The Bhutanese Leading the way.
During the Meet-the-Press on 6th December, the government provided updates on its efforts to address the challenges faced by key sectors, including tourism, construction, and hotels, while also clarifying the status of the Economic Stimulus Plan (ESP). Despite initial hurdles, the government reiterated its commitment to revitalize the economy, and implement the ESP effectively.
Director, Prime Minister’s Office, Chencho, acknowledged the slow progress of ESP, which aims to inject Nu 15 billion into the economy outside the 13th Five-Year Plan (FYP). To address implementation delays, significant revisions to the loan disbursement framework have been made.
“The government has directed that the entire Nu 3.3 billion concessional loans will now be handled exclusively by the Bhutan Development Bank Limited (BDBL),” said the Director.
He said that a dedicated team will be established within BDBL to assess and disburse loans efficiently. Furthermore, the CEO of BDBL has been included in the ESP Steering Committee to promptly address any implementation challenges.
Applications already submitted to the other six Participating Financial Institutions (PFIs) will be transferred to BDBL. However, discussions are ongoing to determine whether loans sanctioned by the PFIs will also be transferred or remain with those banks.
“From now on, all concessional loan applications must be submitted through BDBL branch offices, as other PFIs will no longer accept applications,” he said.
As of 26th November, a total of 1,473 applications worth Nu 3,066.52 million had been received under ESP.
Director Chencho said, “It doesn’t mean all proposed projects will be approved, but the BDBL team will conduct thorough assessments to ensure loans are implemented as intended.”
Responding to concerns about risk-sharing, Director Chencho highlighted the existing mechanism under which 4% of the concessional loan interest rate is allocated to cover non-performing loan risks.
“The government remains open to further discussions on risk-sharing with the BDBL as the implementation modality has now changed,” he said.
Additionally, the BDBL team will ensure proper monitoring of approved projects to minimize the risk of loan defaults and project failures.
The application window for ESP concessional loans will remain open until 31st December 2024. However, the government may consider extending the deadline depending on the availability of funds.
The Director also outlined the government’s broader economic strategies, including an ambitious Nu 512 billion outlays under the 13th FYP, which represents a 63% increase from the 12th FYP. Renewable energy projects, including the implementation of a 15,000 MW hydropower and 5,000 MW solar roadmap, are central to the government’s plan.
He said that Memorandums of Understanding have been signed with Adani Power, Tata Power, GMR, and Reliance Group to achieve these goals. He also noted the Ministry of Finance’s successful acquisition of concessional funds from institutions like the European Investment Bank, Kuwait Fund, and OPEC Fund to finance small hydropower projects through Druk Green Power Corporation.
“These projects will not only boost economic growth, but also create meaningful employment opportunities,” he emphasized.
