Government spends Nu 1.358bn for COVID-19

Government spends Nu 1.358bn for COVID-19

The government has provided a budget of Nu 1.358bn on priority basis for prevention, containment, treatment measures for coronavirus (COVID-19) pandemic and for stocking of essential food items, fuel, and other related activities to ensure public safety.

The National Budget Financial Year 2020-21 report states that Nu 206mn was provided for procurement of personal protective equipment suit, drugs, and flu clinics, about Nu 988.677mn for stocking of essential food items and fuel, Nu 88.920mn for quarantine facilities (logistics and food), and Nu 74.460mn for others.

The government affirmed that the budget requirement for health and safety has been adequately provided and the increasing expenditure on additional resources has been mobilized from internal and external sources. 

As a COVID-19 Response Fund, the government received Nu 135.43mn from voluntary contributions made by the public, business entities, and international organizations as of May 19 this year.

The report states that Nu 85.085mn was contributed by individuals within Bhutan, Nu 48.476mn by international agencies and US$ 26,300 by individuals abroad. The fund would be used for COVID-19 related activities through National Resilience Fund (NRF).

To build economic resilience and boost growth, the NRF was established with fund size of Nu 30,000mn based on the Royal Command, and the resources were mobilized from internal and external reserves.

For NRF, the Druk Holding and Investments contributed Nu 1,564mn and the government received Nu 1,503mn from the Asian Development Bank’s COVID-19 Active Response and Expenditure Support (CARES) and Nu 740mn from the World Bank.   

The NRF would finance the Druk Gyalpo Relief Kidu (DGRK) and Interest Payment Relief among other activities.

About 15,000 individuals have received the DGRK for month of April with disbursement of Nu 161.3mn. 

It is expected that there would be more than 30,000 beneficiaries for the Relief Kidu by the end of May 2020. 

His Majesty granted the Relief Kidu to those who have been laid off from their jobs or placed on reduced salaries to provide them immediate financial support.

All the borrowers were also granted interest payment relief for the months of April to June this year of which 50% would be subsidized by the government and balance 50% borne by the respective financial institutions.

It is estimated that the interest subsidy would come around Nu 650mn per month and would benefit 145, 460 account holders.

The government also announced various fiscal and monetary measures for the period from April to June this year based on the evolving COVID-19 situation. The government would review the effectiveness and relevance of these measures and ensure that the targeted sectors receive adequate policy support.

The fiscal measures include deferment of corporate income tax and business income tax 2019 up to June 30, sales tax, and customs duty on essential items for April to June this year.

Additionally, there is waiver of monthly rent and other charges for three months (April-June 2020) for tourism-related business entities leasing government property, grant of hindrance period for on-going construction works and supplies, simplified Procurement Rules and Regulations and deferment of electricity charges for three months for industries.

The monetary measures include deferment of loan repayments and waiver on interest payments for loans for three months from April to June and provision of working capital at 5% interest to wholesalers and major retailers from March 28 this year.

Moreover, the gestation period for projects under construction for hotels, housing, production and manufacturing has been extended by three months, and working capital is provided at 5% interest to finance operational costs, especially payrolls for a period of three months for the affected business sectors struggling to retain employees and support paid leave.

Monetary measures also include microloans up to Nu 0.5mn at 2% concessional interest rate for activities in the rural and agricultural sector for a period of three months, and working capital at 4% concessional interest for three months to cottage and small industries.

The working capital at minimum lending rate for industries was also provided to stockpile raw materials. The government also initiated Economic Contingency Plan (ECP) in order to overcome the present economic disruptions and to stabilize and stimulate the growth with reprioritized 12th Five Year Plan and front-loaded various activities to fast track the implementation.

Additionally, particular emphasis was placed on revitalizing the rural economy, creating employment opportunities amongst others.

The ECP would be implemented in the areas of Tourism Resilience, Build Bhutan Project, Agriculture, and Farm Road improvement with budget of about Nu 4,000mn.

Thukten Zangpo from Thimphu