ESP has a slow start but is gathering pace

The Economic Stimulus Plan (ESP), designed to provide concessional loans and reinvigoration funds to businesses, has seen mixed results as of December 2024.

Under Window-I of the ESP, which offers concessional loans to support sectors such as agriculture, livestock, and small-scale industries, a total of 1,473 applications amounting to Nu 3.06 billion were received.

However, only 262 applications were approved, totaling Nu 398.22 million, which represents 17.8% of the applications submitted. Of the approved loans, Nu 156.5 million has been disbursed.

Bhutan Development Bank Limited (BDBL) accounted for most of the approved loans, yet disbursements have only reached 64.5% of the approved amount.

One of the concerns regarding the program is the exclusion of the IT sector from Window-I, as it falls under the service sector, which is not eligible for concessional loans under the current framework.

The Minister of Finance, Lekey Dorji, said, “Other dedicated programs, such as the Nu 10 billion allocated to the GovTech Agency will help boost the IT sector by focusing on digital governance and infrastructure. Additionally, Nu 67.5 million has been set aside for startup activities in the current fiscal year (FY2024-25), supporting creative industries including digital content creation, and skill development in sectors such as film, music, and OTT.”

Window-II, the reinvigoration fund aimed at providing subsidies to struggling businesses, has faced similar issues. Of the 87 applications received, 13 have been approved, with a total subsidy amounting to Nu 87.73 million.

In response to the challenges faced by businesses and financial institutions, the government has announced changes to streamline the process.

Nu 3.3 billion concessional loan package will be managed by Bhutan Development Bank Limited (BDBL), which will establish a dedicated unit to handle loan assessments, disbursements, and monitoring. This centralization aims to expedite the approval and disbursement process, reducing delays and improving the program’s efficiency.