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ESP has flopped, says opposition

The figures are not encouraging: growth has plunged to a new low of 2.05 percent

Meet the Press: The Nu 5B economic stimulus plan (ESP), launched with much hype and urgency did no good to the economy, the growth of which is wallowing in all time low of 2.05 percent.

Members of the opposition, during the meet-the-press yesterday, said the government shouldn’t blame the previous government for achieving a poor growth in 2013.

North Thimphu representative Kinga Tshering said that, in the 2013 budget report, GDP growth was projected at 7.08 percent, stating that “ESP will boost the growth”; again, the 2014 report projected a growth of 6.08 percent in 2014-15 financial year, saying that “ESP will propel the growth.”

The 7.08 percent projection, he said, was based on the plan, and that there were huge discrepancies with the actual growth of 2.05 percent, which means something was wrong. “If the projection is based on ESP, why didn’t the growth happen as projected? Somebody has to answer that,” he said.

The ESP, former works and human settlement minister, Yeshey Zimba, said, was pumped in mainly because the banks did not have money. “Now after one and a half years, we hear that banks have excess money.”

This, he said, in the context of the Nu 19B excess liquidity that is lying idle with the banks with no borrowers.

Yeshey Zimba said no borrowers means that no meaningful and significant economic activities are taking place, which again means that the government has not been able to stimulate the economy.

Pangbang representive Dorji Wangdi said the Dagachu, Punatshangchu I and II, Mangdechu projects took off during the previous government’s time.  Besides other projects, like rural electrification, communication for all, and other projects had cascading effects on the economy.

For instance, he said, when these projects came up, people bought trucks, built houses and set up various businesses by borrowing from the banks, which resulted in liquidity shortage. “But when nothing is happening, for what purpose will the people borrow?” he said.

From the ESP, Nu 2.1B was injected into the financial sector and Nu 1.9B into the Business Opportunity and Information Center (BOiC) as a revolving fund.

However, the former finance minister, Wangdi Norbu, said banks themselves are overexposed to certain sectors like housing.  Now that the banks are clamping down on lending to these sectors, and in absence of government projects with ESP adding more money into the system, he said, this was bound to happen.

An economy registers growth, when there is an additional increase in the level of investment or income, and GDP represents the end result of all economic activities that take place in the economy.

The opposition leader, (Dr) Pema Gyamtsho, said the previous government in the 10th Plan had created the ground condition for future growth by investing in roads, which has improved the rural conditions, and inputs in the farms.  This, he said, was one reason why the country slashed it poverty by half, from 24 percent to 12 percent.

Power and telecommunication in the rural areas, he said, was another ground condition that could boost rural economy.

“It was unique opportunity for this government to take the growth further and stop blaming the previous government,” he said.

Members of the opposition also said in 2013 DPT government barely had three months in hand and that it was the end of the planned period with not much activities.

By Tshering Dorji

 

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