The total outlay for the 12th Five Year Plan is estimated at Nu 310bn, an increase of 38% from the 11th plan.
The resource envelope for the 12th plan is estimated at Nu 280.77bn of which domestic revenue is Nu 217.72bn. Grant covers Nu 63.04bn.
The estimated revenue is expected to fully cover the current expenditure and finance at least 21% of capital expenditure.
Further, of the total grant, external grant comprises Nu 61.65bn and internal grant from trust funds, Nu 13.93bn. Grant constitutes 22.5% of the total resources and is expected to finance at least 54.3% of the capital expenditure.
A major portion of external grant would come from the Government of India. Other sources are the European Union, Japan and United Nations agencies.
Of the total estimated expenditure of Nu 310bn for the 12th FYP, the current expenditure is estimated at Nu 193.89bn and capital expenditure at Nu 116.12bn. Current expenditure accounts for 62.5% of total outlay. About 54% of the total capital expenditure will be met through grants and 21% through domestic revenue surplus resulting in a gap of 25%.
The government’s fiscal policy was aimed at ensuring sustained economic growth by broadening tax base, and rationalizing capital and recurrent expenditures.
The fiscal projection aims to maintain the average fiscal deficit below 3% of Gross Domestic Product (GDP) and cover at least 80% of total expenditure through domestic revenue.
The tax to GDP ratio would be maintained at 12% and non-hydro debt below 35%.
The fiscal deficit is estimated to be Nu. 29.24bn in the 12th plan, which accounts for 2.4% of GDP, well within the target of maintaining fiscal deficit within 3% of GDP. The deficit would be financed through external borrowings mainly from the Asian Development Bank and the World Bank.
The estimated net external borrowing during the 12th FYP is Nu. 4.07bn and the remaining deficit would be financed from the domestic market through issuance of government bond and treasury bills.
However, to relieve pressure on the domestic credit market, efforts are going to be made through external grant financing windows such as trust funds and green climate fund.
Meanwhile, the total public debt by the end of the plan is projected to touch Nu 249.23bn which is about 87.6% of estimated GDP. Of the total debt, external debt is projected at Nu 215.86bn which is about 75.9% of GDP. Hydropower debt will constitute about 68.4% of the total public debt and 80% of external debt.
However, with the expected commissioning of Mangdechhu and Nikachhu Hydropower Projects during the plan, the external debt stock is projected to decline.
Jigme Wangchen from Thimphu