Economy is not in a recession: FM

38% of domestic revenue collected in November against target of 36%

The Finance Minister Namgay Tshering said that the Bhutanese economy while not in a recovery mode or in a worst case scenario is not in a recession.

He said that Bhutan’s economy has not yet got past the crisis and the crisis will continue globally until there is a vaccine.

He said that as per the IMF report the average global GDP rate is minus 4.5% and though the Bhutanese economy cannot be compared to India in size the GDP growth in India is minus 12%.

The minister said that the government is doing a continuous assessment through the MFCC whose report shows economic indicators like fiscal and monetary services, and it shows Bhutan is doing well compared to others partly as the economy is of a small scale and while there are some restrictions, some other parts of the local economy are going on well unlike the 21 days’ shutdown.

The minister said that a recession is continuous negative growth for a long period of time which is not in the case of Bhutan which is doing fairly well with the recovery and the contingency plan.

Lyonpo said that in the 2020-21 budget there is a revenue shortage of 14% and so the government is mandating optimal and prudential use of resources without hampering important expenditure.

On the capital budget front, he said that 31% of the capital budget of the 12th FYP coming to Nu 37 bn is allocated for this financial year. The minister said that to be honest as of September only 6.2% of the capital budget payment has been spent on payments made but the actual amount would be larger looking at the works started which would be paid later on completion.

Lyonpo said there is a 15 bn deficit in the budget of which 13 bn would be raised domestically while the rest would be through concessional borrowing.

The minister said that despite the odds the government could realize 38% of its revenue in November against the target of 36%.

The minister said the Nu 15 bn deficit is 8.3% of GDP but he is not worried about the deficit but rather any budget surplus which usually happens when activities are not completed and there is surplus budget at the end of the financial year.

The minister said that there is no tourism revenue and in addition to that both direct and indirect tax for 2019 had been deferred for six months for all and now further deferment would happen on a case by case basis as those who cannot pay will have to justify.

The minister said that the tax revenue will be slim for 2020 but the hope is for improved hydrology of 2020 to help in offsetting some of the tax losses.

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