EIB to help revive the country’s economy through borrowings

The National Council (NC) has passed European Investment Bank (EIB) Framework Agreement with 18 yes votes and 5 abstaining. The agreement came as an urgent bill and the agreement will be submitted to for Royal Assent.

The government will be using EIB to help revive the country’s economy which was impacted by the pandemic as EIB has an excellent response to the COVID-19 according to the government. They see an opportunity to get the funding by early 2021 which is why they have discussed this as an urgent bill.

Tsirang NC member Dhan Kumar Sunwar said that the EIB Framework Agreement came to National Council for rectification in 2015, however, the house (NC) sent nine specific objections related to the act and four general objections which was based on country’s sovereignty and infringement of national law. The bill did not get through back then with all the objections, he added.

“Today, due to COVID-19 situation in the country funding has become something important and EIB is providing funding for COVID-19. Therefore, seeing an opportunity of a concessional rate, NA has put it up as an urgent bill and this is a reason why it was passed this session,” he added.

They have called and discussed with the Ministry of Finance and RMA and reviewed all the objections which were made in 2016. In the past they have made an objection as EIB was a private funding which was to be given to private sector development which did not match with the financial service agreement.

He said, “This time, it is a government project whereby the government will lend for the government projects only. It is EIB and European development bank and therefore it will not be for the private.”

The funding will be routed through RMA and they have incorporated external borrowing guidelines, foreign exchange rules and FDI rules, he said, adding that this is another reason why they have passed the bill.

Background

The Finance Minister introduced to moved the motion to ratify the Framework Agreement between Bhutan and EIB Governing EIB activities in Bhutan 2014 for endorsement on May 2015.

The main objective of the agreement as said by Finance Minister was to promote private sector development, set and promote infrastructure, promotion and distribution of energy and finally to uphold socio-economic development. Moreover, he said that it would immensely benefit towards climate change and private sector development.  

Members of the parliament however questioned about the borrowing procedure for the small and big business and the medium of borrowings.

The NC during its deliberation on 6 November 2015 resolved not to ratify the Framework Agreement on the basis of 13 objections which they decided to submit to the National Assembly for re-deliberation.

Of the 13 objections, three of the objections pertained to undermining of the country’s sovereignty, system of taxation and immigration privileges. In response, the Minister expressed that it was a disappointment that the NC could not ratify the Framework Agreement based on those 13 grounds.

After numerous deliberations on the Framework Agreement, as per the order of the house, the joint committee proposed for deferment of the Framework endorsement with three recommendations at the time.

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