The government is expected to launch the Public Debt Policy this Wednesday which for the first time will set a limit on the debt that can be taken by the country.
Bhutan previously did not have a Public Debt Policy. The policy has set a 35 percent debt ceiling for non-hydropower debt.
Currently the non-hydropower debt is at 27 percent of the GDP. During the 2012 Rupee crisis period the non-hydro debt had touched around 35 percent of the GDP.
There will also be certain limits and safeguards when it also comes to hydropower debt.
A committee lead by the Finance Minister has been working on the debt policy for more than a year on the draft.
The committee has members from the Ministry of Finance, Royal Monetary Authority, National Statistics Bureau, Department of Hydropower System, Gross National Happiness Commission and took expert assistance from the Asian Development Bank and the World Development Bank.
The main aim of the policy is to prevent excessive borrowing especially by political governments to fulfill campaign pledges and in the process damage the country’s economy by accumulating excessive debt.
It is also expected to not only control debt but also ensure that any future debt taken is for productive purposes.