The Ministry of Finance is reporting strong progress in economic reforms, fiscal consolidation, and public sector efficiency under the 13th Five-Year Plan (FYP. Finance Secretary Leki Wangmo said the reforms are helping reshape public financial management into a system that is more responsive, transparent, and results-driven.
At the core of these achievements is Bhutan’s steady economic performance. Despite global uncertainties and domestic constraints, the country has managed to sustain an annual average Gross Domestic Product (GDP) growth target of around 8 percent, with actual growth reaching 8.1 percent in the 2024–2025 fiscal year.
However, maintaining this momentum remains a challenge. Projections indicate that growth may moderate to about 6.8 percent over the next three years, largely due to external pressures such as geopolitical tensions and global market volatility. “While growth momentum has recovered, maintaining the 8 percent target remains challenging, but we are committed to sustaining our economic resilience,” the Finance Secretary said.
On the revenue front, the government has made measurable gains in strengthening domestic resource mobilization. Bhutan’s tax-to-GDP ratio has improved from 13 percent to 14 percent over the past two years, with a target of reaching 15 percent by the end of the plan period. Total revenue collection stood at Nu 62.2 billion in fiscal year 2024–25, accounting for 20.6 percent of GDP.
While the revised revenue target for 2025–26 is set at Nu 47.6 billion, officials say this reflects ongoing structural adjustments and efforts to modernize the tax system. Expanding the tax base, improving compliance, and digitizing tax administration remain key priorities. “Our tax modernization initiatives are gradually bearing fruit, but broadening the tax base will take time,” Leki Wangmo noted.
Fiscal discipline has emerged as one of the most notable successes under the 13th FYP. Bhutan has managed to keep its fiscal deficit well below the 3 percent threshold, with the deficit declining from 2.64 percent in 2024–25 to 2.46 percent in 2025–26. This reflects tighter expenditure control, improved budget planning, and prudent financial management.
“Sustaining this deficit level depends on continued fiscal discipline, tight expenditure control, and prudent management of public finances,” the Secretary emphasized.
Beyond macroeconomic indicators, the Ministry has also made significant strides in reforming public financial management systems. A key milestone is the introduction of the Medium-Term Budget Framework (MTBF) in 2024–25, which promotes multi-year planning and enhances predictability in government spending. This approach allows for better alignment between policy priorities and resource allocation.
In parallel, new Public Investment Management guidelines have been introduced to improve the selection, appraisal, and prioritization of projects. These measures are expected to reduce inefficiencies and ensure that public investments deliver maximum value.
Efforts are also underway to transition toward performance-based budgeting, with support from the Asian Development Bank. This system links budget allocations directly to measurable outcomes, encouraging greater accountability and results-oriented governance. “This transition toward strategic and predictable budgeting is crucial for achieving our development goals,” the Secretary said.
Procurement reform has been another area of major progress. The government has introduced measures to simplify procedures, reduce delays, and enhance transparency. The implementation of updated Public Procurement Regulations and Standard Bidding Documents has streamlined processes and minimized risks of irregularities.
These reforms have already delivered tangible results. Tender submission timelines have been reduced by up to 40 percent, while contract finalization periods have been cut in half. At the same time, digital transformation initiatives—particularly enhancements to the electronic Government Procurement (e-GP) system—are helping automate processes and enable faster, data-driven decision-making.
“Our procurement reforms are designed to create a faster, more transparent, and strategic system that minimizes risks and leakages,” Leki Wangmo said.
Taken together, these achievements highlight Bhutan’s commitment to building a resilient and efficient public sector. While challenges remain—particularly in sustaining high growth and expanding the revenue base—the progress under the 13th FYP demonstrates a clear shift toward disciplined fiscal management and institutional strengthening.
As Bhutan advances through the plan period, continued focus on reform implementation, transparency, and accountability will be essential to maintaining momentum and ensuring that economic gains translate into long-term, inclusive development.
Sherab Dorji,Thimphu
