Finance Minister affirms that health of economy is sound

Govt. worried about fiscal surplus not fiscal deficit: Finance Minister

With the capital budget amounting to Nu 37.84bn and the expenditure reported at Nu 2.11bn which is 6% of the total in the past five months, we need to worry about fiscal surplus not fiscal deficit, said Finance Minister Namgay Tshering during the question hour session of the parliament on Friday.

“We need to worry about fiscal surplus because we will not be able to utilize the rest of the money in the next four to five months,” he said.

Lyonpo said that as per past trends, the capital budget utilization for the first quarter is approximately 10%. This is mainly on account of preparatory works and procurement process being carried out in the first quarter except for spillover and previous year advance adjustments.

He added that during the FY, Nu 3.33bn was allocated under the General Reserve to be transferred to the agencies after fulfilling the established criteria. At the end of first quarter, about 28% of the budget worth Nu 933.502mn has been transferred to various agencies as compared to 8% in the first quarter of the last FY.

The total amount of external borrowings received in the first quarter is about 0.87%. During the first quarter of the last FY, 25% of the estimated external borrowing was received.  As of the first quarter, the total amount received is Nu 35.211mn of the total amount of Nu 4.032bn borrowed.

On the domestic borrowing, the opening balance of T-bills during the first quarter was Nu 1,600mn. During the quarter Nu 4,000mn worth of T-bills were issued to finance the resource gap and Nu 3,600mn worth of outstanding T-bills was redeemed during the quarter. The outstanding T-bills at the end of first quarter are Nu 2,000mn. Compared to the first quarter of the last FY, the T-bill outstanding is reduced by 39%.

Regarding the strategies and plan that have been implemented by the government to address the deficit of Nu 15bn in FY 2020-21, Lyonpo said that they have mentioned in the budget report that they will address the deficit from external borrowing and domestic borrowing.

“It is true that out of the total budget of Nu 310bn projected in the 12th Five Year Plan (FYP), there is a total deficit of Nu 29bn, of which Nu 15.34bn deficit has been reported in the FY 2020-21,” Lyonpo said.

However, Lyonpo said that the government is planning to borrow around Nu 420mn from external sources and around Nu 13.5bn from domestic ones. “Due to the COVID scenario, we have raised the government bond and treasury bills so we have around Nu 6bn from domestic sources.”

He said that around Nu 4bn was borrowed from multilateral financial institutions and in total Nu 12bn is already borrowed.

According to the first quarter budget performance report 2020-21, a first of its kind report on the budget performance published by the Ministry, the overall resource has increased by about 2% while the expenditure increased by about 1.7% from the original budget of the FY 2020-21.

The increase is attributed to incorporation of donor support of Nu 1.19bn which is exclusive of the National Resilience Fund of Nu 4.34bn.

However, the fiscal balance as percentage of GDP (7.36%) remains unchanged at the end of the first quarter due to equivalent receipt of funds.

The total resource realized in the first quarter is about 21% against the estimates. The domestic revenue realized in the first quarter against the estimate is about 25% whereas the domestic revenue realized in the first quarter of last the FY 2019-20 was 17% only.

Against the release of Nu 13.3bn, the expenditure is Nu 8.8bn of which 13% of the total expenditure was released at the end of the first quarter.

The increase in the capital expenditure is about 3.34% whereas the current expenditure has decreased by about 0.05%. The increase in the capital expenditure compared to original estimates was due to incorporation of Nu 1.19bn funded by donor agencies.

The total revised budget appropriation at the end of first quarter stands at Nu 70.34bn including lending and repayment. Of the total revised budget, a sum of Nu 13.3bn which is 19% had been released and the expenditure is Nu 8.8bn or 13%.

Despite the nationwide lockdown during the first quarter, the overall budget utilization has not been impacted much as compared to the first quarter of last FY which was 14%, according to the Lyonpo.

Kinley Yonten from Thimphu