A report, released this month, by the Jubilee Debt Campaign, a UK-based company involved in reducing indebtedness of countries; Bhutan has been categorised as a country with ‘high risk of government debt crisis.’
The report called, ‘The New Debt Trap’ lists Bhutan among 14 other nations that are fast heading towards a debt crisis.
Several other international newspapers including The Guardian, quoted the report saying, Greece was not a unique case and that several other countries were heading towards a crisis.
A crisis could be triggered by large external debt; persistent current account deficit and high projected future debt payments, the report states.
Although countries at risk of debt crisis are growing faster, they were not reducing poverty faster. While Mongolia and Bhutan are reducing poverty quickly, the amount of economic growth it takes to achieve this was not impressive; the report goes on to say.
Between 2002-12 Bhutan reduced its poverty rate from 25 percent to 12.7 percent.
Bhutan’s total external debt today is more than the size of its economy. While GDP size stands at Nu 104 B, total external debt was recorded at Nu 113 B as of June, this year.
The government’s new debt policy puts a ceiling on non-hydropower debt at 35 percent of GDP.
In the 2015-16 national budget report, non-hydropower debt was recorded at 26 percent of GDP.
However, National Assembly member, Karma Tenzin, who is one of the members of Public Accounts Committee of the house, said Bhutan would not enter a debt crisis. He said most of the government borrowings were concentrated on hydropower, which are self-liquidating.
