The Bhutanese Leading the way.
The Mid-Term Review (MTR) for the Ministry of Finance (MoF) focused on Bhutan’s fiscal health, economic growth targets, and the modernization of financial systems to support the ambitious goals of the 13th Five-Year Plan.
The Ministry has demonstrated strong fiscal management and successful policy implementation over the past year.
It maintained an average annual GDP growth rate of 8.1%, surpassing the target of 8%.
MoF maintained the average fiscal deficit at 2.55% of GDP, well within the target of 3% and improved tax-to-GDP ratio to 14%, marking significant progress toward the 15% goal.
It launched the Bhutan Integrated Taxation System (BITS) and implemented GST. These reforms have driven a 91% on-time filing and payment rate, reflecting high taxpayer compliance.
Double Taxation Avoidance Agreements (DTAAs) are currently under negotiation with Singapore, the UAE, Vietnam, Kuwait, and Thailand to foster international investment.
It mobilized Nu. 37.6 billion in grants through strategic and innovative financing mechanisms.
A key issue identified during the review was the inadequacy of existing systems to fully integrate digitally transformed taxation, budget management, and service delivery. Bridging these technological gaps is essential for a seamless financial ecosystem.
The Prime Minister commended MoF for its progress and issued directives to refine the financial architecture, including the Fiscal Framework, Block Grants, the 70–30% Performance-Based Grant model, and procurement ceilings and restrictions.
