The budget spending for the next FY will be towards jobs, infra, agriculture, private sector, and energy, according to the minister
The economic pressure is expected to gradually ease in the country though the fuel prices have hit the country untimely posing a hurdle to a good progress.
However, Economic Affairs Minister Loknath Sharma said economic activities are expected to resume in full swing.
The minister divulged that the government will pursue timely completion of the ongoing hydropower projects and that all efforts are being made since then.
“Had it not been for the pandemic, PHPA-II would have been in an advanced stage of completion, but we are looking forward to the year-end,” Lyonpo said, adding that these are national projects and any government would have seen its importance to the nation.
And as tourism is the main link in our economy, touching and reaching every sector, Lyonpo Loknath Sharma said the government is aware of its benefit as well the need.
“We are looking forward to a good year-end with 5% GDP, and the next year with 7 to 8% in GDP growth and more,” the minister said.
Further, Lyonpo shared that the pandemic had been severe for most sectors, particularly the CSI sector requiring targeted intervention. The budget spending for next FY will be ambitious towards jobs, infra, agriculture, the private sector, and energy.
According to an Asian Development Bank report, the country’s services sector is projected to grow by 5% this year as the COVID-19 mobility restrictions are expected to be removed during the second half, which would boost consumer demand.
The industry is forecast to grow by 4% on stronger construction activity, estimated to rise 5.2% on a surge in budgeted capital spending as supply chain disruptions subside and labor shortages lessen.
Lyonpo Loknath Sharma expressed that with the easing of the covid restrictions, most of the businesses can operate in a normal situation with the covid protocols in place and this will help to grow economic activities, thereby contributing to economic growth in the country.
“The government has lifted the restriction on bringing in foreign workers. With no supply chain disruptions, the businesses can produce what they desire and this will lead to an increase in consumer demand and create employment opportunities in the economy,” Lyonpo said.
Lyonpo added that inflation will subside in the coming years with the opening of the economy and the boost of economic activities as the increase in economic activities will address the shortage of food and non-food commodities in the economy.
“We are also expecting the inflation on fuel to gradually settle by another year,” Lyonpo said.
Meanwhile, the current account deficit is projected to narrow to 10.6% of the GDP in 2022 owing to a slight reduction in the trade deficit from a projected 16.5% increase in exports and a 14.8% rise in imports.
Lyonpo Loknath Sharma said that the efforts of any country are the same – export, import-substitution, earning foreign reserve, and containing imports. These all also depend on the capacity and scale of economies.
“We will try our best to stay within the prescribed limits while achieving economic progress. It will be an uphill task unless hydropower projects start earning export revenue because fossil fuel bills might increase,” the minister said, adding that all efforts of the government are to increase and expand the production of industries that might also add to the relief.
Kinley Yonten from Thimphu