The People’s Democratic Party (PDP) in a press release said acknowledged the Royal Audit Authority (RAA) for the thorough investigation and its report on the misuse of General Reserve Fund (GRF) by the Finance Minister Namgay Tshering.
“We are alarmed that the Finance Minister who is charged with the responsibility of prudent use of national finances would actually abuse his authority to misuse the GRF,” said the release.
PDP said the General Reserve is a fund created for specialised needs such as during natural disasters, emergencies and for National interest works.
It said the governments in the past traditionally exercised great prudence in the use of GRF and the country has therefore been served very well by the GRF during disasters, emergencies and specialised national interest projects.
PDP said it is alarmed the Finance Minister recklessly misused Nu. 19 mn from the GRF to finance non critical works such as improving farm roads and irrigation channels and the construction of a lam’s residence.
The party said in a brazen disregard to prudent financial governance, the Finance Minister actually used the Nu 19 mn to finance projects in his constituency (Dogar Shaba) in Paro. PDP said it is surprised that the Nu. 19 mn from GRF is in addition to the normal Gewog budget received by the Gewogs in his constituency.
PDP said this reckless action of the finance minister has breached the guidelines of GRF usage and has now deprived the nation of a proportionate amount during the times of disaster and emergencies.
It said, “As the Nu 19 mn from the GRF has been siphoned to the minister’s constituency, it tantamount to political corruption where public finance has been abused for political gratification.”
PDP said in view of the gross violation of budgetary guidelines, misuse of authority and political corruption, PDP calls on the concerned agencies to correct the wrong doing of the finance minister and hold him accountable. It urged the PMO, the Opposition Party, National Council, Anti-Corruption Commission and the media to take up the matter with due seriousness it warrants and set good precedence for future political governments and politicians for good conduct.
Finance Minister replies
In response to the Press Release by PDP, the finance provided a set of clarifications on the legitimacy of the use of General Reserve.
General Reserve & Fiscal Prudence
Lyonpo said General Reserve (GR) refers to 4-5% of the annual budget apportioned and kept aside to meet expenses for ad-hoc activities and to mitigate unforeseen events like bye-elections, disaster contingency and monsoon restoration works. The GR as a part of the Annual Budget is approved by the Parliament. There is no separate Reserve set aside and outside the normal budget except for the Trust Funds and Endowment Funds which are established for specific national priority and are governed by Royal Charters and Executive Orders.
He said Fiscal Prudence refers to the rationalization of Recurrent Expenditure (consumption based) and expand the scope of Capital Expenditure (investment based) from a given resource.
“Since the start of the democratically elected Government, the variation between ‘Capital’ and ‘Recurrent’ expenses are 1:2; to achieve result worth Nu. 50 we spent Nu. 100. The Ministry of Finance is initiating to reverse this trend through efficiency gains. Efficiency is what we desire not the mere prudence; we lack ambition hence our scope of both thinking and practice is undesirably constricted,” said Lyonpo.
Legality on the use of General Reserve Fund
Lyonpo said in accordance with the Article 14 Section 3 &4 of the Constitution, Chapter 3, Section 15-19 of the Public Finance Act 2007 and Section 4.2.2, Appendix-1 of the Financial Rules & Regulation 2016, the Ministry of Finance (MoF) carries out supplementary incorporation and technical adjustments from the overall budget ceiling approved by the Parliament.
Any additional budget incorporated over and above the budget approved by the Parliament is submitted to the Parliament in the form of Supplementary Budget Appropriation Bill. “Therefore, I do not see reason to question the legality of ‘technical adjustment’ of Nu.19 million provided to five Gewogs of Paro Dzongkhag,” said Lyonpo.
He pointed out that with the COVID beginning 2020, the national economy has contracted and as counter measure to make-up the loses, the Government from last fiscal year has adopted expansionary fiscal stance.
Accordingly, the Ministry of Finance and GNHC as directed by the Government have carried out a lot of reprioritization and front loading initiatives to ensure that development activities don’t come to standstill.
Given the lack of foreign skilled workers, the construction as well as improvement of new farm roads was prioritized as one expansionary fiscal strategy. Hence, the transfer of budget from GR to new capital activity of improving farm roads in Paro Dzongkhag was a part of the reprioritization initiatives.
Lyonpo said as part of the reprioritization initiatives of the Government with all the budgetary agencies, the Paro Dzongkhag Tshogdu had submitted the Gewogs consolidated request for additional budget requirement to the tune of Nu. 266.981 million from eight Gewogs dated 4th February, 2021. The Ministry of Finance after accessing the implementation capacity and securing the commitment letters from the Gewogs, formally approved Nu.19.386 million (only 7.26% of the proposed budget was released). The process is in line with the Public Financial Management norms defined in the Financial Rules & Regulation, 2016 (FRR-2016).
