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Finance minister Namgay Tshering
Finance minister Namgay Tshering

Budget deficit could touch Nu 40B in 12th Plan

The government’s pledge to establish another national referral hospital, provide free wi-fi, launch sung joen app, and pay breast-feeding allowances, worth a few billions, are not budgeted in the 12th Plan.

At the first meet-the-press session yesterday, Prime Minister Dr Lotay Tshering said the projected fiscal deficit, which is the budgetary gap between the total expenditure and resources (revenue combined with grants), could touch Nu 40B against the projected Nu 29B.

Finance minister Namgay Tshering said the country would avail interest-free, highly concessional loan of Nu 4B from the World Bank, Asian Development Bank and International Fund for Agriculture Development (IFAD). The government plans to source the remaining Nu 25B from financial institutions at home.

“We have, the not huge but significant capacity of internal borrowings,” Lyonchhen said.

Lyonchhen said the budget of Nu 310B is only an outlay and that the actual requirement could be more. “But we are not worried.

In fact, it is an opportunity,” he said adding that it would depend on the capacity of the government, especially the cabinet as to how much fund the country can gather outside the Plan.

While the government claims that it had not done major changes to the draft 12th Plan, an additional National Key Result Area (NKRA) was added to ensure water sustainability under the radar of the Plan.

This, Lyonchhen said is because of the sheer importance of water and also because all political parties have pledged for improved access to water for irrigation and drinking. Establishing a central water body is one of the flagship programmes in the 12th Plan.

The government claims that the 12th Plan is inclusive of major pledges of all parties. Since the last government drafted the Plan, foreign minister, Dr Tandi Dorji said that most pledges made by the PDP are intact in the Plan. He said that all of Nyamrup’s pledges have been aligned with the Plan and that the DPT’s pledges are no different from Nyamrup’s save for hydropower. As for BKP, he said that corruption is one of the NKRAs. Digital Drukyul, which is one of the BKP pledges, is also a flagship program in the 12th Plan.

Lyonchhen said he agrees with all the good pledges made by different parties but that doesn’t mean everything is incorporated in the 12th Plan.

Lyonchhen said the government would meet all the leaders of the political parties to discuss the vision 2045 document to accommodate their pledges.

While the 12th Plan, the last Plan as a Least Developed Country, is an ambitious one, lyonchhen said it has not taken into the projections from the two Punatshangchhu projects.

“Hydropower is something that we talk about and what we should know is that most of the things are not in our hands,” Lyonchhen said. While the Mangdechhu project is completing very soon, we could not reach to a good bargain on the tariff.”

Punatshangchhu I, he said would spillover to the next Plan and is expected to commission between 2022 and 2023. The commissioning date of Punatshangchhu-II is schedule a year before the Punatshangchhu I.

“But we are not in a mad rush and we have to be careful because India is the only market and donor,” Lyonchhen said. “It is wrong to point the lapses to the previous governments because the setbacks were totally unforeseen. Even the investigations are never 100 percent correct.”

In the 11th Plan, the economic growth was projected at an average of 10 percent. However, it was down scaled because of the delay in commissioning of hydropower projects and even the domestic revenue was projected based on the earning from these projects.

The average GDP growth in the 12th Plan is projected between 5.8 and 6 percent, which contradicts with the IMF projections that Bhutan will emerge as the fastest growing economies in the world.

Meanwhile, the 12th Plan is the last plan as LDC and the first Plan that will allocate 50 percent of the budget to the local government through block grants.

 

Tshering Dorji

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