Q&A: The country’s total debt as of December 31, 2012 was Nu 78.65B, so revealed finance minister Wangdi Norbu at the assembly yesterday.
He was responding to opposition leader Tshering Tobgay’s question during the “question hour” that lasted almost two hours, out of which the answer took almost an hour.
He raised several other questions about how much of that amount went into the hydropower projects, what was left of the short-term borrowings and how much the country was paying in interest of the borrowed money.
The Nu 78.65B loan, finance minister said accounted for about 78.4 percent of the country’s GDP.
Total public debt as
of 31/12/2012 - Nu 78.65B
Of that external
Internal debt – Nu 3.3B
Debt invested in
Total interest RMA
Repayment of short-term borrowing and overdraft facility as of 31/01/2013 – Nu 11.46B
Of that, and what the country had to worry about, the external debt, he said as of December 31, 2012 was more than Nu 75.6B, accounting for 96 percent of the country’s total debt.
The internal debt, meaning money borrowed from financial institutions within the country, he said was Nu 3.35B, which was used in buying an aircraft for the country.
Most loans, he said were, however, used for hydropower projects.
“As of December 31, 2012 hydropower debt was Nu 45.45B,” he said, adding they were invested in Kurichhu, Tala, Punatsangchhu I and II, Mangdechhu, Dagachhu and Basochhu projects.
He said they accounted for 60.1 percent of the total loan the country has.
In response to concerns that members expressed with regards the country’s inability export or repay the borrowed money, Lyonpo Wangdi Norbu said the fact that Indian government committed to import electricity the various hydropower projects will generate should allay those concerns.
“Our concern should not be with the 60 percent of the loan component that is for hydropower projects but the other 40 percent,” he said.
On short-term borrowings, he said that as of January 31, 2013, the country had to pay back Rs 11.46B.
Coming to paying back debts, he said Royal Monetary Authority had paid a total interest amount of Nu 703.5M between January 2012 and January 2013 for overdraft to the State Bank of India and Punjab National Bank.
He also pointed out that Dungsam cement and Dagachhu hydropower projects also contributed to Rupee shortage.
The lottery business that earned the country Rupees had to be closed following various media reports of it.
Following finance minister’s response, opposition’s Damcho Dorji said it sounded more like what the minister had said in the past when the opposition, based on media reports raised the issue at the assembly.
“The minister also said the issue, caused mainly by hydropower projects, would be solved within two or three years,” he said. “But instead it rolled into one big problem, a solution for which were still haven’t found.”
Economic affairs minister Khandu Wangchuk said if the government really wish to clear the loans, it could be done within next five to six years.
“But we have to bear in mind the economic developments the country is pursuing so it eventually brings the country economic independence,” he said.
Works and human settlement minister Yeshey Zimba added that, had the country not taken any loans choosing to play safe, the country would not have reached where it has today, in terms of development, employment and changes in lifestyles.
“Borrow we still must, for many of our people still live in the far flung remote areas,” he said.
Hydropower project, he said would definitely elevate the country in terms of development.
Because of Chukha hydropower plant, he said the industrial estate could begin and electricity for people dropped from 80 Cheltrums to 40.
“Tala boosted the country’s economic development further,” he said. “In the not so distant future our problem will be not knowing where to take and spend the Rupees, with tourism, hydropower and exports improving.
Until one or two of the ongoing hydropower projects complete, he said it would be difficult to solve the Rupee shortage immediately, unless through tax raises, which nobody was for.
By Samten Wangchuk