Responding to allegations from the Opposition party that the government had not yet offered a new strategy to deal with public debt, the Prime Minister said that public debt minus hydropower debt had actually come down under the new government.
He said that as of June 30, 2013, the total public debt which included rupee loans, hydropower loans, convertible currency and domestic debt came to Nu 95.483 bn which as of January 31 2014 was at 97.113 bn, showing an increase of 1.630 bn.
The PM said that of the Nu 95.483 bn debt on June 30, 2013, Nu 44.369 bn was for hydropower and as of January 31, 2014, this had increased to Nu 4 8.284 bn which was an increase of Nu 3.915 bn. He said this increase was on the account of construction of the existing three projects, detailed project reports for other projects, preliminary roads and preparations.
In spite of Nu 3.195 bn increase in hydropower debt the total overall debt had increased by only Nu 1.630 bn.
Lyonchhen said that, however, if the hydropower debt was left out Bhutan’s public debt had actually fallen by Nu 2.284 bn. He said the public debt minus hydropower debt on June 30, 2013 was Nu 51.113 bn which had actually fallen to Nu 48.829 by January 31, 2014.
Lyonchhen said, “We achieved this by paying of Rs 5.410 bn of our Rs 10 bn rupee loans by using the Reserve bank of India swap policy in September 2013 and we have to clear this loan, we also aggressively looked for grants for developmental projects and we made plans to ensure the loans are sustainable.”
The PM said that the just because the hydropower loans are self liquidating, it did not mean that Bhutan takes loans irresponsibly, but rather, Bhutan would have to be responsible in taking these loans. He said that it was also not in the interest of Bhutan- India ties and only loans that were necessary should be taken.
The PM responding to the Opposition party’s allegations that nothing much had been done on the public debt in seven months said, “We are grateful to the Opposition for the trust and confidence in the ruling party for expecting a lot in 200 days. They think we are very capable and it is good to be pushed. On the other hand, they are not being fair as it is barely seven months. A problem created over five to six years cannot be solved in barely seven months.”
He said that the opposition parties would target the government, but it was also important for the media to remember that it has just been seven months.
He said, “I remind my colleagues that we have a five-year contract and seven months is already up and we should be worried and we tell this also to civil servants and the private sector, but on the other side it is just seven months.”
The PM said, “In terms of loans what we have done is radical as we have accepted that there is a problem.” He said that the government had slashed unnecessary expenditure starting from the PM and Ministers, themselves, which may not amount to much but that the principle was important. He also said that the government had commissioned a study to look at the loans and what level was suitable for the economy and what would be the projected state of the economy five years from now.
The PM said that the government had managed to get Nu 74 bn in grants for the 11th Plan which far exceeded that of the 10th Plan and that Bhutan would continue to receive grants. He also said that Bhutan received Nu 3.2 bn from the 10th Plan from the Government of India which the previous government had spent but was yet to be received.
The PM also pointed out despite what some people said the Nu 5 bn ESP would help create jobs and businesses, improve liquidity in banks and reduce Bhutan’s dependency as a nation. He said the government had also been able to revise the Chukha power tariff upwards from Nu 2 per unit to Nu 2.25 per unit effective from January 2013.
“So between a combination of success in getting grants, increasing national revenue through increase in power tariff and other measures and reducing government expenditure we have been able to control the amount of debt,” said the PM.