The Bhutanese Leading the way.
The proposal is for a more dynamic annual or multi-year rolling system
He says government has started the process in the way it will now allocate the budget
In what is a major reform, the Prime Minister’s office is at the heart of initiating a major change in the current five-year plan systems with the aim of not drafting a 13th Plan, but leaving it up to the next government to come up with its own system.
The changes have already begun from the upcoming 2020-21 Financial Year budget where money will not be allocated in the usual way and where even good ideas outside the plan will be given space over non-priority 12th plan activities.
Lyonchhen said that the current five-year planning system does not have vision or soul.
He said the present system of planning or five-year plan period is ‘not too good’. “I am not saying it is bad because if it was bad we would not have reached where we are today, so it is good and has served the purpose until now. But with everything rapidly changing in the world the five yearly plan period is not enough.”
The PM said it should be a year or two yearly rolling period and then the government of the day must be there to immediately see if a program not right, to scrap it and bring in a new activity.
Lyonchhen said that the replacement of the five-year plan is not fully formed yet but he trying to think loud and the people are hearing, the media are hearing and then slowly the government will work on it on how it should be designed.
“If for the 13th Plan the majority says they like it and it is the safest then I have no problems,” said the PM.
“We may call it the 13th Plan for the the five-year period to show the fourth government is during the 13th plan and the fifth government is during the 14th plan for referencing sake but inside that the component needs to be tweaked otherwise every five years during the change of government, there will be an economic standstill,” argued the PM.
He said that, in fact, every 12 months during June closing, there is an economic standstill.
The PM said as per the Public Finance Act and even as per the democratic norms the government can approve budget and capital activities only up to 31st October 2023. Beyond that, we don’t authority.
“Immediately what we have to do is that by the summer session of 2023 if we can plan the capital activities up to mid of 2024 then by 1st February of 2024 the new government will be in place and they have four or five months in place to plan their activities and to execute their pledges because the previous government that is our government has already planned the activities for July 2024. So that is the time where the opposition will come in. If they support that then I will be more than happy to do it. If they don’t support that then legally and democratically my government will have no authority,” said the PM
He said, democratically speaking, the public do not pay a lot of attention to the long-term pledges of the parties because it is all decided by the plan period. He said the 10th plan and the first government did not have much problems because bureaucratically they were the same people who designed the 10th plan and then democratically they came into power, but the 11th plan and second government had a lot of problems.
“The plan was designed and drafted by the DPT government and executed by PDP government and even this time though we did not have a really major problem, as we don’t go by that, but if we really went by our political manifesto we could have deconstructed the whole 12th plan and undone the whole thing. And so if this was done then it would lead to a major misunderstanding,” said the PM.
Lyonchhen said the authority with his government is only to deconstruct and leave a vision behind and how that vision can be implemented depends on the government of the day.
“They might come back and design the whole thing and plan activities for five years, but what I don’t want is to leave behind a draft 13th plan. That so called draft creates a lot of confusion as the origin comes from the local government and agencies and is parked at GNHC level. To them it is a plan but whether it will be approved or not will be subject to the legal support by the government. So when a new government comes into affect and does not support them the local government or central government break up will happen. So they will say we proposed this but it got cut. So if we don’t come back in 2023-24 then the next government will be blamed by local governments that the plan drafted earlier is not being followed by them,” said the PM.
He said under the new system the new government should ask the local government its priorities instead of it being fixed with the former government.
Lyonchhen said that without a draft 13th plan the campaign tone itself will be different and the campaign trail will have short term and long term pledges.
“But since Bhutanese democracy is unique, certain major activities I personally feel every major political party must agree to like the Digital Drukyul Flagship program a component of which is to have a Digital ID. If we cannot implement the whole project during out time the next government should continue. This is of national importance and similarly there is the education policy, health policy and major things all political parties must agree to it but how we want to bring in improvements is up to the party but it should not be totally discontinued but that is again just a wish,” said the PM.
