The Bhutanese Leading the way.
RAA also doing a performance audit on ESP
With growing controversy surrounding the ongoing Economic Stimulus Plan (ESP), the ESP Steering Committee has decided to strengthen and enhance monitoring of the various ESP programs including the Concessional Credit Line.
A senior official said that the ESP Steering Committee used to meet once a week earlier where decisions on the implementation of the ESP had to be taken, and recently the proposal was to reduce the frequency to once a month or even fortnightly as most decisions had been taken.
The Committee is proposing to meet once a week with the main aim of monitoring the ESP projects, and especially the ESP loans. The official said this plan was there before the controversy too.
The Committee will want weekly updates from the various agencies that are implementing the different ESP programs.
In the case of the Bhutan Development Bank Limited (BDBL) and the ESP loans, the bank will be required to provide updates on the progress of each ESP loan. BDBL must present data on all loans, showing not only the disbursements but also field verification findings on how the loans are being used and the impact they are having.
Indicators such as loan repayment, jobs creation, import substitution, new production and export enhancement resulting from the ESP will also be reviewed.
It will also have to let the Committee know if there are any issues or actions are being taken against defaulters or those who misuse any loans.
The Committee which only had a skeletal ESP Secretariat staff until now will be recruiting more staff with the main aim of monitoring. The ESP Secretariat will be actively involved in doing its own monitoring of the ESP programs and the loans, and if it comes across any issues then action will be taken.
If, for example, BDBL misses out something and the Secretariat catches something major then even the BDBL can be held liable.
The Committee plans to release its first ESP report by the end of November 2025 and it will keep issuing these reports to update the public.
The official said that BDBL itself has a monitoring mechanism.
The BDBL management said that monitoring is something they already are doing in the field, and by now, actually more officers would be on the field doing verification, but the Anti-Corruption Commission (ACC) investigation is impacting that right now as many officials are occupied in answering ACC queries and sharing data with them.
The management said that BDBL would be tying up with different agencies for enhanced monitoring of the loans.
BDBL said it will be closely monitoring every one of the 289 Production and Manufacturing projects in the Cottage and Small Industries category coming to Nu 393.72 million (mn) and 39 projects in the Medium Category coming to Nu 1.876 billion (bn).
To assist with 1,985 loans given to farmers coming to Nu 742.79 mn, the BDBL in addition to its extensive network will take the help of Dzongkhags and the Ministry of Agriculture and Livestock (MoAL) offices for monitoring.
The BDBL said that so far, mostly the first stage of disbursement has happened, and already loan officials are out in the field to verify if the loan money has been used as per the proposal. Only after satisfactory verification will the second tranche be released.
In case a loan client has not made satisfactory progress then some time will be given to catch up, but the second disbursement will not be made. The BDBL may even ask the loan client to inject his or her own equity to bring the project to the desired level.
If the BDBL finds the project is still not up to the mark or that money is being diverted elsewhere then it can cancel the loan, and even go ahead with court prosecution to recover the loan money.
The BDBL management said that already in the vast majority of ESP loans, the loans were not given to the clients but to their suppliers in Bhutan or India and only those clients needing to import from third countries saw the money given to them but they later had to produce receipts.
Over the week, an anonymous account leaked the ESP loan recipients list online.
There were some comments that different loan amounts had been given for similar items like tractors or power tillers, but here, a BDBL official said it depends on the brand, and in some cases the farmers did not want full financing and so took a smaller amount.
The BDBL management said that there is some speculation that six month bank transaction record is needed, but this was an earlier requirement when the ESP loan was with the banks and BDBL does not have such a requirement.
On the online allegations that existing companies need to have three years audited balance sheet, the BDBL clarified that it applies for older companies, but for a new company this requirement would be adjusted as per the age of the company.
On the charge that 1,985 farmers got only Nu 742.79 mn of the ESP loan while 39 medium category production and manufacturing got Nu 1.876 bn, the senior official said it is like comparing apples and oranges as while the farmer will take the loan for his or her farm, the CSI and Medium category would have bigger projects that would create jobs for multiple people and many of these projects in fact would use the raw products produced by farmers.
The official said that farmers are not just getting the ESP loan but the ESP has Nu 1.5 bn in a buy back scheme to buy paddy, maize, quinoa, wheat, buckwheat and peanuts from them and livestock like chicken, pork and fish.
Apart from this, Nu 800 mn is proposed to be allocated under the ESP for a livestock and crop insurance scheme for farmers.
In addition to this, there is again Nu 1 bn under OGOP to buy niche products from farmers.
The senior official said the allocation for just farmers under the ESP is Nu 4.042 bn which is the highest for any other group.
Apart from the ESP BDBL loans, there is around Nu 9.7 bn in ESP government programs and other projects which the Steering Committee will also monitor.
Here, the senior official said the monitoring will be easier as these projects are mainly being implemented by government agencies who follow budget rules and are audited.
Apart from enhanced monitoring by the ESP Steering Committee and the BDBL, the Royal Audit Authority (RAA) is in the final stages of completing a Performance Audit on the ESP called ‘Design and Readiness for Effective Implementation of ESP,’ which looks at the design, policy, readiness, Standard Operating Procedures, planning and structures of the larger Nu 15 bn ESP program.
A source said this report is not a performance audit on the implementation and outcome part which is likely to be done once there is more implementation and outcomes.
Normally, a RAA Performance Audit is done after a program or project is complete, but in this case the RAA is taking a proactive step right from the planning and early stages so that it can detect any issues and give suggestions early on and not when everything is done and dusted.
The public should temper its expectations as the Audit was done in the early stages as the ESP was just rolled out the mid of last year. It covers the period from the start of ESP in mid-2024 till April 2025.
While the report looks at the ESP overall when it was being done, there was not much implementation in most fields except for the ESP loan.
Besides reviewing governance structures, SOPs, committees, activities, applications, forms, etc., the Audit also examined whether the non-loan ESP programs were different from those activities planned under the 13th Five-Year Plan.
