…𝑷𝒖𝒃𝒍𝒊𝒄 𝑨𝒄𝒄𝒐𝒖𝒏𝒕𝒔 𝑪𝒐𝒎𝒎𝒊𝒕𝒕𝒆𝒆 𝑹𝒆𝒑𝒐𝒓𝒕 𝒓𝒆𝒗𝒆𝒂𝒍𝒔 𝒓𝒊𝒔𝒊𝒏𝒈 𝒅𝒆𝒇𝒊𝒄𝒊𝒕, 𝒓𝒆𝒂𝒄𝒉𝒊𝒏𝒈 𝑵𝒖. 14,572.038 𝒎𝒊𝒍𝒍𝒊𝒐𝒏, 𝒘𝒊𝒕𝒉 𝒍𝒊𝒎𝒊𝒕𝒆𝒅 𝒓𝒆𝒗𝒆𝒏𝒖𝒆 𝒈𝒓𝒐𝒘𝒕𝒉 𝒂𝒏𝒅 𝒊𝒏𝒄𝒓𝒆𝒂𝒔𝒆𝒅 𝒑𝒖𝒃𝒍𝒊𝒄 𝒔𝒑𝒆𝒏𝒅𝒊𝒏𝒈 𝒊𝒅𝒆𝒏𝒕𝒊𝒇𝒊𝒆𝒅 𝒂𝒔 𝒌𝒆𝒚 𝒇𝒂𝒄𝒕𝒐𝒓𝒔
As per the review report disclosed by the Public Accounts Committee, there has been a consistent rise in the government’s fiscal deficit in recent years. The deficit increased from Nu. 3,385.374 million in the fiscal year 2019-20 to Nu. 11,139 million in 2020-21, and further escalated to Nu. 14,572.038 million in the fiscal year 2021-22. This upward trend in the deficit can be attributed to constrained growth in revenue and a surge in public expenditure.
The report attributes the widening fiscal deficit to limited revenue growth and an increase in public spending.
During the joint sitting of the parliament on July 6, the opposition leader, Dorji Wangdi, expressed his concerns, stating, “As of March 2023, the cumulative deficit has reached a staggering Nu. 267 billion. Looking ahead to the new fiscal year, Bhutan anticipates borrowing an additional Nu. 29 billion, pushing the total debt to Nu. 296 billion by the end of 2023-2024. Alarmingly, internal borrowing is also on the rise. Out of the Nu. 29 billion borrowing, approximately 27% will be sourced internally, contributing to an increase of Nu. 8 billion in internal borrowing alone. It is imperative for the government to engage in deliberations on the measures and strategies necessary to effectively address this pressing issue.”
Ugyen Wangdi, a Member of Parliament, highlighted the importance of the government creating effective plans to handle the fiscal deficit. He said that if the deficit keeps growing, it is not wise to borrow money and carry out projects that exceed the country’s income. While fiscal deficits are expected, the government should develop strategies to keep the deficit at a manageable level.
Passang Dorji (PhD), Member of Parliament for Bartsham-Shongphu, expressed concerns about the increasing irregularities and public debt, emphasizing the need for a stronger economy and improved governance.
The Finance Minister, Namgay Tshering, said that deficits have become a recurring feature in every fiscal year. The initial estimate for the first Punatsangchhu project was Nu. 35 billion, but it eventually surged to Nu. 89 billion. Similarly, the estimated amount for the second Punatsangchhu project was Nu. 37.5 billion, but it exceeded expectations and reached Nu. 91 billion. Despite these cost overruns, abandoning the projects midway is not an option, and therefore, we are compelled to seek borrowing to ensure their completion.
During the deliberation, the Prime Minister urged the committee to include a chapter analyzing the quality of debt in their report, rather than solely focusing on debt figures. He also emphasized the need for timely expenditure, stating, “At the end of every fiscal year, about 18 to 20 percent of the budget is mostly underutilized. It is not okay to spend the capital budget at the end of a financial year. Works are done when it is time to show the annual accounts, spending at once.”
Furthermore, the Prime Minister acknowledged that as the country’s economy expands and develops, it is inevitable that the national debt will also increase.
In total, the Joint Sitting adopted the Public Accounts Committee’s twelve recommendations on the Annual Audit Report (AAR) 2021-22 (9 recommendations) and the Follow up on the Review Reports of AAR 2010-21 (3 recommendations) with 100% Yes votes from 67 Members present and voting.