Economy: In last four years, the country has been able to ease the burden for debt repayment substantially, going by figures from the Central Bank.

Even as the country’s external debt has grown from Nu 106 billion (B) in 2012-13 to Nu 128B as of December last year, its debt service ratio has improved extraordinarily.

In government finance, the debt service ratio is the ratio of debt service payments, principal and interest of a country to that of its export earnings. This means that lower the ratio the healthier the economy because low ratio is derived either from expansion of export earnings or less amount of loan repayment.

The country’s external debt service ratio, as per the Central Bank’s monthly bulletin, has decreased to 8.5 percent as of December last year from more than 229 percent in the 2012-13 fiscal year.

The debt service ratio in the 2013-14 fiscal year, came down to 27 percent and to 20 percent in the following fiscal year.

Since 2012, the government had availed for short-term borrowings to ease rupee shortage. The GoI line of credit was also enhanced from Rs 3B to 10B during that time. The government had also availed overdraft facility from the State Bank of India and Punjab National Bank in India.

However, as of September last year, the government had repaid Rs 21.9B out of the outstanding Rs 28.9B short-term INR loan.

The prime minister during an MTR said most of the debts are on account of hydropower, which are self-liquidating in nature.

A joint analysis by IMF and the World Bank conducted in 2009 stated that the country can expect a temporary breach of threshold as Punatsangchu II and Mangdechu’s debt service begins.

Lyonchoen had said that non-hydro debt is a concern. The government claims that it has been able to reduce non-hydro debt from Nu 40.9B to Nu 34B.

The total INR borrowing as of December last year stood at about Rs 9B, mostly availed for hydropower projects. Debt in convertible currency stood at USD 585M.

The debt to GDP ratio was recorded at 107.7 percent of GDP.

Tshering Dorji