However, the non-hydro debt stood at Nu 73.1bn, which constitutes 30.7% of the total external debt and 36.1% of the estimated GDP.

The report also shows that the ratio of non-hydro debt to GDP of 31.5% is within the 35% threshold as prescribed by the public debt policy 2016 required for non-hydro debt stock.

Additionally, Indian Rupee (INR)-denominated debt accounted for 66.1% of total external debt, of which 95.6% was hydropower debt as of March this year.

The INR-denominated debt increased by Nu 3.08bn (2.0%) from the previous quarter owing to disbursements for PHP I and II. 

Further, the Convertible Currency (CC) debt stock stood at USD 0.99bn, which is equivalent to Nu 81.69bn, accounting for 33.9% of the total external debt.

The Ngultrum value of the CC debt stock increased by Nu 0.1399bn from the total CC debt stock of Nu 0.98bn of December 2022. 

The report shows that the increase was mainly due to ongoing project loan disbursement during the quarter and the depreciation of BTN against USD.

The GoI remains the country’s largest creditor with 65% of external debt, followed by 16% to Asian Development Bank (ADB) and 14% with International Development Association (IDA). The rest, about 5.3% from others. 

Internal Debt / Domestic Debt

The total domestic debt stock stood at Nu 26.55bn, accounting for 12.9% of the estimated GDP and 9.9% of total public debt stock. The report shows that the domestic debt mainly comprised T-Bill stock of Nu 11.85bn and government bonds of Nu 14.7bn.

A series of government bonds were issued, including a three-year government bond of Nu 3bn issued in September 2020, 10 year government bond of Nu 7bn in February 2021, and 10 years government bond of Nu 3bn in February 2022.

Further a 7 years government bond of Nu 1.5bn in April 2022, a 12 years government bond of Nu 4bn in June 2022, and a 10 years government bond of Nu 1.25bn each in January and February 2023, this year. 

According to the report, the domestic debt decreased by Nu 0.65bn compared to the domestic debt at the end of the previous quarter due to downwards in Treasury Bills outstanding.

The report states that despite elevated levels of total public debt at 132.1% and external debt at 119.0% of GDP, “the overall risk is deemed manageable, and external debt distress is considered moderate.”

Nidup Lhamo from Thimphu