Finance Minister answers MPs queries on DSA, pension, NCGS, Rural Life Insurance and youth entrepreneurship

During the Question and Answer session in the parliament, Members of Parliament (MP) questioned the Minister of Finance Namgay Tshering regarding National Credit Guarantee Scheme (NCGS), Rural Life insurance scheme, Daily subsistence allowance (DSA), pension scheme, and youth entrepreneur ship.

The MP from Dramedtse-Ngatshang constituency questioned the minister with regards to projects financed under NCGS.

NCGS scheme was launched in 2020 as an economic response to Covid-19 to kickstart economic revival in line with four major trust areas, to boost exports, substitute imports, encourage innovation and green technology, and to generate employment.

It was an intervention from the government to motivate the private sector to initiate economic activities to stimulate the economy, create jobs and enhance productivity.

According to the Finance Minister, the scheme has been funded by three banks, National CSI Development Bank Limited (NCSIDBL), Bhutan Development Bank Limited (BDBL) and Bank of Bhutan Limited (BoBL).

“Since its institution, the scheme has funded 214 projects, in total worth of Nu. 852 million out of which Nu. 539 million was  guaranteed by the Government. Out of the 214 projects, 50% of it was given to the Production and Manufacturing sector, 28% to the Service sector, and 22% for Agriculture and Livestock sector which is spread over 18 Dzongkhags.”

He also added that under this scheme, about 1,800 jobs was created with about Nu.1.1 billion of total investment in the economy, and the Gross Capital Formation of about Nu.692 million.

With regards to non-performing loan (NPL) under this scheme, the Finance Minister shared that NPL is at 11% citing reasons of increasingly high prices in the market (inflation), sharing the example of poultry farmers not being able to pay back the loans.

MP of Chhumig-Ura constituency questioned the Minister on the possibility to increase the current Rural Life Insurance Scheme.

With regards to it, the Finance Minister shared that he sees no problem in increasing the scheme. “Till 2009, under the scheme, people used to get Nu. 10,000 as compensation. In 2009, it was increased to Nu. 15,000 and people had to pay Nu.45 per person. In 2017, the compensation was increased to Nu. 30,000 and had to pay an average of Nu.195. As a subsidy, the government pays 55% which is Nu.108 and the people pays 45% which is Nu.87.”

“In 2022, a total population of 615,000 was paid the subsidy which is 79% of our population, which was about Nu.67 million in total. The scheme is called Rural life scheme and we had paid the subsidy for about 79% of the population. It is important to increase the compensation however there is a need to examine and differentiate those who need the subsidy or not. So, we are currently looking into it with RICBL with differentiation and to increase the compensation.”

MP of Maenbi-Tsaenkhar constituency questioned the minister on DSA for civil servants which was disallowed after COVID 19 situation sharing that lower staffs without pool vehicles have to use their own mode of transport resulting in personal expenses.

With regards to it, the minister shared that DSA was not disallowed. “In 2019, during its pay revision, we increased the daily allowance from Nu.500 to Nu.1000. Before, the lower staffs did not get mileage, so it was also rectified in 2019, getting Nu.16 per kilometer. However, in the FY 2021-22, our current expenditure was at Nu.36 billion out of which 90% was used on mandatory recurrent expenses. The 10% was used for operational maintenance out of which, Nu.1.6 billion was for TA/DA, almost 50% of the operational maintenance budget. The remaining 50% were all equally distributed to 205 Gewogs, 20 Dzongkhags, 10 ministries, 4 constitutional offices, and 34 autonomous offices to spend where some offices might have discontinued it.”

He added without much current expenditure to spend, it might have been discontinued but if there is enough expenditure, it will be given.

MP of Dewathang-Gomdar constituency questioned the minister on pension scheme stating that civil servants are resigning these days as they are reluctant to embrace the pension scheme, especially those wanting to retire earlier, questioning whether the government will consider reforming the pension scheme.

With regards to this, the minister shared that the pension scheme was started as a social security upon retirement and they would love to consider reforming the pension scheme. However, as the government is the guarantor for National Pension and Provident Fund (NPPF), if NPPF is unable to pay, it becomes a contingent liability on the government.

He also added that it is hard to say that civil servants are resigning due to reluctance on embracing the pension scheme. “In 2022, 2400 civil servants resigned and from it, only 96 civil servants had served more than 19 years in service and 60.5% of the civil servants resigned before serving 10 years in the service. Statistically, it is hard to determine that civil servants are resigning solely based on the pension scheme.”

Finally, the minister was also questioned on youth entrepreneurship by MP of Khar-Yurung constituency sharing that youth have lost their interest towards entrepreneurship as they cannot lease the land and at the same time, financial institution deny loan without mortgage, questioning whether the government intends to implement new policies and programs to support youth.

The minister responded that the country has structural issues, mentioning that solving systematic cyclic issues will not help with the issues in the long term. “Currently, we have credit problems in the country and there are times when we have to question whether to support the borrowers or the financial institution if ever there is a situation in which the financial sector is in risk.”

“We also have problems which we cannot solve, from external shocks for example, we instituted the CSI bank in 2020 to help promote the small and cottage industries. The bank has loaned Nu.1.8 billion to the people till now however, 25% has not yet paid back the loans which amounts to Nu.459 million. The reason for not being able to pay back is due to small market, expensive transportation cost, and expensive cost of production. Although we might be able to compete with quality, we are not able to compete with price. Government to government, we are having discussions, but it is something that we are unable to solve. So, in this situation, we did have interventions but we now have to look into the long-term solutions to solve the issues,” he added.

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