“Even our phone models change every five or six years. If the 13th plan is to be made then the notification for the draft has to be sent out by 2020-21, then the draft should be ready 2022 and by 2023 June the 12th FYP period is done and the 13th plan should be ready by then,” said the PM.
He said the 13th plan will last from 2023 June to 2028 June.
“So to do some work in 2028 it needs to be discussed from 2022. We need this level of genius because we should be wise enough to think what will happen in 2028,” said the PM.
He said a bridge that is put in the plan in 2022-23 for 2028 may not be required by 2028 and it may be something else like a chopper. A plan for a road may be tunneling by then.
Changes in the 12th plan and budget making process
“We have already started changing it within the 12th plan. We are not renaming it but within the 12th plan, I have 15 bn pooled aside for flagships which are not in the plan. Major components or almost 50% of the capital budget is through flagship so that is one. Then there is the Digital Drukyul flagship program,” said the PM.
He said APA will be tied up with prioritization and budget approval.
“Right now everything is approved with the plan approved, target setting done, MoF budget approved and then the agencies come back to the Government Performance Management Division (GPMD) for the APA and even GPMD does not have much of a role which is just like a class captain role. It looks at if all the set activities are working or not which is okay as that is also required but now what we are doing is GPMD will be involved in the prioritization of activities and then it will go to MoF for budget approval,” said the PM.
“At least if we cannot bring major activities we will make sure that identified activities will be executed effectively. I can already feel the changes coming in,” added the PM.
“By definition of APA no agencies are allowed to go beyond 12th plan activities but I have said to not restrict ideas to the 12th plan activities. If you have good ideas please bring them in as I will allow you to incorporate it in the plan period. I have already instructed the ministers that if you have good plans to please come up as we will approve the plan and then on the budgeting side you have to sit down with activities within your control to cancel and re-appropriate the money. So the component of efficiency building is already there,” said the PM
He said there is some implementation gap as the budget ceiling distorts the whole thing because even if the project is very useful and important sometimes the whole project is not funded which is why the project gets extended over over multiple financial years.
“If the project is important and of high impact value, then we don’t need to extend it over five years and we can do it in the first year and so it is about preloading and cancelling activities,” said the PM.
The PM said he is asking the ministers to come up with priority activities, though for the agencies all their proposals are of priority for them. “Now when it comes to the national level GPMD will also come in to screen out the so called priority activities.”
The PM said that the formal process of vetting the budget and prioritizing started from 7th January 2020 whereby the Ministry of Finance, GNHC and the PMO will review all the budget heads.
“From there even if it is recurrent we will cut the ones that are not needed. Training if it is not really required, will be cut,” said the PM.
He said earlier activities kept coming as people who proposed the budget from earlier kept proposing it and the ones approving it kept approving it.
Lyonchhen gave the example of how an office order he copied to the PS was received by the PS a week later though his office is one floor below due to the current red tape. He said all major ministries in the national capital still have messengers when even rural people use phones.
On the other hand he said JDWNRH says they require a research grant which is very important because Bhutan has no standards to treat Bhutanese patients for hypertension who are treated by western standards.
“I have designed two umbrellas with one big umbrella and 10 smaller umbrellas behind that.
So one big umbrella is the PMO and the 10 smaller umbrellas are the 10 ministers who will sit down and revise all the activities happening under their ministry. Either the amount can be reduced or the activity itself can be deleted to prioritize for important activities,” said the PM.
He said that people may even lose jobs out of such exercises but if the system has to be changed then there will be short term losses for some people.
Lyonchhen said the current budgeting system itself is problematic and they (ministers) agree that things needs to be changed.
So the Ministry of Finance was supposed to send the budget call notification on Tuesday, 7th January but the PM stopped it and called all of them to his office.
Lyonchhen said unlike the earlier process of meeting budget ceilings the government will see the activity first and if that is a priority nor not. After looking at that budget approval will be given.
