Fiscal deficit drops to 7.08% in the 4th quarter

The improvement in the fiscal deficit is also due to the increase in the resources under the budgetary grants

Bhutan’s fiscal deficit dropped from 7.36% to 7.08% at the end of the fourth quarter mainly due to the withdrawal of grants.

This is according to what was discussed during the Mid-Year Budget Review Exercise.

According to the fourth quarter budget performance report 2020-2021 of the Department of National Budget, Ministry of Finance, the fiscal balance as a percentage of Gross Domestic Product (GDP) of Nu 186.65bn has decreased from 7.36% to 7.08% at the end of 4th quarter.

The reason for the drop is mainly attributed to withdrawal of capital budget during the Mid-Year Budget Review Exercise. The improvement in the fiscal deficit is also due to the increase in the resources under the budgetary grants.

The report states that the resource and budget have increased by 8% and 3% respectively at the end of the FY 2020-21. The increase in the resource is mainly due to the incorporation of external donor support of Nu 3.34bn.

To this end, the Asian Development Bank (ADB) granted Nu 563.506mn, European Union Nu 1,136.127mn, Austrian Government Nu 67.250mn, GFATM Nu 99.666 5mn, Government of India (GoI) Nu 1,090.802mn, besides the UN agencies granting Nu 229.328mn and World Health Organization (WHO) Nu 154.628mn during the financial year.

The performance of the resources at the end of the 4th quarters stands at 90% against the estimate of Nu 60,387.38mn. Despite the challenges faced by the agencies in implementing the activities due to the current pandemic, the utilization of the budget stands at 83%, which is considered quite commendable.

The current expenditure has decreased by 0.78% whereas the capital budget has increased by 6.98%.

The decrease in current expenditure is mainly attributed to the re-appropriation of budget from current to capital as admissible by FRR, while the increase in capital budget was due to incorporation of donor support.

At the end of the 4th quarter, the total resources realized stands at 90%. The remaining 10% couldn’t be accomplished on account of grants (both program grants and project tied grants) and other receipts as estimated.

According to the report, the opening balance of T-bills during the 4th quarter was Nu 5bn. During the quarter Nu 30.5bn worth of T-bills were issued to finance the resource gap and Nu 22.5bn was redeemed, thereby managing short term cash requirement of the government.

The outstanding T-bills at the end of fourth quarter stand at Nu 13bn, which is 38% more than the 3rd quarter. 

Dechen Dolkar from Thimphu