According to the latest figures from the RMA, Bhutan's external debt burden continues to grow. At the end of fiscal year 2009/10 Bhutan's external debt outstanding totalled US$840.7m, 5.8% higher than the US$794.3m at end-2008/09. The rise was driven by growth of 1.7% in convertible-currency debt, as well as 6.4% growth in rupee-denominated debt. However, Bhutan's overall debt/GDP ratio fell from 70.4% in 2008/09 to 63.5% in 2009/10, given strong GDP growth and some increase in capital repayments.

Of Bhutan's total external debt outstanding at the end of 2009/10, rupee-denominated debt, mainly for hydropower development, made up 58.1%, while the remaining 41.9% was in convertible-currency loans, both in concessional lending and private debt. A large part of Bhutan's rupee borrowing comes from a short-term overdraft facility from the State Bank of India (SBI, a commercial bank owned by the Indian government) at an interest rate of 9.2% per year. Borrowings under this facility made up 66.7% of all rupee loan disbursements during the year.

Bhutan's debt-service ratio (debt service payments as a percentage of exports of goods and services) fell slightly to 29.5% in 2009/10 from 30.5% in 2008/09. During the year, Bhutan increased repayments of principal on both concessional and private convertible currency debt, by 10.6% compared with 2008/09. Debt servicing on rupee obligations remained high due to repayments towards the SBI's overdraft facility. Bhutan's rupee debt service ratio remained high, at 31.5% during the year, against 32.7% in the previous year. Meanwhile, debt servicing on convertible-currency loans also increased, from 16.4% to 19.9% in 2009/10.

Of Bhutan's total rupee debt outstanding, 80.2% was public debt on hydropower lending for the Kurichhu, Tala and Punatsangchhu I hydropower projects. Within the convertible-currency loan portfolio, concessional public and publicly guaranteed debt accounted for 96.6% (the rest was outstanding external debt of the private sector).

The government of India continues to be Bhutan's biggest creditor, with total outstanding debt at Rs21.3bn (about US$481m) at the end of 2009/10. It was followed by the Asian Development Bank (US$136.4m), the World Bank (US$107.7m) and the government of Austria (the equivalent of US$57.9m)