11th Plan endorsed by NA

The 11th FYP (2013-18) expenditure outlay is estimated at NU 213bn

Aimed towards self-reliance and inclusive green socio-economic development, the 11th Five-Year Plan (FYP) presented to the National Assembly (NA) was endorsed by the house following hours of deliberations on Thursday.

Finance Minister Namgay Dorji who presented the FYP to the NA said the plan’s expenditure, which has a total outlay of NU 213bn, of which Nu 121bn is allocated for current expenses and NU 92bn for capital expenditure.

He said the government has targeted an annual average gross domestic product (GDP) growth rate at more than 10 percent over the next five years.

The government’s key priorities over the next five years, as per the report, will be to address challenges regarding poverty, economy, social sectors, and reducing corruption.

Poverty

Poverty rate will be reduced from 12 percent to less than 5 percent and multidimensional poverty from 25.8 percent to less than 10 percent.

Poverty at the national level was calculated at NU 1,704.84 a person per month in 2012 has declined significantly over the last decade while disparities exist at local levels. Some dzongkhags continue to face high levels of poverty.

In terms of area of residence, rural poverty was 16.7 percent compared to urban poverty of 1.8 percent. Poverty on a multidimensional basis (measured based on health, education and living standards) remains high. The 2010 multidimensional Poverty Index (MPI) indicates that 25.8 percent of the population is multi-dimensionally poor in four of the thirteen health, education and living standard indicators.

Gasa, Dagana and samtse were the poorest dzongkhags with more than 40 percent of multi- dimensionally poor while Thimphu had the Least with less than 5 percent poor on multidimensional basis.

The growing rural-urban migration trends, higher unemployment rates in the urban areas and rapid urbanization could further aggravate the problem in coming years unless mitigation measures are implemented.

The Bhutan Multiple Indicator Survey 2010 indicates that food and nutritional security is a challenge for many remote communities and chronic malnutrition continues to affect around a third of all Bhutanese children under the age of five.

The priority in the 1th plan will be to reduce poverty on multidimensional basis, narrow inequalities in income, address poverty at disaggregated levels and improve nutrition levels particularly among the children.

Economy

The National Accounts Statistic 2012 reports an annual GDP growth rate of 7.9% per annum over the last four years.

The contribution of major economic sectors to growth indicates a gradual shift or change in the economic structure, from that of agriculture to more diversified activities of manufacturing and service sectors.

The top three economic activities contributing to GDP were construction with 16.3%, agriculture with 15.7% and electricity and water with 13.9%. Inflation measured in terms of Consumer Price Index was 8.86%.

The Labour Force Survey 2012 indicates that unemployment was reduced from 4 % in 2009 to 2.1 percent in 2012. Among the unemployed, 1.9% was male and 2.2 percent females. Rural unemployment was 1.5 percent and urban 3.5 percent and youth unemployment was 7.3 percent in 2012 and it’s targeted to reduce to 2.5 percent by 2018.

The major economic challenges requiring immediate attention are regarding the rupee shortage and public debt. Rupee shortage is the most significant macroeconomic issue which needs to be addressed urgently.

The total external outstanding debt is expected to increase from Nu.110 billion in Financial Year 2013-14 to Nu.259 billion in Financial Year 2017-2018, about 121 percent of GDP. The figure indicates substantial increase in public debt, increased id due to planned disbursement for development of 10,000 MW of hydropower generation by 2020.

Hydro power debt comprises about 80% of the total debts, debt service to export is projected to decline from 32 percent in 2013-14 to 17 percent in 2017-18 primarily due to increase in electricity exports.

Exports without hydroelectricity will be increased from NU15bn in 2012 to NU28bn by the end of the plan.

Currently, domestic revenue finances about 65 percent of the total expenditure and the target for the 11th plan is for domestic revenue to finance at least 85 percent of the total expenditure by 2017-18, provided the three ongoing hydropower projects are completed on time.

The priorities for economic development are addressing rupee shortage and credit crunch issues to facilitate private sector investment and development, developing the non-hydro sector economic diversification, export promotion and import substitution, enhancing productivity and competitiveness to boost exports, strengthening coordination, accountability and capacity of institutions responsible for macro-economic policy and implementation, improving the quality of employment and opportunities to ensure full employment particularly to youth and developing a frame work for the establishment of a stabilization fund.

Social sectors indicators show improvements in the health and education sectors.

Education

Annual Education Statics 2012 reports net primary enrollment ratio (PP-VI) of 96 percent, net basic education enrollment ratio (PP-X) of 94% and adult literacy of 52.8 percent in 2012. There are about 210,000 students, 2011 schools and 10,200 teachers, lecturers, instructors, caregivers and trainers. The Global Monitoring Report ranks Bhutan among the medium incase of education for all.

In the education sectors, the primary goal will be to improve the quality of education.

Health

Annual Health Bulletin 2013 estimates life expectancy at birth to have increased from 66.1 years 2000 to 68.1 years in 2012. The infant mortality rate per 1000 per live birth reduced from 60.5 in 2000 to 47 in 2010.

Despite the progress, many of the country’s hospitals continue to face constraints of inadequate number of doctors, nurses, medical supplies and equipment. The rising cost of health care due to the emergence of non-communicable diseases such as diabetes, hypertension, chronic liver diseases, cancer etc. is a big concern for sustainability. The growing number of HIV/AIDS is another area of concern.

The priority in the health sector will be improving the quality of health services through human resource development and provision of adequate medical supplies and infrastructure, creating awareness on non-communicable diseases and imitating programmers to promote healthy lifestyles and developing a mechanism for sustainable healthcare and financing.

Reducing corruption

The Anti-Corruption Commission’s 2012-2013 annual report shows corruption is still a major challenge although people’s perception of corruption is declining. In 2012 -2013, ACC received 499 complaints compared to 458 in the previous year.

The major areas of complaints were misuse of resources like government property and funds followed by personnel, land, construction and procurement of goods and services.

Transparency International’ s 2012 Corruption Perception Index ranked Bhutan 33rd among the 176 nations, an improvement of five positions from 38th in 2011.

Priority will be to ensure full implementation of the National Anti-Corruption Strategy by all agencies in the 11th Plan. Effort will be made towards strengthening and supporting institutions combating corruption to root out corruption.

Monger’s Drametse-Ngatshang, MP Ugyen Wangdi said the plan didn’t include black topping of gewog roads. “We might not able to explain the 11th plan to the people in our constituencies,” he said.

North-Thimphu MP, Kinga Tshering said that a ceiling should be created for the debts and it should contain how to address the debt.

Finance Minister, Namgay Dorji said that for the hydro power project, the fixed ceiling will be difficult and there will be discussions whether ceiling will be made for the debts incurred in other activities.

Agriculture Minister Yeshey Dorji said that for farm road constructions, NU 400mn had already been allocated.

The House also extensively deliberated whether or not emphasis on construction of roads, improvement of agriculture was included in the plan. The queries were clarified by the Cabinet Ministers further informing that the details of the plan would be distributed next month.

NA Speaker Jigme Zangpo also expressed his heartfelt gratitude on behalf of the house to all development partners and particularly to the Government of India (GoI) for their continued and generous assistance to Bhutan.

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