The Nganlam MP, Choida Jamtsho, raised concerns on the increasing National Debt in the National Assembly on May 27, which is to reach 121% of GDP in the 11FYP as reported in the Annual Audit Report 2014.
He said the debt to GDP (Gross Domestic Product) ratio must be maintained at or below 60% of GDP, but currently it has reached to 92% of GDP.
He asked how the government will resolve this issue and also questioned the last NA resolution to carry out an independent study on the country’s debt situation.
The Finance Minister Lyonpo Namgay Dorji, giving an insight into the earlier debt situation in our country, said during the start of the 10FYP, the debt was at Nu 37.8 bn, and in the end of 10FYP plan it stood at Nu 101.3bn.
The country’s total debt has reached to Nu 99.57bn as of March 30, 2014. The external debt accounted to Nu 99. 22bn and Nu 350mn is the internal debt. With regard to the external debt, the hydro-projects alone accounted for Nu 62. 44bn and others at Nu 32.77bn.
On the need to acquire loans, Lyonpo said USD 39mn was required for the Dagachhu project that was suffering from insufficient budget and for works to continue. For the development of towns, an amount of USD 7.4 mn was borrowed from the World Bank.
Bhutan has, in total, repaid Nu 15.6bn so far. Out of which the government has repaid Nu 6.6 bn to service an overdraft debt from the State Bank of India, a sum of Nu 3.6 bn to Punjab National Bank, and for the Government of India (GoI) currency swap arrangement from South Asia, the government has repaid Nu 5.4 bn in September last year.
Lyonpo said Bhutan has to repay Nu 10 bn from GoI line of credit. Of which, the government was required to repay Nu 3bn in March last year but failed to do so. Bhutan has asked for a year of extension and was agreed upon by India. There is Nu 3bn to be repaid by March 2017 and rest Nu 4bn by March 2018.
Lyonpo also said the increase in the total cost of the Punatshangchhu project, from Nu 35bn to Nu 97 bn, has tripled. He also stated that the present government took over the spillover works accounted at Nu 5.4 bn whereas the previous government undertook the project at Nu 1.5bn.
Comparing the budget outlay of 10FYP and 11FYP, Lyonpo said there is an increase by 29% from the previous plan. For the 10FYP, Bhutan received Nu 34bn from India while 11 FYP has Nu 50bn approved by India. And a total budget outlay for 11FYP stands at Nu 71bn.