Prime Minister Dasho Tshering Tobgay: File Picture

PM explains what the Nu 15 bn ESP will be used for

Stringent monitoring to ensure payback of loans

For some time now there has been a lot of speculation on what the Nu 15 billion (bn) Economic Stimulus Program will be used for.

The only thing known was that it would be used to stimulate the economy.

The Prime Minister Dasho Tshering Tobgay has now said the Nu 15 bn Economic Stimulus Program money will be used to lift the loan moratorium and give subsidized, targeted and also some collateral free loans but through banks. 

The PM said, “The expert group that we put together has completed their work on how best to use the ESP to stimulate our economy. We will need to discuss it in the cabinet. I am yet to receive the report.”

He said people can expect a range of interventions to stimulate the economy including changes on policies that affect doing business and Foreign Direct Investment which is one part of it.

Lyonchhen said the country has been facing liquidity issues compounded by foreign currency or reserve concerns and as such there has been a moratorium on most of the loans.

“As soon as we roll out the ESP, we, in close consultation with the RMA (Royal Monetary Authority), will lift the loans moratorium and gradually lift the import moratorium and then provide the banks with support to enhance their liquidity levels,” said the PM.

Lyonchhen said they we also look at the existing situation vis a vis loans including deferments and NPLs (Non-Performing Loans).

The ESP will also help roll out a whole range of subsidized loan services which means loans at a lower interest rate.

The PM emphasized that all this is being done in close consultation with RMA and they will continue to work closely with RMA on these matters.

“We need to make loans available through ESP via the normal banking channels once we lift the moratorium on loans. We expect the loans to resume through the normal banking services,” said the PM on how money would be pumped into the economy via the banks.

He said the ESP will be able to provide loans to help businesses to get back on their feet and to enhance and expand their services.

He said loans would be targeted towards generating employment and self-employment and for youth.

There will be loans for farmers, special loans for women, youth, Cottage and Small Industries, Tourism and Creative Industries.

Lyonchhen stressed the target is to really stimulate the economy quickly and that is why loans will be there in all these various sectors.

The loans will not be a free for all bit there will be stringent and professional monitoring, including to ensure repayment.

“Obviously, these are loans and loans will be fully vetted and we will make sure that we study and are involved closely throughout the process from the design of the loans, proposals to disbursements to implementation of the activities and most importantly for recovering the loans. This is something that we all have to be very very mindful about,” said Lyonchhen.

Lyonchhen said there will be different types of loans and they will have to wait to hear from the committee.

“My personal hope now is that there will be some loans that will be not be just collateral free but even subsidized. But for those loans there will be heavier oversight.

Why are collateral free loans are required? Because some people don’t have collateral,” said the PM

He said they should have access to loans but they should also be subject to much more stringent oversight.

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