Nu 74.8 bn for FY 2023-2024

Finance Minister Namgay Tshering presented the budget appropriation bill for the fiscal year 2023-2024 to the National Assembly on June 9, 2023, announcing a total budget estimate of Nu (ngultrum).74.8 billion (bn). The allocation includes Nu 45.5 bn for recurrent expenses and Nu 29.3bn for capital expenditure.

The minister emphasized the importance of allocating the recurrent budget as block grants, under mandatory and controllable heads, to ensure optimal resource utilization and promote fiscal prudence.

“Despite the total available resources in the country amounting to Nu.53.5 billion, the estimated total expenditure is projected to reach Nu.74.8 billion, resulting in a deficit of Nu.21 bn, which is expected to be covered by supplementary incorporations,” Lyonpo said.

Lyonpo also shed light on the budget allocations for various sectors, which demonstrated the government’s commitment to social welfare, economic development, cultural preservation, and debt management.

According to the budget report for 2023-2024, the Social Services sector received the largest share of funds, amounting to Nu 24 bn, accounting for 28.8% of the government’s budget.

Within the social services sector, a significant portion of funds was directed towards Health, which receives Nu 9.9 bn, which again reflected the government’s emphasis on ensuring access to quality healthcare services for all.

Additionally, Education received a substantial investment of Nu 14 bn, accounting for 17.2% of the budget.

The Economic and Public Services sector also received significant attention, with a total allocation of Nu 22 bn, representing 26.7% of the budget.

The Religion & Cultural Services sector received a budget allocation of Nu 1.4 bn, which accounts for 1.7% of the total budget.

The Law and Order Services sector, responsible for maintaining public safety and enforcing the law, received a budget allocation of Nu 2.6 billion, accounting for 3.1% of the total budget.

General Public Services, which encompasses administrative and governance-related expenditures, accounted for 21% of the total budget, amounting to Nu 17.7 bn.

 Additionally, the National Debt Services sector received an allocation of Nu 16 bn, representing 18.8% of the budget.

Meanwhile, Lyonpo Namgay Tshering emphasized that the budget for FY 2023-24 aims to ensure the completion of ongoing activities and the continuity of critical public service delivery, considering that the 13th Five-Year Plan is still under formulation.

Furthermore, the annual grant allocation to Gewogs has been maintained at 19% of the 12th Five-Year Plan outlay to support local economic development, growth, and efficient service delivery.

According to the report, the fiscal year 2023-24 will also witness the implementation of the Pay Structure Reform Act of Bhutan 2022, which aims to enhance effectiveness and efficiency through the adoption of a clean wage system. Given that it is a transitional year between two plan periods and considering ongoing initiatives to strengthen the economy, the overall budget has been adjusted to deliver and respond to emerging national priorities.

Lyonpo also said that despite the total available resources in the country amounting to Nu.53.5 bn, the estimated total expenditure is projected to reach Nu.74.8 bn, resulting in a deficit of Nu.21 bn, which is expected to be covered by Supplementary incorporations.

Further, the Minister also presented the budget report for the previous fiscal year, 2022-2023. The minister informed the House that the Supplementary Budget Appropriation Bill for FY 2022-23, amounting to Nu 2.3bn was submitted for consideration.

Furthermore, the finance minister provided an overview of the country’s expenses and revenue for the fiscal year 2022-2023.

“In that year, the hydropower export revenue reached Nu 23.5bn while other exports, excluding hydropower, amounted to Nu 26.7 bn, resulting in a total export revenue of Nu 50. 2bn. However, he noted that the import of oil and fuel accounted for Nu 11.3b, the winter import of hydropower reached Nu 1.6 bn, and other imported commodities accounted for Nu 86.8bn.

“The total cost of imports summed up to Nu 99.7 bn, resulting in a trade deficit of Nu.49.7 bn (USD 650 million),” Lyonpo said.

Subsequently, addressing various concerns, Lyonpo Namgay Tshering mentioned the high rate of people migrating abroad, the retirement of civil servants, and the depreciation of the ngultrum against dollar, attributed to the all time widening trade deficit.

 To address these issues and stimulate the economy, the minister outlined several measures. Fiscal policy measures, including tax reforms such as property tax and custom duty rationalization, have already been implemented by the government.

“Monetary policy measures and rationalization of government expenditure are being pursued as potential solutions.”

He emphasized the need to focus on fundamental structural issues within the economy in order to foster strong and sustainable economic growth.

Tshering Pelden from Thimphu