The country’s total public debt decreased by almost Nu 8bn in the second quarter of this year compared to the preceding quarter. According to the finance ministry’s quarterly Public Debt Situation Report, the total public debt stands at more than Nu 285bn as of 30th June. The debt comprises external debt of over Nu 263bn and domestic debt of over Nu 21bn, respectively.
The decrease in the total debt was due to a decline in domestic debt by Nu 10bn and a slight increase in external debt of over Nu 2.5bn.
Meanwhile, domestic debt primarily consists of an overdraft outstanding of close over Nu 379 M and government bonds totalling Nu 21bn.
According to the report, the finance ministry prematurely liquidated the government bond series amounting to a little over one billion ngultrum in April this year. In addition, the ministry has curtailed unnecessary expenditures which led to the closure of the government consolidated account with a zero balance of Treasury Bills.
At 92.5 per cent, external debt constitutes the majority of the total debt.
The majority of the external debt constitutes borrowings from the Government of India at Rs 172.5bn, which is 65.4 per cent of the total external debt.
The total external debt of close to Nu 264bn includes government debt at Nu 240bn, borrowings made by public corporations at Nu 12.8bn, and central bank debt at Nu 10bn.
According to the report, government debt includes borrowings for budgetary purposes, hydropower projects, and various other loans. Meanwhile, the hydropower debt of Nu 167bn constituting over 63 per cent of total external debt as of 30th June is a slight decrease from the first quarter.
The report highlights that although total public debt and external debt constitute 106.9 per cent and 98.8 per cent of the GDP, respectively, the overall risk remains manageable.
The external debt distress is assessed as moderate because a large portion of this debt is linked to hydropower projects, which are commercially viable and have a secured export market in India.
Dechen Choden
Edited by Phub Gyem
