Budget utilization in first quarter of current FY at 10%

The increase in resources is the incorporation of Nu 1,255mn through donor support

The capital budget for the Fiscal Year (FY) 2021-22 has been revised at Nu 39.577bn through re-prioritization and nationalization of activities, according to the budget performance report for the first quarter of the FY.

The actual capital expenditure reported in the first quarter of the FY (July-September 2021) was Nu 3.923bn, which is roughly 10% of the total capital budget. This means that about 93% of the capital budget remained unused at the end of the first quarter.

The budget utilization report states that in the first quarter, both the resources and budget have increased by 2%. The increase in the resource is mainly on account of the incorporation of Nu 1,255mn through donor support.

The fiscal balance as a percentage of the GDP (Nu 199mn) has increased from 8.59% to 8.60% mainly on account of the incorporation of loan-funded projects under the International Development Association amounting to Nu 11mn.

However, the report adds that the current budget has decreased by 0.02% whereas the capital budget has increased by 3.28%.

The decrease in the current budget was mainly attributed to the re-appropriation of budget from current to capital as is admissible by the financial rules and regulation (FRR). The increase in the capital budget on the other hand was on account of the incorporation of Nu 1,255mn under donor support.

In addition, the receipt during the quarter was less than the release and the actual expenditure reported is 114% against the realized resource and 76% against the release.

The report stated that the excess release as against the realized resources during the first quarter was mainly due to the RGoB pre-financing of donor projects as an interim measure until donor fund releases are received and the excess expenditure is against adjustment of prior year advances.

Meanwhile, the year-on-year comparison of fiscal for the first quarters of the two FYs shows that during the FY, the total resources have decreased by 8% and expenditures have increased by 22% respectively as compared to the last FY for the same period.

The actual expenditure by function (including lending and repayment) against the release of Nu 19.423mn, the expenditure reported is Nu 14.745mn (76%) at the end of the first quarter.

The actual current expenditure as of September 30, 2021 is Nu 8.886mn, which is a 5% increase as compared to the actual current expenditure for FY 2020-21 which was Nu 8.457mn during the same period.

The increase in current expenditure in the FY 2021-22 was mainly on account of interest payments with 39% in actual expenditure against the revised interest budget.

The revised capital budget for FY 2021-22 stands at Nu 39.577mn as against the actual capital expenditure of Nu 26.915mn in FY 2020-21.

The report states that with the relaxation of the COVID-19 restrictions, and further with fiscal policies put in place to mitigate risks especially in the construction industry, the capital expenditure performance in the first quarter of the FY 2021-22 has significantly increased as compared to the same period in the FY 2020-21.

The performance of the domestic revenue stands at 21% against the revised estimates, which is lower as compared to that of the first quarter of last FY which was about 25% against the estimates.

However, the total expenditure for the first quarter of FY 2021-22 is 35% more as compared to the same period in the last FY.

The expenditure as compared to the revised budget is about 18%, whereas release against the revised budget is about 24%. The difference between actual expenditure and releases can mainly be attributed to prior year advances which will be adjusted during the course of the FY.

The report stated that having successfully vaccinated 65% of the total population, there has been an improvement in the COVID-19 situation, and further with necessary and timely interventions from the government, the implementation of the capital activities is expected to pick up during the second quarter.

The Budget Monitoring Tool (BMT) which was officially rolled out this FY is also expected to enhance budget utilization as it will enable monitoring the implementation of the activities on a real-time basis, according to the report.

Kinley Yonten from Thimphu