“So that is why I am keeping one month as the annual performance agreement month based on the 2020-21 annual performance agreement. After sending the budget call notification when they submit they will come with the projects and activities first. Once the recurrent is cut the capital or newer initiatives will be brought and we will go through it and GPMD will go through it sitting across the table. If the activity is prioritized then we will say it is okay and ask MoF to give the money but if the activity is not important then we are going to cut it,” said the PM.
Lyonchhen said, “What I am telling Lyonpo Namgay is that when you go in front of the Parliament session and when you give the report (budget) every businesspeople should be glued on the TV saying that our MoF is giving a financial statement and we need to see the way forward and how monetary and fiscal systems are being tweaked. There should be some excitement and please don’t read what you are given to read.”
He said if the aim is to read 36 pages of what the system has made then there is no need to even report it.
“So this summer session onwards, certain elements will come out,” said Lyonchhen.
“From our side day in and day out we are trying to see how this nation should progress. We won’t be there its fine but need to keep a footprint in government which in 80 to 90 years time when you look back I will be happy with this footprint,” added the PM.
Local Government adjustments
“Slowly what I am thinking is that the block grant system has gone to gewog level but the human capacity is at the central government level, but the central level is still regulated. To me that does not make sense as block grant should go to where there is capacity. So slowly the central government must shrink and stay with regulatory and monitoring authority and the implementation flexibility is given to the ministry and central agency,” said the PM.
He said if the Ministry of Education comes up with a Nu 3 bn proposal, right now they go through activity by activity and slash money and ultimately they get 2.8 bn and approvals are based on those identified activities.
“I thought in the long run if the minister and ministry, if they are really capable, should be given 3 bn to let them perform and at the end of the year or mid-year, one agency should go and study that. Efficiency can come in that,” said the PM.
The PM said the governance structure is tied up a little bit differently. He said the local governments in terms of planning structure is tied very closely with central government but in terms of execution and legally they are not really tied up.
“Then there is a decentralization policy and block grant system is there. The mere definition of block grant is that once the money is given to them it is upto them on what they want to do but the activities they are supposed to be doing now was identified four to five years back. So the planning system, block grants system and execution system are totally unrelated. The definition of block grant says they can do whatever they want with the money and reprioritize but do whatever they want does not mean that they go on a tour or construct their house,” said the PM.
“So there is a mismatch if you study the component very carefully as through decentralization and LG Act the LG leaders are given the authority to plan and execute the activities of their importance and we are giving them the money. Okay, if that is the case do it but the five years planning system says you bring it up from down there and GNHC will draft and sort it out and government of the day will be asked to approve it. It does not make sense to me,” said the PM.
He said the the LG Act is being worked upon by the relevant Department and once they have it they will sit down and discuss.
“I don’t know if they will propose any major changes. The decentralization policy is to narrow the gap between the central and local government and give them authority to that extent where they should be allowed to implement activities of their priorities and then be very vigilant in misuse of resources and underutilization of resources,” said the PM
He said right now there is no problem as they are all in the similar mindset and that on a very frank note there is not a lot of budget and they only have more autonomy in the 12th plan and amount has not increased that much. By proportion the amount has doubled but it is not much in absolute terms.
He said as of now there are no coordination issues and there are no problems as their mindset is to go with GNHC planning, 12th plan and get approval with MoF activities. But that if things cannot be smoothened out then there could be problems in the future. The worry is national priorities going one way and DT priorities going another way, according to the PM.
“As of now LGs are still in the 12th plan mode as they submitted the 12th plan in 2017 and it was approved by 2018 end so they are all structured but later on if we undo this plan and there is no plan period then there has to be a mechanism to coordinate between the central and local government. Then that is the problem,” said the PM.
He said that communication is needed between the decentralization policy, budget approval system, local and central government.
Editor’s Clarification: There are some grammatical errors in the print version of the story as a draft version of the story was mistakenly published. The story, however, is the same with no factual errors.
