PDP reveals solutions to national economic crisis

The party has come up with an ESP to counter the economic mess

The People’s Democratic Party (PDP) at a press conference in Mongar yesterday morning made its economic stimulus plan (ESP) public, which entails recommendations to solve the country’s economic situation at the earliest, if elected to office. The party vowed that most part of the proposal will materialize within the first 90 days in office.

The prime focus of the ESP is on abating the issue credit crunch, subsidies for targeted business sectors, fiscal and monetary policies, wasteful government spending and Indian Rupee (INR) shortfall. While some of the solutions provided are a reiteration of few earlier pledges, the ESP also points out procedures and possible sources to implement the plans.

PDP president Tshering Tobgay said, “While the previous government have always claimed high economic growth rate citing assessments by international organizations, PDP has always maintained that domestically, our economy has been under recession.”

Referring to the hydropower sector, he added that the high growth rate claimed by the government is derived from just one sector and that too driven by huge liabilities in the form of loans. “That is the reason people are losing jobs, closing down shop, resorting to retrenchment and many other measures,” he added.

The ESP has been developed by PDP’s own economic development taskforce (EDT) comprised of economists and professionals in the industry. Following an extensive analysis of the country’s economic situation, the EDT zeroed in on a host of “practical” recommendations.

Solution to the credit crisis & INR shortfall

PDP president Tshering Tobgay said the most serious problem facing almost all sectors of the private sector is the non-availability of loans from commercial banks owing to the liquidity crunch in the market.

“As such, many small businesses are at the verge of closing down, small contractors are facing working capital problem, film producers have no funds to start new businesses and many people have not been able to complete their building constructions,” the PDP president said.

PDP, as part of its plan to address the issue, stated that the party will infuse the banks with fresh capital by injecting Nu 3bn within the first 90 days, if elected. “This will allow financial institutions to restart lending within the central bank’s norms. The additional capital can be availed as loans by productive sectors that contribute to various national goals such as youth employment, small and medium enterprises (SMEs), agro businesses, import substitution, construction, and women empowerment among many others,” added the PDP president said.

PDP, if elected, plans to establish a loan commission to look at issues of non-performing loans (NPLs) with local banks, which currently has huge adverse impact on small businesses and private individuals. Under the current economy, many businesses and individuals have defaulted on their loans leading to a steep rise in the NPLs. “The loan commission will help such businesses to renegotiate and restructure their loans with financial institutions,” the president said.

Within the first 90 days in office, the party plans to establish a special taskforce, comprising of eminent national and international economists to develop a long-term strategy and action plan to deal with the INR shortfall. The president also reiterated on the party’s stand that PDP will begin initial discussions with the government of India and other concerned state governments about reviving the Bhutan Lottery business.

“The PDP government will also consider online lottery business which has the potential to earn huge revenue in INR. According to proposals submitted to the previous government from five different Bhutanese companies, revenue of more than INR 9.5bn per annum can be earned from online lottery alone. The current INR situation can be easily covered by the potential earnings from lottery business,” PDP president Tshering Tobgay explained.

A long-term strategy to promote and develop import substitute products within the country will also be developed in the first three months if PDP comes into power. The strategy includes various incentives including tax subsidies.

PDP also vowed to consider renegotiating the trade agreement with the Indian government as commended by Bhutan chamber of commerce and industries on the excise duty.

Subsidy, fiscal and monetary policy measures

The president said PDP will consider offering subsidy and special lending schemes to certain targeted sectors such as agro industry, startup businesses in rural areas, youth entrepreneurship, tourism infrastructure and the likes. As pledged by the PDP president and its candidates, the party plans to provide tax rebate to small and medium enterprises. “This will allow our SMEs to invest and grow. PDP will also do away with taxes for small businesses in rural areas,” the president said.

On the fiscal and monetary front, the president said, “EDT will consult with experts and professionals from both within and outside Bhutan to review and recommend required changes to the existing policies.”

The president also pointed out wasteful government spending. “PDP will identify and remove all wasteful spending in the government budget like unnecessary international travel, white elephant projects among others,” he said.

Implementation and sources of funds for the ESP

PDP, if elected, plans to submit the ESP in the first session of the second Parliament of Bhutan within 90 days in office after extensive consultation with all stakeholders. “The ESP will be implemented by the Economic Advisory Council of the Prime Minister’s Office,” the president stated.

The party will accord top priority to rebuilding and strengthening Bhutan-India relationship. As a new government, in the long term interest of strengthening democracy, the Government of India will be requested to finance most of the ESP. “We can also avail soft term loans from external organizations such as the International Monetary Fund, Asian Development Bank, and the World Bank,” the PDP president said.

Minjur Dorji/  Mongar