He said similarly, other Dzongkhags were provided additional budget as part of the reprioritization initiatives to stimulate the economy as mentioned in the table attached. Dzongkhags such as Tsirang and Mongar were provided with additional budget of Nu.217 million and 197 million respectively.
Political Corruption and Gratification
Lyonpo said, “When the entire nation is grappling to fight COVID and His Majesty is sparing no efforts to save lives and sustain livelihood of thousands of Bhutanese people; it will be morally wrong on my part and the Ministry of Finance to make reckless spending. As we struggle to sail through this unprecedented time, National Interest weighs far above the Political Interest, and so I desire same from rest of our allies in the democratic process and journey.”
Lyonpo said he personally owes it to fellow Bhutanese citizens to give better clarity of what is really happening and the additional budget provided to Dzongkhags during the same year (FY 2020-21). He said this is absolutely not to counter-argue the earlier press release by PDP.
“I rather owe to PDP as the seasoned political party for serving me the reminder to observe better fiscal prudence. I am glad that, we could use the COVID as reset button to streamline many pitfalls and shortcomings in the past,” said Lyonpo.
He said he worried people are given the wrong perception of General Reserve through the recent press release by the PDP.
“While I acknowledge the concern raised by PDP, I am equally worried that their press release didn’t serve the intended purpose beyond political discourse. The budget from annual GR is used primarily for disaster related mitigation works including the monsoon restoration works and should there be savings, the Ministry of Finance make technical adjustment to other capital activities, but this cannot be misappropriated for current expenses. During the last fiscal year, the Royal Government have made significant expenditure for COVID response and with utmost prudence we have managed the government resource very well,” said Lyonpo.
Use of General Reserve (GR) in the past
“Perhaps in absence of proper Guideline, the use of fund from General Reserve was observed to be widely misappropriated deviating from intended purpose. However, I will not question on the legality and morality of the past practice, rather look forward to learn from past mistakes,” said Lyonpo.
“As we are going through unprecedented time, I personally desire for all of us to come together despite our political differences. With the blessings of His Majesty the King and Her Majesty the Gyaltsuen, we are saved from the otherwise catastrophic event emanating from COVID-19. Therefore, I personally submit my sincere plea to be united in body, speech and mind, nothing can outweigh the spirit of common thinking,” said Lyonpo.
Lyonpo said holding on to his sacred duty, he will rededicate his commitment to remain true to the King, Country and the People of Bhutan within the provision of the law of the Land; should there be any lapses and shortcomings in the management of Government Treasury, he will remain accountable and the buck should stop with him.
PDP Rebuts Finance Minister’s Clarification
PDP said it would like to acknowledge the clarification on the misuse of the General Reserve Fund by Finance Minister Lyonpo Namgay Tshering.
PDP said it appreciates the gesture of responding and clarification from the government because such exchanges and debates will only shed light on the issue in discussion and contribute to the strengthening of our young democracy.
PDP, however said it would like to maintain its stand and invite the attention of all concerned on the following issues.
The party said PDP has raised the issue of the GRF abuse after the RAA’s investigation and its subsequent report. PDP did not investigate to score a political point as was implied by the finance minister.
“It was the RAA who found the GRF use in Paro inappropriate, requiring the attention of the DNT government. As a responsible political party, PDP is duty-bound to check and question the government in power. Democracy will only thrive when the government in power is criticised and questioned for its actions and in actions, which would have a far-reaching impact. The GRF misuse is a serious breach of good financial governance by the very authority who is the custodian of the nation’s financial asset and on whom the country has reposed its trust,” said the party.
PDP said the fact remains that Paro Gewogs, which also comprise the constituency of the Finance Minister, are the only Gewogs of the 205 that are the privileged beneficiaries of the GR fund.
The party said the sanctity of the GRF is violated by the actions of the finance Minister.
“GRF, as Lyonpo pointed out, is created for use during emergencies, disasters and unforeseen national interest projects. The use in Paro is non-critical and should have been executed through the normal budgetary channels as is done with all other dzongkhags,” said the party.
The party said the strategy of Front loading the budget cannot be used to justify the misuse of GRF in Paro. “The front-loading strategy applies to all the plans in 205 Gewogs. But to have made Paro gewogs exclusive beneficiaries of GRF speaks of the abuse of the special Reserve Fund,” said the party.
The party said during such time as this when the economy is devastated and when His Majesty is leaving no stone unturned to keep every Bhutanese safe and get the nation stable and stronger, the Finance Minister has exercised poor judgment in gratifying his constituency with GR fund and indulging in ‘Pork Barrel Politics’.
The party said an important democratic tool of ‘questioning and criticising’ the government in power is consistently snubbed under the excuse of COVID 19 whenever the government is called up for its mis-actions.
“PDP would like to point out that the DNT government should stop sweeping its wrongdoings and failures in the shadow of COVID,” it said,
PDP said that it hoped that the concerned agencies will look into the matter and bring the matter to its logical conclusion.