Bhutan is currently facing a significant challenge in the form of a widening fiscal deficit and a rapidly increasing public debt. The latest report attributes this alarming situation to limited revenue growth and a surge in public spending. As of March 2023, the cumulative deficit has reached an astonishing Nu. 267 billion, and the government anticipates borrowing an additional Nu. 29 billion in the new fiscal year, pushing the total debt to Nu. 296 billion by the end of 2023-2024. The gravity of the situation is further exacerbated by the rise in internal borrowing.
The surging fiscal deficit and the corresponding increase in public debt cannot be ignored. The government must engage in deliberations to determine the measures and strategies necessary to effectively address this pressing issue. The consequences of unchecked deficits and mounting debt would be an unbearable burden on future generations.
To begin with, the government should focus on revenue generation. Exploring avenues for increasing revenue is essential to curb the widening fiscal deficit. This can be achieved through a combination of measures, such as revising tax policies, broadening the tax base, and improving tax collection mechanisms. Additionally, efforts should be made to attract foreign investments and promote private sector growth, which would stimulate economic activity and contribute to revenue generation.
Furthermore, the government needs to exercise prudence in public spending. It is crucial to prioritize projects based on their potential impact on the economy and the welfare of the people. Emphasis should be placed on investing in sectors that promote sustainable development, create employment opportunities, and enhance the country’s long-term growth prospects. Proper evaluation and cost-benefit analysis should be conducted for each project to ensure its viability and contribution to the overall well-being of the nation.
In addition to revenue generation and prudent spending, it is imperative for the government to implement effective fiscal management practices. This includes developing a comprehensive debt management strategy that aims to reduce reliance on borrowing and gradually bring down the debt burden. The government should explore options for refinancing or restructuring existing debt to alleviate the financial strain. Concurrently, efforts should be made to strengthen financial governance, improve transparency, and enhance accountability in fiscal matters.
The future economic well-being of Bhutan relies on its ability to address the escalating fiscal deficit and debt. The government must take proactive measures to control the deficit, curb excessive borrowing, and ensure sustainable economic growth. The burden of the fiscal deficit and debt should not be passed on to future generations, as it undermines the prospects for their prosperity.
Bhutan faces a significant challenge in the form of a widening fiscal deficit and an escalating public debt. The government must act decisively and develop effective plans and strategies to tackle this issue. Fiscal deficits are expected in any economy, it is crucial for the government to develop prudent strategies to keep the deficit at a manageable level.
By focusing on revenue generation, prudent spending, fiscal management practices, and international cooperation, Bhutan can work towards mitigating the impact of the fiscal deficit, reducing debt, and securing a confident and prosperous future for its citizens.