Govt. to release 31% of FYP Budget this year

Govt. to release 31% of FYP Budget this year

The government is releasing 31% of the Five Year Plan (FYP) budget this year, said Prime Minister Dr Lotay Tshering, adding that initially, the government had planned to use 24-25% of the budget but it did not work with the COVID-19.

“Nowhere in Bhutan’s financial year has the government released 31% of the plan period budget but this year we are releasing it,” he said.

He shared with ministers, heads of the constitutional bodies and senior government officials that the government has started the 12th FYP like any other FYP but with the situation plans are affected and have to be re-appropriated.

“We started our 12th FYP like before but year 2020-21 budget is different from the usual government budget; in these extraordinary times our recurrent budget is almost 14% less. Last year we had Nu 36bn in recurrent budget but this year we have Nu 33bn,” Lyonchhen said.

He shared that Nu 33bn budget is just to match the domestic revenue. “We don’t have another extra budget to release this year but we are trying to compensate by having more capital budget,” said Lyonchhen, adding there is Nu 36bn in capital budget this year.

“To do capital works, we have difficulties in importing raw materials and getting expertise from other countries, so we have to re-appropriate government activities,” Lyonchhen said, adding monthly exercises are held among officials of GNH, finance ministry and Prime Minister’s Office to analyze budget allocations and to ensure prudence.

He said ministry of finance will be given recurrent budget to agencies as block grants. “Now you will have authority to reprioritize even from the recurrent budget,” he said.

With the COVID situation government having re-appropriated the entire plan, Lyonchoen said. “Even the government has made so many pledges, we have to seriously look in to our pledges and segregate to adapt with the times.”

He added plan activities are priority for political parties too. “It is time to revisit pledges and priorities due to COVID-19.”

However, Lyonchhen said, among the pledges, they have decided to build farm roads. “With the COVID situation, building farm roads will help our farmers in agriculture production and marketing.”

He added that there is not enough budget to black top all the 12,000 farm roads worth Nu 5bn but the government will build all weather roads.

Meanwhile, the government, in collaboration with the Royal Monetary Authority and FIs, has devised several strategies to address the Non-Performing Loans issue. One of them is to promote loan specialization by different financial institutions.

Lyonchhen said the government is coming up with a strategy to deal with NPLs once and for all.

Currently, the country’s total NPL stands at Nu 21.5bn. As per RMA figures, hotel and construction sector together account for 30% NPL.

As of June 2019, the eight financial institutions had lent about Nu 143bn of which the major share was in the housing, tourism and hospitality, and trade and commerce sectors, which also has the highest NPL currently.

With increased loan applicants over the years, defaulters have also increased, thereby increasing the NPL.

Kinley Yonten from Thimphu