Druk Nyamrup Tshogpa (DNT) has said the country’s debt-to-GDP ratio is the highest in South Asia.
According to the World Economic Outlook Database of April 2017, published by the International Monetary Fund, Bhutan’s public debt is 112.87 percent of its GDP.
Presenting the annual budget report to National Assembly on May 8, Finance Minister Namgay Dorji said the external debt stock is estimated at Nu 178.672 billion (B) by the end of FY 2017-18. This would be about 99.2 percent of GDP.
DNT said that it is deeply concerned for the people of Bhutan that the government has put Bhutan in ‘danger zone’ with 113 percent debt.
The party stated the Bhutan is the worst country in the SAARC region in terms of debt management, to the extent that it said Bhutan is almost becoming a Greece in South Asia.
“This is especially disheartening as the current government blamed the past government on poor debt management and campaigned on the promise of improving debt in 2013. But the reality is we are now much worse than we were four years ago,” said DNT.
The government’s inability to reduce the debt-to-GDP ratio, according to DNT, it will widen the gap between the rich and the poor.
“Imagine a Prado for a government secretary bought by the government on debt that must be paid equally by every Bhutanese. Benefit is accrued to one, but debt has to be paid by all in the future,” DNT said. “This will only perpetuate social inequality and widen the gap between the rich and the poor.”
The government, DNT said, must wake up to the “harsh reality of debt crisis before acting unrealistically benevolent with political handouts of sheep, shoes, and sleek Prados”.
“It may be easy for the government to put the country in danger zone carelessly and irresponsibly but it is not easy for the people to save the country carefully and responsibly `from the danger zone. But the people must, before it is too late like Greece,” said DNT.
However, the government says that the high percentage of Bhutan’s debt is because of the ongoing hydropower projects.
The finance minister reported to National Assembly that the external debt stock is projected to increase by 7.6 percent on account of expected disbursements for the ongoing hydropower projects – Punatsangchu I and II, Mangdechhu, Nikachhu and Kholongchhu.
He reported that of the total external debt, Nu 146B, which is 81.1 percent of GDP, is on account of hydropower projects. The rest Nu 32.662B, 18.1 percent of GDP, is non-hydro debt.
According to the budget report, the domestic debt stock is estimated at Nu 47.43 million by the end of the financial year 2017-18. It was availed from National Pension and Provident Fund for construction of staff quarters at Phuentsholing hospital, which will be liquidated April 2022.
For the financial year 2017-18, the debt service is estimated at Nu 4.909B. Principal repayment for hydropower loans is Nu 1.342B, which is about 47.6 percent of the total principal repayment.