Govt. urged to come up with economic recovery plan at the earliest

Opposition says it’s high time there is a forward-looking, clear and comprehensive recovery plan to stimulate the economy

The Opposition Party submitted a letter to the Prime Minister’s Office on February 5 stating that the government needs to come up with an economic recovery plan at the earliest.

The letter states that the COVID-19 pandemic has disrupted the economy causing unprecedented surge in unemployment and loss of income to people and businesses. It is evident that many businesses have collapsed and numerous others are on the verge too.

“As a consequence, the overall economic situation has already entered into a recessionary mode with the projected growth rate of lower than negative six percent, triggering distress and helplessness to many people.”

According to Opposition Leader Dorji Wangdi, it is high time there is a forward-looking, clear and comprehensive recovery plan to stimulate the economy.

“As we continue to fight the pandemic, the economic rescue plan must reinvigorate the economy to normalize the social and economic lives of our people,” he said, adding that it must focus on generating immediate employment and income, and reviving and promoting businesses.

“The government knows the situation well. We know it is a difficult time, but solutions have to be found, and quickly,” he said, adding that it is high time there is a forward-looking, clear and comprehensive recovery plan to stimulate the economy.

“We stand ready to offer our support in experience and expertise, if need be,” the OL stated in the letter, adding that the government has not done any economic recovery activities according to the plan.

Meanwhile, the government is hopeful that the economy recovery will see significant improvement and rebound strongly after the completion of the Covid-19 vaccination in the country.

According to the Ministry of Finance (MoF), the GDP growth was projected at 3.3% for the next fiscal year and it’s expected to touch 6% in the best-case scenario where the situation both within the country and in India and Bangladesh improves significantly after the Covid-19 vaccination drive.

In an earlier interview with Finance Minister Namgay Tshering, he shared that the economy would recover swiftly once export and import activities regain momentum.

“The government is hoping that the domestic economy will improve significantly once the Covid-19 vaccination drive is completed and that the Indian economy is expected to recover in the near future,” Lyonpo added.

The government is also restraining its hopes on the agriculture and industries (construction and manufacturing) sectors to offset the impact of the Covid-19 as well as for revival of the economy.

“The agriculture sector is contributing 10 to 11% in GDP. Industries and construction sectors have already started doing better despite the challenges,” the Lyonpo said.

Meanwhile, the cabinet endorsed a resource envelope of Nu 54,460.689mn for the FY2021-22. Domestic revenue is estimated at Nu 34,641.800mn and external grants at Nu 19,463.200mn.

According to Lyonpo Namgay Tshering, though the COVID-19 pandemic has overwhelmed the public healthcare system and impacted economic growth resulting in downgraded GDP of -6.8%, it is projected that the economy will grow by 3.3% in FY2021-22.

Since the pandemic has affected the revenue performance, the recurrent budget has been adjusted within the estimated domestic revenue in keeping with the constitutional provision.

The outlay for the FY has been estimated at Nu 75,588.725mn of which capital budget is Nu 38,946.925mn (33% of the 12th FYP capital outlay) and current budget is Nu 34,641.800mn.

The fiscal deficit is estimated at Nu 19,128.035mn (which is 9.7% of the GDP), which remains elevated as compared to the plan targets of 3% due to the impact of the pandemic on the revenue performance. The fiscal deficit is expected to be financed through external concessional credit and internal borrowing.

Kinley Yonten from Thimphu