3.3% GDP growth projected in next fiscal year

3.3% GDP growth projected in next fiscal year

The outlay for the FY has been estimated at Nu 75,588.725mn

Though the COVID-19 pandemic has overwhelmed the public healthcare system and impacted economic growth resulting in downgraded Gross Domestic Product (GDP) of -6.8%, it is projected that the economy will grow by 3.3% in FY2021-22, according to the finance ministry.

The cabinet has endorsed a resource envelope of Nu 54,460.689mn for the FY2021-22. Domestic revenue is estimated at Nu 34,641.800mn and external grants at Nu 19,463.200mn.

Since the pandemic has affected the revenue performance, the recurrent budget has been adjusted within the estimated domestic revenue in keeping with the constitutional provision.

The outlay for the FY has been estimated at Nu 75,588.725mn of which capital budget is Nu 38,946.925mn (33% of the 12th FYP capital outlay) and current budget of Nu 34,641.800mn.

The fiscal deficit is estimated at Nu 19,128.035mn which is 9.7% of the GDP, which remains elevated as compared to the plan targets of 3% due to the impact of the pandemic on the revenue performance. The fiscal deficit will be financed through external concessional credit and internal borrowing.

Current budget will be allocated as annual grants to the LG and Block Grants to other budgetary bodies within the estimated domestic revenue. The ministry also stated that starting from FY2021-22 the practice of providing capital budget ceilings has been discounted.

As there will be no capital budget ceiling, budgetary bodies will prioritize and propose adequate budget for all ongoing activities both under government and external as spillover. Budgetary bodies will also not propose any budget under government for long-term and short-term trainings except for external grant funded HRD programs. Further, budgetary bodies will not propose budget for procurement of pool vehicles except for specialized vehicles.

For all externally funded capital activities, the proposal will be submitted through multi-year rolling budget. The LGs while proposing new capital works have to ensure that there is no duplication of activities with that of central agencies. In order to determine the level of budget support, Thromdes will also have to submit details of revenue realized for the past two years and estimate for the FY2021-22.

Dechen Dolker from Thimphu