[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-110786-en":3,"doc-seo-110786-105":29,"detail-sidebar-cat-0-en-105":90},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":4,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":13,"seo_description":14,"update_tm":27,"read_time":28},110786,2336464648746,"Skyler","https://ap-avatar.wpscdn.com/davatar_276721f389ce27ea32af1340a28f341c",8,"Research & Report","Bhutan - Joint Bank-Fund Debt Sustainability Analysis - Moderate Debt Distress","Bhutan’s overall and external debt distress risk is assessed as moderate, consistent with the 2018 Debt Sustainability Analysis. Despite mechanical results indicating higher risk under baseline indicator breaches, judgement is applied due to hydropower-related debt structures. Most public and publicly guaranteed debt links to government of India hydropower loans where India covers key financial and construction risks and commits to purchase surplus electricity. Medium-term debt dynamics are expected to improve via higher electricity exports and lower import needs, though vulnerability remains to export and depreciation shocks and to contingent liabilities, with limited space to absorb additional shocks.","Public Disclosure  \nPub lic Disc losure Authorized  \nApproved by:  \nMarcello Estevão and Zoubida Kherous Allaoua (IDA) , Nada Choueiri and Kevin Fletcher (IMF)  \nPrepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF) .  \n\n| BHUTAN : JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS |  |\n| --- | --- |\n| Risk of external debt distress | Moderate |\n| Overall risk of debt distress | Moderate |\n| Granularity in the risk rating | Limited space to absorb shocks |\n| Application of judgment | Yes. The risk of debt distress is assessed as moderate due to the FDI nature of hydro-related loans and the projected improvement of medium-term dynamics due to hydro exports and revenues. |\n\nBhutan’s risk of overall and external debt distress is assessed as moderate, unchanged from the 2018 DSA.1 While the mechanical results point to a high risk of overall and external debt distress, with breaches in the indicators under the baseline scenario, judgement was applied given the unique mitigating factors. First, the majority of the outstanding public and publicly guaranteed debt is linked to hydropower project loans from the government of India (GoI) . These projects are implemented under an intergovernmental agreement in which the GoI covers both financial and construction risks of the projects and commits to buy all surplus electricity at a price reflecting cost plus margin. Second, the debt dynamics are set to improve further over the medium term, driven by a significant increase in electricity exports and a decline in imports associated with hydropower construction. Overall, the analysis shows that external debt sustainability could be vulnerable to export and depreciation shocks, while the overall debt sustainability could be susceptible to contingent liabilities shocks. Within the moderate rating, Bhutan is assessed to have limited space to absorb additional shocks. Going forward, a gradual fiscal consolidation and revenue mobilization, a stable peg with the Indian rupee, and reforms to improve productivity and competitiveness of the non-hydropower sector, could help support debt sustainability.  \n1. The coverage of public debt in this debt sustainability analysis (DSA) includes public and publicly guaranteed (PPG) debt. PPG debt in Bhutan includes central government debt, central government borrowing on-lent to state-owned enterprises (SOEs) (including for hydropower-related projects), external guaranteed debt contracted by SOEs,2 and central bank debt (standby credit facilities) . Bhutan’s local governments, social security fund and extra budgetary funds do not have any outstanding debt.3 The coverage of public debt in the 2022 DSA is broadly the same as that in the 2018 DSA. The external debt definition is based on residency. The calibration of the contingent liability shock is based on the default values, which account for domestic non-guaranteed SOE debt (2 percent of GDP), financial market component (5 percent of GDP), and public private partnerships (PPPs) (2 percent of GDP) .  \n| 1 | Subsectors of the public sector | Sub-sectors covered |\n| --- | --- | --- |\n|  | Central government | X |\n| 2 | State and local government |  |\n| 3 | Other elements in the general government |  |\n| 4 | o/w: Social security fund |  |\n| 5 | o/w: Extra budgetary funds (EBFs) |  |\n| 6 | Guarantees (to other entities in the public and private sector, including to SOEs) | X |\n| 7 | Central bank (borrowed on behalf of the government) | X |\n| 8 | Non-guaranteed SOE debt |  |\n\n\n| 1 | The country's coverage of public debt | The central government, central bank, government-guaranteed debt |  |  |\n| --- | --- | --- | --- | --- |\n|  |  |  | Default | Used for the\u003Cbr>analysis\u003Cbr>Reasons for deviations from the default settings |\n| 2 | Other elements of the general government not captured in 1. | 0 | percent of GDP | 0.0 |\n| 3 | SoE's debt (guaranteed and not guaranteed by the government) 1/ | 2 | percent of GDP | 2.0","cbCaidCsa9RE1qm1","https://ap.wps.com/l/cbCaidCsa9RE1qm1","pdf",1709302,1,19,"English","en",105,"# Risk Assessment and Judgement\n## Overall and External Debt Distress Ratings\n## Mitigating Factors and Medium-Term Dynamics\n# Debt Coverage and Indicators\n## Public and Publicly Guaranteed Debt Definition\n## Contingent Liability Shock Calibration\n# Shock Sensitivities and Policy Outlook\n## Vulnerabilities to Export, Depreciation, and Contingent Liabilities","[{\"question\":\"What is Bhutan’s assessed risk of debt distress?\",\"answer\":\"Both overall and external debt distress risks are assessed as moderate, unchanged from the 2018 DSA.\"},{\"question\":\"Why was judgement applied despite mechanical results suggesting higher risk?\",\"answer\":\"Judgement reflects mitigating factors, especially the FDI nature of hydro-related loans from India and projected medium-term improvement driven by electricity exports and reduced imports.\"},{\"question\":\"What could most affect Bhutan’s debt sustainability going forward?\",\"answer\":\"External sustainability could be vulnerable to export and depreciation shocks, while overall sustainability could be susceptible to contingent liabilities shocks; Bhutan also has limited fiscal space to absorb additional shocks.\"}]",1784487066,48,{"code":4,"msg":30,"data":31},"ok",{"site_id":24,"language":23,"slug":32,"title":13,"keywords":33,"description":14,"schema_data":34,"social_meta":85,"head_meta":87,"extra_data":89,"updated_unix":27},"bhutan-joint-bank-fund-debt-sustainability-analysis-moderate-debt-distress","",{"@graph":35,"@context":84},[36,53,67],{"@type":37,"itemListElement":38},"BreadcrumbList",[39,43,47,50],{"item":40,"name":41,"@type":42,"position":20},"https://docshare.wps.com","Home","ListItem",{"item":44,"name":45,"@type":42,"position":46},"https://docshare.wps.com/document/","Document",2,{"item":48,"name":12,"@type":42,"position":49},"https://docshare.wps.com/document/research-report/",3,{"item":51,"name":13,"@type":42,"position":52},"https://docshare.wps.com/document/bhutan-joint-bank-fund-debt-sustainability-analysis-moderate-debt-distress/110786/",4,{"url":51,"name":13,"@type":54,"author":55,"headline":13,"publisher":57,"fileFormat":60,"inLanguage":23,"description":14,"dateModified":61,"datePublished":61,"encodingFormat":60,"isAccessibleForFree":62,"interactionStatistic":63},"DigitalDocument",{"name":9,"@type":56},"Person",{"url":40,"name":58,"@type":59},"DocShare","Organization","application/pdf","2026-07-19",true,{"@type":64,"interactionType":65,"userInteractionCount":4},"InteractionCounter",{"@type":66},"ViewAction",{"@type":68,"mainEntity":69},"FAQPage",[70,76,80],{"name":71,"@type":72,"acceptedAnswer":73},"What is Bhutan’s assessed risk of debt distress?","Question",{"text":74,"@type":75},"Both overall and external debt distress risks are assessed as moderate, unchanged from the 2018 DSA.","Answer",{"name":77,"@type":72,"acceptedAnswer":78},"Why was judgement applied despite mechanical results suggesting higher risk?",{"text":79,"@type":75},"Judgement reflects mitigating factors, especially the FDI nature of hydro-related loans from India and projected medium-term improvement driven by electricity exports and reduced imports.",{"name":81,"@type":72,"acceptedAnswer":82},"What could most affect Bhutan’s debt sustainability going forward?",{"text":83,"@type":75},"External sustainability could be vulnerable to export and depreciation shocks, while overall sustainability could be susceptible to contingent liabilities shocks; 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