MoF and Department of Planning, Budget and Performance advised agencies to use ESP for 13th FYP activities
The economic stimulus plan (ESP) has been one of the most debated topics with a public hearing held on it, followed by extensive discussions in the National Assembly (NA). According to reports from the Economic and Finance Committee (EFC), the ESP has not been utilized for purposes it was intended for, apart from underutilization and misalignment of funds. The report further says the ESP has been utilized to fulfill pledges of the government and that the ESP is a special fund to be used for special programs to revive the economy. Further, the ESP has been utilized for activities of the 13th Five Year Plan, at the instruction of the Ministry of Finance (MoF) and the Department of planning and budget.
A member from the EFC said they have come across expenses that were made for regular 13th FYP activities. “Upon inquiring the reasons, the agencies informed us that they were advised to meet the expenses from ESP due to shortage of budget to carry out the planned activities. This is an indication of poor planning and coordination of fund mobilization, management and timely release to the implementing agencies by the government,” he said.
He said this deviates from the ESP’s intended objective of economic recovery within the short period. “ESP tenure is just for two years, and investment will have to be chosen precisely for activities that have potential to recover economy within the brief span of time.”
Meanwhile, the allocated long-term loan for Education and Home Ownership is Nu. 600 million and Nu. 1.500 billion respectively. “The two components are part of the government’s pledge. Governments are given rooms to accommodate their pledges within the allocated budget of 13th FYP during the approval stage of the 13th FYP. ESP is over and above the 13th FYP and meant specifically for recovery of economy,” he added.
Further, Nu. 530 million has been allocated for development of the creative industry mainly given as grants for theatrical shows, production of movies, organizing national film awards. Similarly, Nu. 1000 million has been allocated for tourism development are also used for regular planned activities of the 13th FYP such as road shows and other promotional activities.
He added that to implement regular 13th FYP under economic transformation, there is already an allocation of Nu. 80 billion. “It is, therefore, not desirable to deviate ESP for regular 13th FYP activities.”
Based on the high demand of loans under Concessional credit line and Business reinvigoration fund; we recommended major reallocation of fund from the budget allocated for special initiative by agencies. “If the recommendation is followed, this could prevent diversion of fund as well as sustain the fund, as loans will have to redeemed to government by banks at later years,” he underlined.
“We can also prevent diversion of fund with timely acquisition of funds from donors and subsequent timely release to the implementing agencies for implementation of regular 13th FYP.”
The official maintained that most of the distressed business which is supposed to be provided with relief measures is left out completely due to poor CIB records and NPL. “If the main players of the economy: traders, hoteliers, tour operators, (the service sectors) are ignored, the possibility of reviving those sick sectors are slim. There is clarion call for urgent collective interventions for this sectorsby relevant stakeholders: government, RMA and Financial Institutions.” The report mentions that despite tourism being among the hardest-hit sectors during COVID-19, support for tourism has been limited to training and promotional activities, with no financial relief for tour operators and the hoteliers. Similarly, trading sectors are not covered under current eligibility, limiting the ESP’s reach and impact.
According to the report, under the current framework, applicants with NPL and poor CIB records, and those under cooling periods are disqualified for obtaining the services. This contradicts the ESP’s mandate of supporting distressed businesses, many of which are recovering from pandemic-induced defaults. According to the Royal Monetary Authority (RMA), NPL amount to Nu. 7.582 billion across 6,696 accounts. Charged-off loans stand at Nu. 13.477 billion (4,228 accounts), and loans under deferment amount to Nu. 29.62 billion (4,828 accounts) as of 30th April 2025. These figures highlight the need for a more flexible and rehabilitative approach to ensure the ESP reaches its intended beneficiaries.
Committee members have also said that despite their potential for export and significance to rural incomes, proven cash crops like potatoes, ginger, cardamom, apples, and oranges are not generally not covered by the concessional loan program. Where support is rendered, it is sporadic. The youth groups, women-led enterprises, and farmer cooperatives, likewise are also still not eligible under the scheme. This lack of support hinders the program’s potential to nurture and revive the economy.
Additionally, the report says that Monitoring and Evaluation (M&E) are crucial across all stages of implementation for the success of the program. Under the existing guideline, monitoring and evaluation is planned to be carried out by staff of PFI; but noting the inadequacy of staff even to carry out their regular functions, there is a risk of eventual failure of the program. The engagement of LG leaders and technical people especially at the planning, monitoring and evaluation stage are minimal under the current implementation arrangement.
Nidup Lhamo From Thimphu
