Two years of govt.’s rule has led economy to recession – Opposition

As the government completes its second year in office, the Opposition Party, Druk Phuensum Tshogpa (DPT), issued a press release yesterday maintaining that the government still has not got any clarity on its economic vision.

“It has conveniently got lost in the muddles of indecisions and foggy thinking. Its most damaging failure is in economic visioning and planning that will have unbearable ramifications for our nation in the future. The government has not been able to come up with a clear 21st Century Economic Road Map for the country. And the Technical, Vocational and Educational Training (TVET) reform initiative is yet to see any concrete development,” states the press release from DPT, which it called the ‘Opposition Party’s Assessment of Government’s second year in office’.

With the economy projected to nosedive to between negative 2 to 6% growth rate, according to the Opposition, it makes the worst performance in the country’s economic history.

“Given a raging Covid-19 pandemic, external fiscal support flow will not be as usual. This warrants a proper fiscal planning. The government has not been able to come up with a clear fiscal management plan yet,” states DPT.

Further, the party maintained that the shrinking fiscal space because of a hefty ‘debt burden’ of Nu 28bn in the last two years will be a stumbling block to the economy’s performance.

“As of 30 September 2020, the total national debt stood at Nu 223.294bn, accounting for 120.8% of the 2020-21 GDP. This fiscal year has a record fiscal deficit of Nu 15.34bn,” states DPT.

The Opposition has also recommended the government of the needs to note the anomalies in the reading of some economic performance indicators in the past year. For example, the trade deficit is reported to have decreased by 32% in the first half of 2020. However, DPT states that it does not pass for a positive economic pointer for it was caused by the decrease in imports. The decrease in the imports of raw materials has implications for production, consumption and the overall health of the economy.

The Opposition also described the present government as a typical case of a political government that is getting misled by itself.

“The claim that a surplus account of an already allocated budget for development is a ‘budgetary achievement’ is a gross economic and budgetary misunderstanding. Six months into the current fiscal year, but a mere use of 6% of the capital budget of Nu 37bn, is an unforgiveable failure of execution of development activities. The economy is in recession like never before in our history, but the government fails to make use of the allocated budget,” states DPT.

According to the Opposition Party, it demands the government to speed up in implementing the development activities, so that the allocated capital budget fuels the economy through increased investments.

In the fiscal year under review, according to the DPT’s press release, imports decreased because of the Covid-19 protocols, while the increase in the sale of electricity increased the total exports – registering at Nu 18bn in 2020 from Nu 13bn in the previous year. In the first half year of its operation since June 2019, Mangdechhu Hydropower Project generated Nu 6.8bn, easily offsetting reportedly Nu 3.5bn the government had to spend to fight the Covid-19 epidemic.

Had it not been for the hydropower, the economy would have been in further deficit by that much amount, according to the DPT.

And considering that the hydropower sector is the major steady source of national revenue, the government’s stand that ‘hydropower projects should be taken slowly’ begs a policy revisit, according to the Opposition.

“The Opposition Party stands that the hydropower sector is one of the main building blocks of our economy. The government should work harder to establish some more hydropower projects. No new hydropower project has got the government’s serious attention, forget about starting one,” states the party’s press release.

DPT also alleged that the ruling party’s has not lived up to its manifesto (p.21), which states about generating an additional 5,200MW of hydropower through Sankosh, Kuri-Gongri and other projects.

Meanwhile, the DPY yesterday also provided assessment of the government performance in the two years in office in other areas such as the economy, governance and rule of law, and government pledges.

Staff Reporter from Thimphu