The country’s total public debt stands at around Nu 192.9bn as of March 31this year; an increase of around Nu 10bn from Nu 182bn as of March 31, 2019.
Finance Minister Namgay Tshering presented the budget report to the Parliament on Monday. Lyonpo said that for the Financial Year (FY) 2020-21 the debt to Gross Domestic Product (GDP) ratio is 100.8%.
Lyonpo mentioned that of the total public debt around Nu 189.6bn is external debt accounting to 99% of the GDP and around Nu 3.2bn is domestic debt accounting to 1.7% of the GDP ratio. Similarly, Lyonpo mentioned that the hydro-power debt is around Nu 141bn accounting to 74.8% of the total external debt. The non-hydro debt of Nu 47.8bn accounted for 25.2% of the total external debt.
The Nation Budget report for FY 2020-21 states that the hydro debt is expected to increase by Nu 137bn from June 2019 to Nu 158bn at the end of this financial year, which is increase of 15.8%. The increase is mainly attributed to the inclusion of Mangdechhu Hydropower Project’s (MHP) Interest During Construction (IDC) of Nu 12bn and loan disbursements estimated Nu 8.5bn for the ongoing hydro-power in this financial year.
The report states that the non-hydro debt is also expected to increase to Nu 54.9bn from Nu 42.1bn by the end of this financial year.
The increase is mainly due to the project and program borrowings from Asian Development Bank, World Bank and International Fund for Agricultural Development (IFAD) during the financial year. The depreciation of Ngultrum is also expected to significantly increase the non-hydro debt in this financial year.
The government also aims to maintain non-hydro debt to GDP below the Public Debt Policy threshold of 35% which is expected to improve in the medium term.
The hydro debt service to hydro export revenue is expected to drop from 23% in FY 2018-19 to 8% in FY 2019-20. The drop is due to the liquidation of Tala Hydropower Project debt in December 2018, and increased hydro export after the commissioning of MHP in August 2019.
The external debt service to exports ratio is projected to rise sharply in FY 2020-21 with the start of MHP debt servicing (first installment) and settlement of Standby Credit Facility (SCF) II during the financial year.
In the upcoming financial year the total debt servicing is projected at around Nu 5.6bn, of which interest payment is around Nu 2bn and principal repayment is around Nu 3.6bn.
The government also plans to start paying off the debt for MHP to the Government of India in the upcoming financial year of around Nu 2.4bn which accounts of 44.1% of the external debt servicing.
Dechen Dolkar from Thimphu