Crisis or risks of crisis over last 30 years. Economics Essay

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Rupee Crisis in Bhutan
Introduction
Over the past years, Bhutan has been confronted with financial crisis commonly referred to as the Rupee Crisis; the supply of rupees is low than the demand for rupees. The Rupee crisis first occurred in the early 1990s but its effects became prevalent in 2012. The crisis is a result of Bhutan’s extensive dependence on India for financial assistance. According to the World Bank, Bhutan’s debt in 2017 was Nu. 171 billion, which is equivalent to the country’s GDP. Other than India, Bhutan has huge debts that it owes to the World Bank, Government of Austria, Kuwait Fund for Arab Economic Development, and the Government of Denmark.
Causes of Rupee Crisis
The trade and credit relationship between India and Bhutan are beyond any reasonable economic principle. For instance, in 2012, India offered Bhutan credit worth 10 billion Rupees with an interest of 5% per annum. Due to Bhutan’s inability to pay...