MB Subba

Members of the National Council (NC) expressed concerns about the government’s plan to borrow from the European Investment Bank (EIB) amid the burgeoning public debt.

Members raised the concerns when Finance Minister Namgay Tshering introduced the framework agreement in the House as an urgent Bill yesterday.

“Is the government taking advantage of the five-year grace period, which EIB provides to borrowers, to burden the next government?” member from Gasa, Dorji Khandu asked.

He said that borrowings from the bank could do more harm than good in the country’s post-Covid-19 economic recovery efforts. The chances of appreciation of dollar value against Ngultrum would put a strain on the state’s exchequer at a time when the government would require more money, he said.

The member from Haa, Ugyen Namgay, said that he supported the objectives of the government’s efforts to ratify the agreement. However, he asked if additional borrowings were really needed given that the government had reportedly said that it was concerned “more about fiscal surplus than deficit”.

Zhemgang NC member, Pema Dakpa, said that the money was required in view of increasing financial needs amid Covid-19 and that the government should reveal how much it was planning to borrow and for what projects.

Finance Minister Namgay Tshering said that the reports of “fiscal surplus” were not accurate. He clarified that the government was concerned about the chances of some allocated money remaining unused due to non-implementation of planned activities.

He said that ratification of the agreement would help the country avail money to fund projects. The minister said that EIB gave loans for climate change mitigation initiatives and private sector development, which he said were in line with the country’s policy.

The framework agreement has been fast-tracked as an urgent Bill although it was introduced as a normal Bill in the National Assembly, where the Bill was passed recently.

The ratification of the agreement, he said, would help the country in its post-Covid-19 economic recovery efforts.

The second NC in 2015 had rejected the framework agreement in view of questions on sovereignty and infringement of national laws.

The finance minister said that by signing the framework, Bhutan can have access to new concessional financing opportunities to meet the increasing development financing needs and also have more financing options after graduation from the group of Least Developed Countries group. 

He reported that the government had worked tirelessly for the past one year with the secretariat of the EIB on the objections of the NC and that consequently, they had agreed and considered all the objections.

The House will continue deliberation on the agreement today.