All short term INR loan to be paid by 2018

INR: By the time the government goes to the poll in 2018, it would have cleared all the short term borrowings, which the previous government borrowed when the shortage of Indian Rupee (INR) was at its highest in the 10th Plan.

The government claims that it has repaid Nu 21.9 billion (B) out of the Rs 28.9B the government borrowed as short-term borrowing to ease the rupee shortage that surfaced since 2012. The INR short-term loan as of today is Rs 7B.

As of September 2013, remaining loans of Rs 5.4B from swap arrangement, Rs 4.5B from Punjab National Bank (PNB) and Rs 9B from State Bank of India (SBI) has been cleared.

Only Rs 3B was repaid of the Rs 10B GoI line of credit, finance minister Namgay Dorji said

The repayment of the GoI line of credit was due since March last year. However, upon request the GoI deferred the payment.

In the 10th Plan, when the INR shortage saw no signs of cooling down at one point of time, the then government formed a task force which recommended on enhancing limits on INR borrowings from GoI and SBI as a short term measure to address the rupee crunch in the economy. It was also recommended to avail currency swap arrangements among SAARC nations.

The government took Rs 10B loan at five percent interest from GoI line of credit in 2012. The limit on GoI line of credit was enhanced from Rs 3B to 10B.

The country also availed the currency swap arrangement with Reserve Bank of India (RBI) and borrowed INR 5.4B at an annual interest rate of 5.25 percent.

In the swap arrangement, Ngultrums were placed in the RBI account, and the RBI released an equivalent amount of INR, charging interest.

As per the figures from the finance ministry, government also took an additional loan of Rs 4.5B from PNB overdraft facility and Rs 9B from the SBI.

The total INR borrowing as of March this year stands at Rs 78.1B, of which 65.5 percent is for the hydropower projects.The country’s total borrowing is Nu 118B, of which 63 percent is INR loan. This means that the size of the INR loan is 62 percent of the size of country’s economy.

External debt constitutes almost 92 percent of the total public debt.

Tshering Dorji