During the Third Sitting of the Seventh Session of the Third Parliament, the Finance Minister (FM), Namgay Tshering, presented the Annual Budget Report for the fiscal year 2022-2023.
The FM said that the Annual Budget Report FY 2022-23 is based focusing on human resource development and skills development program as well as the education.
According to the FM, the budget for FY 2022-23 will continue to adopt an expansionary fiscal policy with initiatives focusing on the theme, “Accelerating Economic Recovery and Investing for Resiliency and Sustainability” through strategic investments in the areas of food self-sufficiency, human capital development, sustainable infrastructure development, and improved social security.
Lyonpo Namgay Tshering said, “As the country transitioned to Phase II of COVID-19 management, it is of paramount importance to ensure economic fallout from the past two years does not derail the Phase IV measures under fiscal and monetary measures. As such, the government has rolled out Phase IV fiscal, monetary and regulatory measures in support of economic recovery. At this critical time, we need to direct more resources to relieve people’s hardship, and provide businesses with adequate levers to stabilize the economy and maintain public confidence.”
“To continue the efforts in support for the economic sectors, the government reviewed and passed the new Fiscal Incentives Act of Bhutan (FIAB) 2021, which provides various incentives under direct and indirect tax categories in view of the current economic situation. Further, the government provided time extension to settle taxes due without levying 24 percent penal interest to the tour operators. The time extension shall be until tourism business resumes in the country without any mandatory quarantine for tourists or extension up to 31 December 2022 whichever is earlier,” FM said.
To uplift and support small and micro businesses in the rural areas, the government provided tax exemptions for small and micro businesses in the rural areas up to 31 December 2024. Moreover, having considered the ordeal undergone by the tourism and allied sectors, the government waived off the payment of monthly rent and other charges for tourism related business entities leasing government property. This resulted in a loss of revenue by almost Nu 51.365 million for the government.
FM said that order to continue supporting the impacted sectors, the Monetary Measure Phase IV shall be implemented through three Windows (covering past NPL, present credit portfolio and future credit). Resolution of Past Non-Performing Loans (NPLs), NPLs shall continue to be guided by the current NPL resolution framework with improved policies and Judiciary support. It will be resolved either through Debt Restructuring or Foreclosure in line with the existing rules and regulations.
The MM Phase IV includes the following Eight Targeted Support Measures – with loan EMI deferments extended over 1 to 2 years based on sector risks or severity of impact from the pandemic crisis: deferment of loan repayment from 1 to 2 years, partial repayment (50 percent of instalment) from 1 to 2 years , extension of maturity period up to 3 years (in addition to the deferred period, change in repayment frequency (monthly, quarterly or half yearly repayment), conversion of overdraft facility to term loans , splitting of loans into multiple accounts , transfer of loans to third party and extension of gestation period up to 2 years depending on the progress of the project.
As for the credit support for economic recovery, there are new credit reforms promoting improved or reformed End-to-End Credit Eco-System, enhanced judiciary support to expedite NPL resolution, extension of loan term for hotels and restaurants. The maximum loan term for the construction or setting-up of hotels and restaurants shall be up to 30 years (excluding gestation period). It shall be applicable for both existing loans as well as new loans.
Other economic recovery measures include transformation initiatives, which focus on areas such as energy, technology, infrastructure, water and food. The overall transformation initiatives are estimated at Nu 45,132.700 million for a period of 10 years. Of the total, Nu 1,000 million is included for FY 2022-23 to initiate the programs. Under taxation, the multiple Customs Duty rates have been simplified to 10 percent