The 2020-21 financial year budget reading shows that Bhutan has a tough financial year ahead, especially in a country where the government is by far the largest mover of the economy as a large chunk of GDP growth still depends on government expenditure.
With the COVID-19 impact GDP growth rate in this FY is expected to come down to a record low of 0.97 percent and domestic revenue will decline by 14 percent.
The fiscal deficit will be on the higher side at 7.36 percent.
However, in what is a COVID-19 budget, the government, despite limited resources, has front rolled many 12th plan activities and others with the result that the budget is still substantial with a larger capital outlay to build more roads, water supply and other projects.
It is also good that the government has carried out cost cutting measures like asking agencies to be accountable for their TA/DA expenses among others.
The increased expenditure by the budget along with Druk Gyalpo’s Relief Kidu to ensure no one goes hungry, loan interest waiver Kidu, fiscal and other monetary measures should provide an important cushion or life jacket in what will be stormy seas for the coming financial year.
It does not look like the challenges are going to get any easier as there is an explosion of cases in the neighbourhood and especially in India and its bordering states of Assam and West Bengal.
The main focus has to be on preventing community transmission from coming into Bhutan until there is a cure or vaccine.
Bhutan, under the leadership of His Majesty The King, has been successful in becoming an international success story for COVID-19 management and we must keep up this great work.
At the same time, as COVID-19 becomes a long-term reality for the world and Bhutan, we must learn how to adapt to the economic impacts caused by the virus.
One positive way of looking at it is a huge opportunity and potential to develop our agriculture, professionalize our construction industry, enhance Digital Bhutan, develop our tourism products, strengthen our health system and more.
This is no time to be morose, but we should roll up our sleeves as there is plenty of work to be done in such difficult but interesting times.
“In the midst of every crisis, lies great opportunity”