The Finance Minister Namgay Tshering said that Bhutan had received an offer through the International Monetary Fund (IMF) of multiple International Financial Institutions like World Bank (WB) and Asian Development Bank (ADB) asking if Bhutan wanted to defer its international loan payments due to COVID.
Lyonpo said Bhutan declined to defer the loans as they did not want to spoil Bhutan’s image in the international arena as this would matter in the future while seeking other loans as the country’s image will not be one of being unable to pay back loans.
He said this decision was taken with a futuristic outlook.
Of the around 223 bn debt so far the minister said that around 180 bn debt is hydropower debt which is self liquidating. He said the rest is budgetary support debt and this too is being taken at highly concessional rates. He said the public finance policy contained this non-hydro debt below 35% of GDP and it is currently at 22 to 25% pf GDP only.
Lyonpo said that concessional loans from the WB was at 0.75% service charge interest and had a repayment period of 32 years while for ADB it was 25 years with a 1% interest for the grace period followed by 1.5% loan after the grace period.
The minister said that debt increased by around 7 bn in July, August and September mainly on account of hydro debt for ongoing projects.
The PM said that in 2018-19 financial year Bhutan had got total receipts of USD 86 mn into the economy and with no tourists now this amount had to be offset through concessional borrowing. He said such borrowing helps build the convertible currency reserves and at a time when the dollars has appreciated against the Ngultrum it benefits Bhutan as repayment is done over the longer period of time.
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