Finance Minister Namgay Tshering

Fiscal deficit at record 8.59% with 17 bn shortfall in 2021-22 budget

4.1% growth predicted in 2021-22

The total budget appropriation for FY 2021-22 is estimated at Nu. 80.483 billion. Of the total, capital expenditure is Nu. 38.320 bn (48 percent) and the recurrent expenditure is Nu. 35.598 bn (44 percent). So total expenditure is estimated at Nu. 73.919 bn, which is 7 percent increase from the previous FY.

In addition, Nu. 5.654 bn is for principal repayment (7 percent) and Nu. 909.400 mn is for on-lending (1 percent).

Total resources are estimated at Nu. 56.765 bn, of which domestic revenue is Nu. 35.600 bn, external grants are Nu. 20.525 bn, and other receipts is Nu. 640.271 million.

Fiscal deficit or the resource gap Nu 17.153 bn estimated at 8.59 percent of GDP in FY 2021-22 to support economic recovery besides responding to containment measures. This is highest fiscal deficit so far.

The FY 2021-22 Budget aims to ‘Ensure Sustained Economic Stability for a Resilient Recovery’.

Domestic revenue is expected to grow by 7 percent during the fiscal year mainly on account of estimated growth from income taxes, followed by increased consumption taxes.

 Tax-to-GDP ratio is expected to improve from 10 to 11 percent during the fiscal year.

To maintain adequate inflows of domestic revenue, the Mangdechu project shall be maintained under profit transfer modality during the FY.

Stronger than expected tax buoyancy indicates efficient and better performance of tax revenue

The economy experienced its largest contraction in 2020 triggered by the COVID-19 pandemic with -6.3% growth.

Economic growth for FY 2021-22 is projected at 4.1 percent.

Further, the Druk Gyalpo’s Relief Kidu in the form of income and interest payment support to affected individuals, along with fiscal and monetary measures effectively mitigated the adverse impact to a large extent.

Total public debt stands at Nu. 224.909 bn at the end of March 2021, accounting for 120.5 percent of GDP. Of the total public debt stock Nu. 215,822 bn is external debt and Nu. 9.086 bn is domestic debt.

 Hydropower debt amounts to Nu. 160,035 bn, constituting 74.2 percent of total external debt. The non-hydro debt is Nu. 55,787.048 million accounting for 29.9 percent of total external debt

The Government has earmarked a budget of Nu. 3 bn to meet COVID-19 containment related expenses and support economic revival initiatives.

Health, Education, Water, CSI development, Digital Drukyul, National Organic, Tourism, Waste and Stray Management flagship projects are getting Nu. 3.064 bn.

There is construction of 36 Chiwog Road amounting to Nu. 266.452 mn, On-going Improvement of Farm Roads (GSB and drainage) amounting to Nu. 1.135 bn, Construction of 27 Farm Roads amounting to Nu. 157 mn and Blacktopping of 22 Gewog Center Roads amounting to Nu. 1.257 bn.

For the establishment of a Royal Bhutanese Embassy (RBE) at Canberra, Australia Nu. 357.600 mn had been budgeted.

Training of 500 youths and grant support for Youth Enterprise Development will get Nu. 44.320 mn, and Construction and Renovation of Irrigation Channels will get Nu. 515.893 mn.

For Supply Chain Management there will be construction of two warehouses and one cold storage amounting to Nu. 140.500 mn and Construction of Pack Houses Nu. 37.500 mn.

For Trade Facilitation there is money for development of dry ports at Pasakha, Nganglam and Gelephu amounting to Nu. 560.740 mn, Development of POL Depot in Eastern and Central Bhutan at Nu. 70 mn, and Development of industrial parks at Jigmeling, Dhamdum, Pasakha, Bjemina and Motanga at Nu. 531.272 mn.

For implementation of Electric Vehicle (EV) discount program and Construction and Installation of EV charging station Nu. 128.134 mn is allocated.

The Replication of Teachings and Learnings from The Royal Academy will be implemented in 22 schools at Nu. 50 mn and Civil Service Reforms will get Nu. 19 mn.

For Employment Creation Build Bhutan Project will get Nu. 416.578 mn, Critical Skills Development and Youth Engagement for Livelihood and Leadership Program amounting will get Nu. 175.042 mn and On-going construction and expansion of TTIs at Thimphu and Samthang will get Nu. 226.244 mn.

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