Finance Minister Namgay Tshering

MoF looking at priority areas, collateral free loans, enhancing debt ceiling, using reserves and private role in SOEs to boost economy post lockdown

If the economy was in a bad enough condition with the COVID-19 measures, the nearly one-month lockdown has put it in a deep freeze.

The Finance Minister Namgay Tshering and his core team in Paro are racking their brains, going through a lot of data and coming up with important proposals to boost the economy in the new normal.

Lyonpo said that he and his team have done a thorough sectoral performance analysis of the various sectors of the economy and and they have come up with around 10 to 15 areas of investment.

He said these areas are all ones which are export oriented, creates jobs and there are other ancillary companies or sectors dependent on them.

One is manufacturing where a company like a beverage factory will also have ancillary companies’ dependent on it like a pet bottle manufacturer.

Lyonpo said another sector is the transport sector, services etc.

The minister said the MoF would submit the sectors but the cabinet would finalize it. There will also be a collaboration between PMO, MoF, MoEA and GNHC in identifying and helping these sectors.

Collateral Free loans

The minister said a bold proposal to help accessibility of financing to these sectors is giving them collateral free financing where the government will act as a guarantor.

Lyonpo said that the Prime Minister himself has a huge concern in this area.

For small industries and the agricultural sector, the idea being looked at is a collateral free group loan scheme where there would be around 10 people in a group and they would stand as guarantors for each other and the group for a loan.

Lyonpo said that the idea here is that even if some people in the group fail others can be there to guarantee the loan and it also creates a collective sense of ownership.

Reserves and Debt Ceiling

“Another big lesson would be to relook into the reserves based on the current position and use that to bring liquidity into the economy by injecting it into investments and the market,” said Lyonpo.

He, however, said that the reserves if used would be for investment purposes and as much as possible he would not allow the reserves to be used to meet current expenditure.

The minister said that the government may have to also revisit the non-hydro public debt to GDP ceiling. It is currently set at a maximum ceiling of 35 percent to the GDP and the minister said the current situation is comfortable with it being 22 percent to the GDP.

However, Lyonpo said that with the COVID-19 situation Bhutan may need to borrow funds to invest them and so the proposal of the MoF is to push it as high as 50 percent of the GDP.

Lyonpo said that at the same time the ministry would be doing a detailed study of the absorption capacity of the economy and the investment portfolios for such borrowings because it would not make sense to raise the ceiling or borrow if there is no absorptive capacity or investment avenues.

The minister said the MoF will also propose for an amendment of the Public Finance Act like the debt management component and also certain powers conferred on the Finance Minister and the Department of National Budget to make it more systematic and coherent.

Lyonpo said as a way to raise more money the government is also seriously looking at off shore investments like how Singapore invests in India. He said Bhutan can do the same with NPPF funds, trust funds and endowments.


On the ground, the minister said that the current MDP at Phuentsholing cannot process more than 200 trucks in a day at full capacity and this is why hundreds of trucks are stuck in Jaigaon leading to issues.

The minister said he is studying with his team to how best expand the land port facilities to process more trucks.

The benefit of this in the longer run is that it would check tax leakages as currently vehicles like boleros bringing in goods do not pass through the MDP.

The minister said with enhanced capacity all importing vehicles would have to go through the land ports enhancing revenue.

SOE’s mandate and private involvement

Lyonpo said that another idea is for the SOEs under the MoF to both modify their mandates with the lockdown and also welcome private investment and joint projects with the private sector.

He said the National Housing Development Corporation Limited (NHDCL) is tasked with coming up with affordable housing projects.

Lyonpo said the NHDCL could partner with private people who own land in Phuentsholing and come up with housing projects. This would also benefit the many Bhutanese who stay across the border in Jaigaon.

He said the NHDCL will also be told to come up with developing pre-fab materials that are low cost and durable which means that it can come up with low cost and durable housing that does not require much labour.

Lyonpo said Bhutan Livestock Development Corporation (BLDC) is tasked with supplying livestock products across the country but there is a mismatch as the input or funds for restocking livestock is still with the ministry which can be given to the corporation now.

He said that another example is Bhutan Post who can take up the E-Commerce business.

The minister said that the mandates of the SOEs under MoF will also be reviewed to see how best they can involve and engage the private sector in various joint projects which the private sector can take over eventually too.

Lyonpo said that given the current economic situation private businesses may not want to start a new venture. Here, he said, the SOE could step in along with the private sector.


The minister said that government revenue would also be enhanced with the Goods and Services Tax (GST) which is coming along with the aim to start its implementation by July 2021.

He said while the Act had been passed the rules are being drafted, the business process engineering is being done and system is almost ready to register eligible entities.

Health and Education

The government is also expected to give a push across all sectors for digital transformation and invest more in Digital transformation like the ongoing Digital Drukyul projects.

Lyonpo said the government is not looking at just commercial investments but also some social security investments in health and education.

Lyonpo said that learning from COVID-19 the health system has done well but it  must be made more prepared and resilient with investments like high end health facilities, smart surveillance systems and others.

In education, Lyonpo said the government would enhance digital investments and promote e-learning.


The minister also outlined that just prior to the lockdown he had video discussions with all the budgetary agencies and the Dzongkhags and told them to reprioritize activities and submit only those that met certain parameters of ongoing restrictions and giving priority to works that used locally available materials and kept in mind the limited manpower.

He said for example if an agency had planned to construct an office but a Detailed Project Report is not ready then it can be postponed for now.

Lyonpo said the agencies were also told to keep the worst case scenario in mind. He said this rationalization exercise had finished just before the lockdown and the ministry was encouraged by the list of activities that the agencies and Dzongkhags said they would be able to implement.

The minister said that even during the lockdown in the Dzongkhags when activities like supply of essentials and others were being discussed and implemented, some of these reprioritizations was being kept in mind.

In terms of the loss of office time, the minister said he does not know about other agencies but the MoF and its officials have been working from home.

He said that in future when lockdowns are instituted it will not be as strict as the past 21 days as there will be smarter versions of it which will allow a certain level of economic activity.

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