Finance Minister Namgay Tshering

Economic recovery to focus on Energy, Infra, Skilling, Child Health and ICT

The Prime Minister Dasho (Dr) Lotay Tshering has stepped down from his role as the Chair of the reconstituted National COVID-19 Taskforce, now chaired by the Health Minister, to focus and take the lead on the economic recovery plan.

The government is rushing against time with only around 19 months left before its term ends in late 2023.

With the economy entering a virtual freeze since March 2020 with borders being sealed, tourism stopped, restrictions and multiple lockdowns, the first order of the day for the government will be to accelerate the process of economic recovery and growth in the time left.

The Finance Minister Namgay Tshering laid out five major focus areas for the government where it would be pumping in the bulk of the money in the next 19 months and beyond.

Lyonpo said that the economic recovery planning is not being done now, but has been on for a while with guidance from His Majesty’s different committees and various levels of think tanks.

Lyonpo said that economic recovery will be done on a ‘war footing’.

“We want to respond like how we responded to tackling COVID-19 and there will be that much level of aggressiveness to bring about an economic recovery,” said Lyonpo.

He said that the last two years of the economy was in the ‘rescue phase’ and here the Druk Gyalpo Relief Kidu was key to keeping the economy alive and helped many people. He said there were also many fiscal and monetary measures.

He said now the economy will come in the ‘recovery phase’ for the next two years followed by a longer term post pandemic economy that will be the stabilization phase.

The aim for the government is to initially ensure the success of the recovery phase in the next two years which can then be followed by a stabilization phase.

Lyonpo said that the investments to be made in the next two years will also have to generate returns.

One major area of investment for the government will be renewable energy which will bank on DGPC’s success in small scale hydro projects. There could also be investments in solar, wind and possibly also geo-thermal energy.

The other area is investment in major infrastructure projects like improving existing roads, and another will be initiatives like the Desuup initiative of water projects for irrigation and drinking.

A third area is skilling, re-skilling and upskilling with the focus on Human Capital Development formation. It will be taken up at a much bigger scale.

A fourth area of investment will be a long term one which Lyonpo said will be in accelerating women and childcare from the time of conception up to two years. There will be a complete package designed with various interventions to ensure healthier citizens and Lyonpo sad that any possible allowance will only be a part of the larger package.

The fifth area of investment will be in ICT with the focus on the ICT infrastructure, ongoing project Drukyul, Digital ID taking shape, and other programs

In an earlier interview the Prime Minister Dasho Dr Lotay Tshering made it clear that the government will have to make investments not only to recover the economy but also avoid the one-year dip in growth whenever a government is in transition.

He also said that Bhutan may have to borrow from external sources to meet such investments given the extraordinary situation of the pandemic.

A big challenge for the government is that the original projected revenue of the 12th plan which was Nu 217 bn has dropped to Nu 179 bn due to the pandemic. This is even below the projected current expenditure of Nu 194 bn in the plan.

On the monetary front with the loan deferral coming to an end in June 2022 the RMA, FIs and the government are coordinating to ensure that there is some kind of monetary support and breathing space for a recovery.

The Finance Minister has already called for lower loan interest rates. Another possibility being considered is giving a longer loan term to sectors.

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