The country’s total public debt has crossed Nu 298bn as of March this year, almost the size of the entire economy. This means for every ngultrum Bhutan earns, it owes almost the same in debt. According to the latest Public Debt Situation Report released by the Ministry of Finance, public debt now accounts for about 99 per cent of the country’s estimated Gross Domestic Product. Compared to the previous quarter, the debt has increased by Nu 5.4bn, mainly due to a rise in borrowings from outside the country.
Out of the total debt, about Nu 277bn is borrowed from foreign countries. This is a sharp three per cent increase from the previous quarter.
A significant share of the external debt, around Nu 170bn, is for hydropower projects like Mangdechhu, Punatsangchhu I & II, Basochhu, Nikachhu, and Dagachhu.
Bhutan owes the majority of its external debt to India. The remaining is owed in convertible currency, which is a little over a billion US Dollars.
While foreign debt increased, domestic debt, which is the money borrowed from within the country, dropped to about Nu 21bn from Nu 23.5bn, a 10 per cent decrease from the previous quarter.
According to the finance ministry, despite the high debt level, the risk is considered manageable. This is because most of the external debt is for hydropower projects, which have long repayment periods and are backed by future earnings from electricity exports to India.
Kinley Bidha
Edited by Tandin Phuntsho
