Macroeconomic stability to foster sustainable economic path

A total outlay of Nu 81.83bn – the highest budget allocation

The government’s utmost priority for an economy to progress and develop is macroeconomic stability to foster a secure and sustainable economic path.

  For this, investments in human capital development are critical and this year’s budget focuses primarily on investing and developing the existing human capital base.

This is according to the state of the nation report 2022. While presenting the report, Prime Minister Dr Lotay Tshering share that the government is currently implementing the fiscal year 2022-23 budget on the theme ‘Accelerating Economic Recovery through strategic investments in the areas of food self-sufficiency, human capital development, sustainable infrastructure development, and improved social security’ with a total outlay of Nu 81.83bn, the highest budget allocation.

“The government targeted strategic interventions to accelerate economic recovery given the economic contraction of the past two years,” he said.

PM said that this will be followed by scaling up development of critical infrastructure such as food, roads, energy, water and technology which will result not only in short-term economic gains but also set a strong and robust economic base for the future.

According to the report, the strategic investments in key economic sectors will also be made for broad-based sustainable recovery by leveraging agricultural productivity, facilitating the growth of CSIs, creating an enabling environment for the growth of manufacturing industries and opening the tourism sector.

About Nu 3.1bn is being spent on the implementation of the flagship programs- Digital Drukyul, water, education and tourism.

However, external concessional borrowings have been enhanced to channel resources to productive investments with higher returns and export potential.

Further, other financial instruments such as the currency swap facility from the GoI has also been pursued to meet the foreign exchange needs and external debt obligations besides providing market confidence and ensuring adequate level of reserves.

The report states that the reopening of tourism from 23 September onwards saw a promising inflow of tourists about 6,093 visitors as of 1 November, indicating a positive outlook that would contribute to the economy.

The new ‘Bhutan Believe’ brand is expected to boost economic prospects and opportunities for Businesses.

Meanwhile, the Foreign Direct Investment (FDI) policy is being reviewed to make the investment environment friendly and attract FDI through creating a brand image of dependability and trustworthiness as a nation.

“The government has initiated reforms to stabilize macro-fiscal fundamentals through fiscal normalization, fiscal consolidation and fiscal structural reform,” the report states.

A public financing policy to subsume existing policies such as public debt policy, external commercial borrowing, public-private partnership policy and others will ensure prudent financing while safeguarding public debt sustainability.

In addition, the launch of the Integrated Business Licensing System (IBLS) is expected to ease doing business and promote a better business environment.

According to the report, the changes in the planning process to ensure continuity of economic activities during transitioning of government are being initiated. “This will ensure normal budgeting anomalies are rectified and national priorities are carried beyond the plan period.”

Nidup Lhamo from Thimphu