Modest growth of 5.1 percent projected for 12th plan

According to the current assessment of the baseline growth forecast, modest growth of 5.4 percent in the medium term and 5.1 percent on an average for the 12th FYP has been projected. Slowdown in growth is projected mainly on account of shifting of commercial operation date of Punatsangchu- I and II to the next plan besides the delay in the commissioning of Mangdechu Hydro project and Nikachu Hydro project.

It is anticipated that higher growth of 6 percent and above could be achieved in the 12th FYP by expediting the commissioning of Punatsangchu II and starting the construction of Sunkosh hydropower project within the plan period besides attracting additional Foreign Direct Investment, Public Private Partnerships and implementing major fiscal reforms such as GST.

Service sectors and manufacturing sectors are expectedly to greatly contribute to country’s economy with a share of 48 percent and 41 percent contributions respectively. Agricultural sector is expected to contribute 11 percent of the sector share in the 12th FYP.


Agriculture sector continues to be the major employment provider in the economy employing about 57.2 percent of the labour force, followed by service sector with 34.2 percent and industry sector employing only 8.7 percent. Unemployment rate in 2016 was 2.1 percent which is an improvement of 0.4 percent points from 2015.

Adoption of policies focused in skill development in service industry could be an important source for generating gainful employment for the youth.

External Sector

External sector performance during the 12th FYP is likely to improve as current account deficit is projected to fall to a single digit which will be adequately financed by surplus from capital and financial flows. Thus, the over balance of payment is estimated to remain positive at 2.8 percent of GDP on an average.

Exports are projected to increase by 1.12 percent with the commissioning of Mangdechhu Hydropower Project while the imports are also projected to increase at an average of 1 percent. However, imports will increase if new hydropower projects are taken up.


In the 12th FYP international reserves is estimated to increase at an average of 5.2 percent contributed by tourism sector inflow, budgetary grants and hydropower disbursements. Total reserves for FY 2018-19 is estimated at US dollar 1,440 mn, an increase by 11.2 percent from the previous year.


Total resource for the 12th FYP is estimated at Nu 280 bn, which is an increased of 31 percent from the previous plan. Of the total estimated resource for the 12th FYP, 85 percent is domestic revenue and balance is grants from development partners.

For the FY 2018-2019, the estimated resource is Nu 39bn which accounts for 14 percent of the total estimated resources of the 12th FYP.


Total grants estimated for the 12th FYP is Nu 63bn which is about 22 percent of the total resources. Grants from Government of India accounts 71 percent of the total and the rest is expected from other development partners.

For the FY 2018-19, estimated grants are Nu 5 bn of which Nu 3 bn is from the Government of India.

Public Debt

Based on the loan agreement signed for the on-going projects and requirement for financing the estimated fiscal deficit and public debt is projected to be Nu 249 bn by the end of the 12th FYP, accounting for 87 percent of the GDP, which will be an increase of 33 percent from the previous years.

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