While the total budget for the 12th FYP is Nu 310B, the government has already exhausted around 89% of the budget with one fiscal year still remaining for the FYP to end
By Tashi Namgyal
By the end of this fiscal year, Bhutan would have exhausted about 89 percent of the 12th Plan’s capital budget and only a meager 11 percent would be left for the fifth and final year of the five-year plan period which ends in 2023. Only Nu 12.4 billion (B) of the capital budget will be left for the fiscal year 2022-23 after estimates of the four fiscal years round up to Nu 103.6B.
While conceding that not much budget is left for the final fiscal year of the 12th plan, finance minister Namgay Tshering acknowledged it only signified that the government has utilized the budget very efficiently, and that money was spent within four years instead of five years. He added that the budget was spent well before its exhaustion time because of the expansive fiscal policies laid down by the government due to the coronavirus pandemic.
According to the finance minister, Bhutan cannot afford to lose time putting the blame onto the pandemic. Otherwise, the country’s economy could backtrack when the global economy recovers from the pandemic in a few years’ time.
“We don’t have the luxury of wasting time and being stingy. We could be left behind with many countries of similar size when the world economies recover from the pandemic in a few years,” the finance minister said.
While maintaining that the situation arose from the frontloading exercise, he said that he government also had to ramp up spending to confront the economic impacts of the pandemic.
The nominal GDP loss incurred in six months of 2020 amounted to Nu 5B and the government needed to pump money into the economy to offset the loss. Government spending contributed close to 40 percent of the GDP.
The government plans to initiate programmed borrowings -although not confirmed- in order to meet the expenditures of the remaining years, which could be injected into activities facing budget constraints. The finance minister reiterated that there should be investments made for the economy to revive.
Although budget in the first and final years of the elected government would be minimal due to transition periods, the physical and financial achievements of gewogs accounted for 95 and 98 percent respectively.
In contrast, opposition parliament members say that the achievements in infrastructure development did not match the expenses, and that the budget could have been used in more fruitful terms.
The projected fiscal deficit of the 12th FYP was Nu 29B, which the government claims had been reduced by Nu 6B through grant programmes.
The overall expenditure (capital and current) at the end of the current fiscal year would be 75 percent, according to finance ministry estimates. A total of Nu 128.207B or 66 percent of the total current budget will be utilised at the end of the current fiscal year. In other words, Nu 65B will remain as current expenditure.
The government has been receiving funds from development partners as per the commitments despite the pandemic’s impact on the world economy. Development partners have committed around Nu 63B for the 12th FYP.
The government received a total of Nu 31B, which is almost half of the total development partners’ support for the 12th FYP, at the end of the first half of the five-year period in December 2020. Figures show that despite the pandemic, the capital budget was spent much faster in the 12th FYP than in the 10th and 11th Plans.
The capital budget for the ongoing fiscal year has been revised as Nu 39.578B, according to the Department of National Budget.