The Bhutanese Leading the way.
During the Meet-the-Press held on 6th December, the government addressed questions regarding its decision to introduce an airfare subsidy for SDF-paying tourists during lean months. The initiative aims to reduce the cost of air travel for the tourists by offering airfares at SAARC levels, thereby, encouraging increased arrivals.
The Minister of Finance clarified that the subsidy is not for airlines, but a targeted measure to lower ticket prices for SDF-paying tourists during December, January, February, June, July, and August. The move is projected to increase tourist numbers from 7,213 in 2023 to over 9,600 by the end of 2024, enhancing overall domestic revenue generation.
The projected subsidy of Nu 96 million will be financed from the fiscal year 2024-25 budget. The minister emphasized that the fiscal space after meeting recurrent expenses for FY 2024-25 stands at Nu 5,850.520 million. This ensures that the subsidy remains fiscally viable and within the approved budget.
Lyonpo Lekey Dorji acknowledged country’s low internal revenue-to-GDP ratio, which stood at less than 14% in 2023, the lowest among Asia-Pacific countries. However, it justified the initiative as a strategic investment with multiple long-term benefits. The subsidy is expected to boost domestic revenue, improve Bhutan’s foreign exchange reserves, generate employment in the tourism sector, and potentially increase tourist arrivals beyond the lean season.
The Minister expressed optimism about the initiative, describing it as a potential tipping point for sustainable growth in Bhutan’s tourism sector, while also addressing broader economic goals.
