Despite increasing external debt, the International Monetary Fund (IMF) in its economic outlook has projected Bhutan’s Gross Domestic Product (GDP) in 2020 at 7.2 per cent. Although external debt stands at 114 per cent of the GDP, the IMF says the country’s risk of debt distress is moderate.
This was announced at a recent IMF Asia and Pacific Department press briefing in Washington D.C.
The IMF’s regional economic outlook projects Bhutan’s GDP to rise from 5.5 per cent this year to 7.2 per cent next year. The growth projection comes at the back of delayed hydropower constructions and mounting Rupee debt, which accounts for 73 per cent of the total external debt as of June this year.
At the press briefing, the IMF’s deputy director of the Asia and Pacific Department said, the situation in Bhutan has been carefully assessed.
“Looking at Bhutan and the economic outlook, we feel that, some of the numbers that may look somewhat difficult in particular, the very high level of debt, you know, need to be seen in the context of the specific economic structure and that growth link to India. So the debt stands at 100 per cent of GDP, but we still have estimated it in the last Article IV to be moderate. Simply because these investments in hydropower are contractual and will yield their own export revenues in the foreseeable future,” said Anne-Marie Gulde-Wolf, the Deputy Director of Asia and Pacific Department, IMF.
Rupee debt as of June stands at Nu 138bn. Of which, 124bn is hydropower debt. Convertible currency debt amounts to Nu 49bn, which mostly constitutes debts to the World Bank and the Asian Development Bank.
The IMF is also looking at Bhutan’s growth measurement with GNH indicators with great interest.
“Bhutan is the only country so far that is following the growth national happiness indicator, but we think that this is a good approach to look at inclusive and broad-based aspects of how the economy is doing. It is somewhat difficult to compare internationally, as you say, I mean, there is only — the one country that is following this indicator, but we are looking at this with very great interest and other countries are trying to emulate or to use elements of this concept. So I think its worthwhile indicator to look at,” Anne-Marie Gulde-Wolf added.
However, a team from the IMF will visit the country in December and the projected numbers will go under the scrutiny again.
Sherub Dorji
