Govt has three options for passing the budget during the 11th session

But the problem of widening gap between the five year plan start dates and election dates will only get worse in the long term

The government has come up with three options to pass the budget before the upcoming June session of the Parliament.

The first is to pass the budget as the first budget of the 12th Five Year Plan (FYP), without finalizing the 12th FYP.

The second option is to pass a smaller in-between budget with the current budget, some spillover activities and some new ones.

The third option is to pass a minimum budget with the current budget and only spillover works of the 11th plan in the capital works so that ongoing works do not grind to a halt.

All three options will be discussed in the plenary session of National Assembly to see which of the above three will be adopted.

A senior government official said that at the moment, given the opposition from the Opposition party to passing any budget, a minimum budget looks more likely.

The Opposition party has made its stand clear saying that a budget need not be passed as there are legal provisions to put in place funds that ensure a government can run.

Long term issue

Even if the ruling and opposition party come to some agreement on the budget, the issue will keep coming up in the long term as elections and the start of five year plans will no longer coincide.

The 12th FYP as per the financial calendar and budget starts after the end of the 11th FYP in June 2018.

With the final general elections expected to happen around the end of October 2018 a new government may come into office only by November 2018 along with the first National Assembly (NA) session of the new NA in the same month.

Therefore, in the next Parliamentary elections in the future the dates will be pushed even further off.

In 2008 the general elections were held in March 2008 and in 2013 it was held in July and in 2018 it is likely to be held in October. Therefore, the next general election is likely to be held in early 2024 as the Election Commission has to have  a 90-day election period.

So with each general election the five-year plan dates will move further away from a new government to a time when a new government coming in will have to implement half a five year plan, create a new one midway and then implement half of it.

In the regional example this did not seem to be an issue in India which had governments coming in the middle of a five year plan.

The situation is complicated for Bhutan as it is still dependent on donors’ aid and these donors may not want to change budgeted plans and programs in the FYP even if a new government comes.

Therefore, the upcoming session of the NA will not only have to look at the immediate budget and plan but also at the future implication as election dates move away from the FYPs.

Budget call

Earlier the Ministry of Finance (MoF) in a circular posted on it’s website in January 2018 had sent out a budget call circular for the financial year 2018-19 which is the option two (of the three options) where a transition budget is passed without actually implementing the entire 12 FYP activities for the first year

The budget call gave guidelines for preparing and submitting the annual budget proposal for the 2018-19 financial year.

The budget call says, ‘As the first financial year (FY) of the 12th Five Year Plan (FYP), the focus is to complete all spillover capital activities of the 11th FYP and initiate preparatory works for the implementation of programs and activities of the 12th FYP, besides regular activities.

The total proposed budget for 2018-19 FY is Nu 43.722 bn of which Nu 11.532 bn is for the capital and Nu 32.190 is for the current budget.

It says that since the 2018-19 budget is the first year of the 12th FYP the budget ceiling has been drawn from the tentative outlay of the 12 FYP plan which is estimated to Nu 313.389 bn of which Nu 115.324 bn is capital and Nu 198.064 bn is current.

The capital budget of the 12 FYP divided over five years comes to around Nu 23.064 bn per year and the current budget comes to Nu 39.612 a year.

This means that by comparison this 2018-19 budget has been kept lower than average mainly to ensure that the government keeps running and some spillover works are completed in an election year.

The total resource available for the 12th FYP is nu 42.328 bn of which Nu 35.855 bn is from domestic revenue and Nu 6.473 bn is grant.

The fiscal deficit is only at Nu 1.394 bn or 0.68 percent of the GDP which will be financed through internal and commercial borrowing.

By comparison the 2017-18 budget was Nu 60.7 bn with Nu 29.3 billion for capital expenditure, Nu 28.6 billion for current expenditure and Nu 2.8 billion to service loans.

The budget guidelines also come with various restrictions. For the capital budget it says no budget for vehicle purchase shall be proposed in keeping with the government’s initiative to rationalize pool vehicles.

It also says except for major security reasons construction of boundary walls will also not be entertained.

Ministries are also asked to consult the Ministry of Information and Communication (MoIC) for all ICT related investments and obtain endorsement to avoid duplication and align them to the National ICT plan.

It says that proposals to procure furniture, equipment and computers must be limited to replace unserviceable ones only, and the Finance Ministry will make necessary arrangements for new requirements owing to new staff joining the office.

The document also says that unless there is external support, no agency shall propose human resource development programs for the year.

It says maintenance of roads especially that of resurfacing national and Dzongkhag highways must be capitalized and accordingly proposed.

The document asks all ongoing spillover activities must be adequately captured in the proposal.

Government offices have been asked to reduce the stationery budget in line with the government’s initiative to go paperless.

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