A total budget estimate of Nu.74.86bn is allocated for the Fiscal Year (FY) 2023-2024, comprising Nu.45.54bn for recurrent expenses and Nu 29.31bn for capital expenditure.
With the 13th Five Year Plan (FYP) still under formulation with outlay and resources yet to be determined, the budget for FY 2023-24 is aimed at ensuring completion of on-going activities and continuity of critical public service delivery.
In addition, the annual grant allocation to gewogs has been maintained at 19% of the 12th FYP outlay to promote local economic development and growth, and support efficient service delivery.
Further, as part of the larger transformation in public services, FY 2023-24 also includes the implementation of Pay Structure Reform Act of Bhutan 2022 that seeks to enhance effectiveness and efficiency through adoption of a clean wage system.
FY 2023-24 as a transitional year between the two plan periods and taking into consideration the on-going initiatives towards building a stronger economy, the overall budget has been accordingly adjusted to deliver and respond to emerging national priorities, according to the budget report 2023-2024.
According to the budget report, the recurrent budget will continue to be allocated as block grants under mandatory and controllable heads to ensure optimal utilization of resources and drive fiscal prudence.
Similarly, the sources of financing for the capital budget for the FY 2023-2024 is through grants and mostly from deficit financing that is planned to be mobilized from domestic market and concessional external borrowings.
Meanwhile, all the proposals related to office constructions, renovations, staff quarters, residences, boundary walls, gates and fencing, amongst others, have been deferred and the allocation for non-developmental activities related to training, awareness, workshops, sensitization have been limited to critical requirements essential for public service delivery.
The total budget appropriation for FY 2023-24 is estimated at Nu.85.52bn, of which Nu.45.54bn is for recurrent expenses, that is about 53.2% and Nu 29.31bn is for capital expenditure that is about 34.3%.
Nu.9.1bn is for principal repayment that is about 10.7% and Nu 1.5bn is for on-lending that comprises about 1.8%.
Meanwhile, the recurrent expenditure for FY 2023-24 is estimated at Nu.45.54bn, which is about 25% increase from the approved recurrent budget of FY 2022-23.
The increase in recurrent expenditure is due to implementation of Pay Structure Reform Act of Bhutan 2022 effective from July 2023, provision for pay revision resulting from the recommendations of the 6th Pay Commission and interest payments.
Of the total recurrent budget, the allocation for interest payment is Nu 5.3bn consisting of Nu 3.33bn for external interest payment and Nu 2.05bn for domestic borrowings. The recurrent budget also includes provision for the National Assembly Election.
Similarly, the estimated capital budget for FY 2023-24 is Nu.29.31bn constituting about 39.2% of the total expenditure. Of the total, about 27% is financed through grants and 73% through borrowings.
Further, the Government will continue to make concerted efforts to mobilize additional grants and concessional external borrowings to reduce internal borrowings and improve the foreign currency reserve, the report stated.
The total on-lending estimated for FY 2023-24 is Nu 1.50bn comprising of Nu 712mn for the DHI-Phuentsholing Township Development including additional financing under the ADB funding and Nu 796.8mn for the National housing development corporation limited (NHDCL) – Green and resilient affordable housing sector project under ADB funding.
Meanwhile, for the FY 2023-24, the repayment for both external and internal borrowings amount to Nu 9.15mn, which is for the loans availed by the Government for financing investments and on-lending to state-owned enterprises (SOEs) including minimum holding period (MHP) loan.
Sherab Dorji from Thimphu