The Bhutanese Leading the way.
The budget for fiscal year 2023-2024, presented by the Finance Minister in the National Assembly, is aimed at building stronger institutions through strategic reforms while ensuring a sustainable fiscal path and smooth transition. This planned budget will be the first budget that aims to bridge the Gross Domestic Product (GDP) dip which happens during the transitioning period from the old government to the new government.
During the Bhutanese electoral cycle every five years, there is a massive dip in the GDP as a full budget cannot be passed, with no new works happening, and the interim government takes over for around three months and it takes time for the new government to settle to start over.
In 2013, the GDP dipped to 2.1 percent and in 2018, the GDP dipped to 3.2 percent.
Therefore, the government has formulated the budget for the whole fiscal year to ensure economic recovery and to avoid a GDP downturn during the transition period. The budget has also been formulated for the whole year, as the new government will be formed only in February 2024 with no possibility of holding a Parliament session before June 2024.
As the projects have been planned for over a year, the Opposition Leader (OL) shares that he stands by the general rules. “The government’s mandate is for five years and beyond the term, you cannot allocate the resources. The Constitution allows the recurrent budget, which is not the issue. Having said that, where you can allocate the budget is when there are capital budgets which spills over to the next plan or the next 1 or 2 years. We can allocate budgets for spillover activities but not for new plans and projects. It can be till October but not beyond that.”
And OL further said, “The new project and the budget allocated may not be executed anyhow as there will a new government in the next three months and they can change anything. For the capital budget, resource allocation is from grants and borrowings. We are increasingly becoming a debt financing country and it is a big concern. So, in that light, new projects don’t make much sense except for voter advantage.”
As of 31 March 2023, the total public debt stood at Nu 267,401.3 mn, accounting for 132.1 percent of FY 2022-23 GDP estimate. The total public debt comprised Nu 240,851.3 mn (119 percent of GDP) of the external debt stock and Nu 26,550 mn (13.1 percent of GDP) of the domestic debt stock.
The government has taken a bold move, allocating Nu 85,522.5 million (mn) during a fiscally challenging period. The budget includes spill over activities and activities from the reform initiatives to lay the foundation for a developed Bhutan.
This is the biggest budget passed by a government during its last fiscal year.
The total estimated resource for FY 2023-24 is Nu 53,513.2 mn, a decrease of 12.4 percent from the FY 2022-23 revised resources estimates.
The total estimated domestic revenue of Nu 46,245.8 mn for FY 2023-24 is inclusive of Nu 4,000 mn being transferred from Druk Holdings and Investment (DHI).
The domestic revenue excluding the transfer from DHI is estimated at Nu 42,245.8 mn, which is an increase of 3.5 percent from the previous FY.
The estimated external grants of Nu 6,367.4 mn consists of Nu 2,320.1 mn from Government of India (GoI), Nu 1,743 mn from ADB, Nu 401.2 mn from World Bank and remaining from other development partners.
Total expenditure is estimated at Nu 74,861.6 mn of which recurrent allocation is Nu 45,545.9 mn and capital allocation is Nu 29,315.7 mn which constitutes 60.8 percent and 39.2 percent of the total expenditure respectively.
Of the total capital expenditure, about 27 percent is financed through internal/external grants, and 73 percent from external/internal borrowings.
Some of the major activities planned are in the health and education sector with the highest amount of budget allocated to the health sector.
For the education sector, Nu 180.3 mn has been allocated for education reforms, Nu 234.1 mn for improving access to the quality Early Childhood Care and Development, Nu 424 mn for undergraduate scholarship and Nu 108.1 mn to support scholarships in private colleges, Paro College of Education and masters program for in service teachers.
For the health sector, Nu 32.3 mn has been allocated for construction of 60 bedded hospital under The Pema Centre, Nu 370.8 mn is for completion of on-going construction of 65 bedded MCH at Mongar, Satellite Clinics in Motithang and Phuentsholing, expansion of microbiology in six cluster hospitals (Samtse, Dewathang, Tsirang, Wangduephodrang, Trashigang, & Bumthang), construction of water reservoir and waste shed at Samdrup Jongkhar, Pemagatshel, Trongsa and Zhemgang Hospital. Nu 1,057.5 mn for procurement of medical equipment and Nu 63.2 mn for continuing medical education and critical long-term training. Nu 158.4 mn for procurement of medical vehicles (ambulance), Nu 136.9 mn for development and implementation of health electronic patient information system and Nu 190 mn for development of national digital identity.
Nu 527.2 mn has been allocated for water flagship activities in various dzongkhags and thromdes for access to 24×7 safe drinking water.
Nu 877.6 mn has been allocated for million fruit trees, construction of Phangyul irrigation scheme, establishment of warehouses at Bumthang and Wangdiphodrang, integrated cold storage at Zhemgang and animal health facilities at Gelephu and Nu 191.1 mn for Bhutan for Life Projects.
Nu 180 mn is for continuation of development of industrial parks at Dhamdum and Motanga, dry ports at Pasakha, Gelephu and Nganglam, and industrial estate at Pasakha. Nu 1,094.5 mn is for a POL depot in eastern Bhutan. There is provision of Nu 486.6 mn for improvement of Primary National Highway, Nu 400.5 mn for construction and improvement of Secondary National Highway, Nu 220.3 mn for completion of on-going blacktopping of seven GC roads (Chunzom, Sarpang, Bjoka – Zhemgang, Silambi – Monggar, Chhimung – Pema Gatshel, Lauri – Samdrup Jongkhar, Merak and Sakten – Trashigang), Nu 5 mn to carry out the DPR for Dunga GC road and Nu 49.6 mn for ongoing construction of Laya GC road, Nu 244.8 mn for construction and maintenance of bridges and Nu 187 mn for monsoon restoration works.
Nu 944.7 mn for construction and installation of 17MW Sephu utility skill solar power project.
Nu 561 mn is for construction of Dzongs at Lingzhi and Sarpang and conservation/renovation of various monasteries/goenpas/lhakhangs.
