The Economic Stimulus Program (ESP) has received 422 applications totaling Nu 1,604.65 million from Participating Financial Institutions (PFIs) as of October 2024. So far, 41 proposals have been approved, amounting to Nu 29.72 million, marking an encouraging start for the initiative.
ESP is designed to provide concessional loans at a low interest rate of 4 percent, without requiring collateral. This approach aims to make financing more accessible for individuals and businesses looking to invest in various sectors, particularly primary agriculture, livestock, and small to medium enterprises. However, the approval process has encountered some delays.
To address these challenges, Prime Minister (PM) Dasho Tshering Tobgay convened a meeting with the CEOs of all seven PFIs. During this meeting, he emphasized the importance of simplifying the loan application process.
PM urged financial institutions to streamline their review processes, and provide better support to clients to expedite loan disbursements.
“We need to ensure that these loans are disbursed quickly to those who are genuinely interested in starting or expanding their businesses,” an official from ESP stated.
They have acknowledged the current situation, noting that the thorough reviews of applications are crucial due to the collateral-free nature of the loans. While the intent is to minimize risks, this scrutiny has inadvertently slowed down the disbursement process.
The official remarked, “The sooner we can get these loans into the hands of entrepreneurs, the quicker we can stimulate and revive our economy.”
In response to feedback from stakeholders, the government is actively working to refine the loan application process.
The Royal Monetary Authority (RMA) and PFIs are collaborating to review documentation requirements, making it easier for applicants to submit their proposals.
For small and medium enterprises, detailed business proposals are now mandatory, ensuring that the financial institutions can assess the viability of these ventures effectively. Loans can range from Nu 10 million for small enterprises to Nu 100 million for medium-sized businesses.
One significant change aimed at easing access for applicants is the removal of the technical clearance requirement for small and medium enterprises. Previously, this requirement added complexity to the application process. Now, a detailed business proposal will suffice for most applicants. However, in certain circumstances, particularly depending on the nature of the business, financial institutions may still request technical clearance to ensure the project’s feasibility.
For primary agriculture and livestock ventures, a new one-page simplified technical clearance form has been developed. This form, filled out by local agriculture and livestock officials, will help PFIs understand the gestation period of projects, which is crucial for assessing repayment timelines. By simplifying this process, the government aims to support farmers and entrepreneurs in accessing the funding they need more efficiently.
Community engagement has emerged as a critical component of the ESP’s implementation. The ESP Secretariat, in collaboration with local government officials, has been conducting training sessions to empower community center operators and local leaders. These training programs equip them to assist applicants in navigating the loan application process, especially those who may struggle with literacy or understanding the requirements.
To further enhance public awareness, the ESP Secretariat has initiated weekly Q&A sessions with local government representatives, where officials from RMA and financial institutions participate to clarify any doubts about the loan application process. This initiative aims to demystify ESP and ensure that community members understand how to access these loans.
Moreover, the government has recognized the importance of using modern communication tools to reach a broader audience. Animated videos and updates about ESP loans are being shared on social media platforms, and through local radio and television broadcasts. This multi-channel approach is designed to ensure that information about ESP is accessible to everyone, particularly in rural areas.
The overarching goal of ESP is to stimulate economic growth and create job opportunities, especially as Bhutan faces a growth rate of 4.8 percent, and an unemployment rate of 16 percent.
By providing financial support to entrepreneurs and businesses, the government aims to work towards the targets set in the 13th Five-Year-Plan, which envisions a USD 5 billion economy by 2029 and full employment for its citizens.
As ESP moves forward, the government is committed to monitoring the progress of loan disbursements closely. The ESP Steering Committee, chaired by Finance Minister, will oversee regular updates from PFIs to ensure that any challenges are swiftly addressed. This proactive approach aims to identify and resolve any bottlenecks that may hinder the disbursement of loans.