As the pandemic-era loan deferment scheme nears its June 30 expiry, the government has initiated discussions with the Royal Monetary Authority (RMA) and financial institutions (FIs) to consider possible extensions. The move comes amid concerns from the tourism and transport sectors—heavily impacted by debt burdens.
Industry, Commerce, and Employment Minister Namgyal Dorji confirmed the talks during a recent Meet-the-Press, acknowledging that while tourism has rebounded, many hoteliers remain under financial strain. Out of Nu 13.9 billion in deferred loans, 80% were from the hospitality industry, benefiting 503 hotels.
However, some bankers argue that continued deferments only increase interest burdens and may no longer be sustainable. They recommend loan restructuring instead—extending repayment periods up to 50 years to ease monthly payments without compounding interest.
With the sector showing signs of recovery—tourism revenue in 2024 reached USD 26 million despite lower arrivals compared to 2018—officials are treading carefully. While FIs are recovering, the finance ministry warns that prolonged deferments could pose systemic risks and foster unhealthy borrowing practices.
As of December 2024, over 5,000 loans had been deferred, with Bhutan Development Bank accounting for the majority. Meanwhile, the hotel and tourism sector continues to carry Nu 33.25 billion in credit, with Nu 561 million classified as non-performing loans.
The outcome of these discussions could shape the next phase of Bhutan’s economic recovery—balancing borrower relief with financial system resilience.
