The chairperson of the Public Accounts Committee Choida Jamtsho who is the Nganglam-Pema Gatshel member read out the report on public debt management to the joint sitting of the parliament today. The report also contained recommendations made by the Royal Audit Authority (RAA) and response from the finance ministry.
The RAA proposed 33 recommendations on public debt management to the finance ministry.
One of the recommendations asks the government to develop a clear policy framework on public debt management to which the finance ministry responded, it had developed a draft public debt policy, which will soon be submitted to the government.
The debt policy is expected to provide a clear direction on the economy’s borrowing by fixing a limit on how much the government can borrow.
A debt sustainability report carried out by the international monetary fund categorises Bhutan under a “significant risk of debt distress.” The constitution mentions the level of public debt should not result in undue burden to the future generations.
The RAA also pointed out that debt was raised mostly from external agencies and the domestic debt market was still undeveloped. For instance in 2013, government’s debt in local currency constituted only 0.56 percent of total debt.
The Royal audit also mentioned that the current debt management was scattered; with different ministries managing and executing different debts. For example the economic affairs ministry managed hydropower debt while the ministry of finance managed other borrowings.
In March this year, total government borrowings had reached 118B, which is 6B less than gross domestic product. By 2017-18, total debt is expected to reach Nu 258B.
The public accounts committee had urged the ministry of finance to implement all the recommendations made by the royal audit authority.
The debt management report will be deliberated in the parliament Monday next week.
