Our debt

Yesterday, the Finance Minister reported that Bhutan’s total debt outstanding is Nu 35,109.3 million. That’s about 56.7% of our GDP.

In other words, every citizen owes Nu 64,000 of that debt. Or, assuming the average family has five members, every family would owe Nu 320,000.

The good news is that most of that debt – about 61 per cent – consists of hydropower construction loans. These loans, we are told, will pay for themselves, and generate huge revenues for the government. Good.

But, let’s not completely ignore the risks. An overdependence on one source of revenue – in this case, hydropower – is not good for our economy. And, the almost complete dependence on one buyer, India, for the electricity that’s produced should be cause for concern. And, there’s the risk of an unforeseen natural calamity.

I’m not advocating for a halt to the investments in hydropower projects. But, I’m calling for a better awareness of the risks. And for measures to address these risks, however unlikely they may appear today.

What should we do to insure ourselves properly? Diversity our economy. And, strengthen the private sector.

In the meantime, prepare for more loans. According to the Finance Minister’s report, by next year, our collective debt will have ballooned to Nu 44,718.71 million.


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  1. “And, the almost complete dependence on one buyer, India, for the electricity that’s produced should be cause for concern”

    Well, like it or not looks like we will always have to depend with india for our electricity market. Even, if we open export to other countries like bangladeeh, burma etc, the transmission line has to go through india….the only other option is, open trade with our northern neighbour…that i don’t know whether it will be good or bad….


    My two cents if you will…

  3. If I am not mistaken about 12-13 months ago Bhutan’s loans when calculated down to an individual level stood at about Nu. 49,000 per person. I cannot believe that in about a year’s time it has risen to Nu. 64,000 per person. Is this government’s legacy going to be a huge national debt for our children to repay?

  4. Tshewang says

    Sonam Zam you are right and you have calculated the right figure. The percentage is heavy.Now My question is wheather Bhutan can repay the debt if we cant export our hydro power to India if there is competion from other substitute….(nuclear)..if India is not willing to import after few years or our river water gets dry due to climatic condition.. iam observing that Thimphu is getting too hot. Mercury level has inreased a lot…this year. Is it due to ozone depletion?. NEC sleeping or finding solution???.

    Solutions would be

    1.FDI investment. Government should be flexible for investor.
    2.Reduce Tourism royalty make as US$25 and make Bhutan as top destination in the world by promoting.But provide the same quality of tourist…not like nepal. Increase more products and services. Stop personal guest visit. Indian Tourist should be handled by Tour operator of Bhutan.
    3.Main exports like cordycep,orange/apple should reach the right market where we can get good price.
    4.Invite Software gaints from India to Bhutan..providing many benefites. Bhutan being free from strike,hartals,trade unions..lot of advantages for those software gaints.
    5.promote our agri-organic products to international market..online baking..etc..
    6. Tax holiday for large scale industries…due to Global economic recession.

    • “iam observing that Thimphu is getting too hot. Mercury level has inreased a lot…this year. Is it due to ozone depletion?. NEC sleeping or finding solution???”
      Hi tshewang, tempted to answer this question of yours because i have been doing a sereis of reports on Climate Change. Optimistic that there is more awareness created.

      True, thimphu seems the hottest this year. It may be due to rising emissions of carbon by the global community which contribute to the greenhouse effect. For more info, please google CC, or read my reports wher i have tried to write in a Bhutanese context at http://www.bhutantoday.bt scientists say that even thought CC is happening and happening bacause of human activity, one cant attribute every weather change to it. Thimphu may be hotter this year than the last becasue of various reasons, but if it is hotter than it has ever been, then yes, CC.
      ABout NEC..well, actually u know there is not much they can do given the fact that it is a problem caused by the world (and not us so much thanks to our huge forest cover and few industries and hydropower as opposed to coal for electricity.)
      they are doing some work in relation to studies, global talks, and collecting funds for averting possible disasters. Our tendency to blame everything on the government sometimes seems to go overboard.
      What we need is a lot of information/awareness so that we can participate in the global dialogue and make our voices heard in the discussions about decreasing global carbondioxide emissions.
      In december this year, the 15th COP meeting will take place where countries will gather to discuss the problem and answers in Copenhagen. It is about us too, as you must realise, so do make sure to keep yourself informed about it. I will be reporting on it. 🙂

    • I agree to most of what tshewang say’s here. But donot reduce tourism royalty to $ 25. Not a good idea. Reduce it to max US$ 50 per night. Tourism should not be cheap in Bhutan. Keep up with the policy of High value low volume or high value value low impact.But keep it high value by providing good value infracture and greater quality guides to increase value for our valuable guests visiting. I often hear that guides make or break a clients trip to Bhutan and I cannot agree enough to this. At all cost- don’t make tourism cheap in Bhutan but provide enough/adequate incentives to tour operators to promote Bhutan well through value addition. It is a must. Tourism council should not think that every discount given in teh tariff should be passed on to clients – this is wrong thinking as it should be tour operators whether to pass it on or not depending on the situation of the tour.

      Another aspect is the agri organic products mentioned by Tshewang. I support this cause. We should work towards exporting such products to WHOLE FOODS in America. They re buying/importing from all over the world but Bhutan. We should explore this opportunity. Agri Lyonpo should move fast on this. It is a great marketing tool for Bhutan too when we become exporters of organic foods.

      MY TWO CENTS LA……….

  5. The old saying goes…..
    ‘Do not put all your eggs in one basket”

  6. And now the government will be funded by the people through the issuance of Treasury Bills from August 2009 as per the Kuensel’s report of 24th July. The Financial gap of Nu.4.5 billion for fiscal year 2009-10 will be raised through this instrument. Its a right thing that the Ministry of Finance has taken such decision where the general populace is given the oppertunity to invest in such risk free investment portfolios and which also controls the market interest rates. Of course, I feel that this would be a blow to the financial institutions who provides the depository servives as there will be a client run out from the institutions if the MOF gives better returns.

    Ohh then the govt. debt will increase if MOF do not create sufficient repemption fund.


  8. Tshewang says

    The figure seems huge but do not be alarmed. The lender is equally concerned, if not more, about the repayment capacity of the borrower, ie. RGoB. Also, the borrowing or borrowed fund is spent for laying key economic infrastructure without them Bhutan can not break the vicious cycle of poverty.

    It is also important to understand that development of hydropower is ONLY Bhutan’s comparative advantage. And when there is advantage without environmental consequences Bhutan MUST capatilize on it to speed up socio economic development.

    As far as I am concerned Bhutan’s policy to develop hydropower projects is in right direction.

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