The Prime Minister explained the lowest recorded GDP (Gross Domestic Product) growth rate for 2013 reported by the National Statistical Bureau (NSB) during the 13th Meet-the-Press held yesterday.
The economy in 2013 has grown by only 2.05% as compared to 5.07% in the previous year. Although the growth has declined by 3% point, the average growth in last five years is recorded at 6.7%.
However, the government has pledged to achieve the country’s average GDP growth rate to 10% within the time frame of five years.
The said Bhutan has had to face such a growth rate because of the poor administration and poor management of monetary and fiscal policy in the last five years.
As per the NSB report, in nominal terms, the level of GDP has touched Nu 104378.08mn as compared to Nu 97452.96mn in 2012.
The report also shows the negative growth in the construction and manufacturing sectors, as well as the import restriction (in line to rupee shortage), as the factors for the economic decline.
Lyonchhen assured that the construction sector, in 11th FYP, the estimated loan amount of Nu 100bn, which has the potential to strengthen the economy. This will take into account the part of hydro-projects construction and the numerous construction works in schools, bridges, roads, farm roads, gewog roads.
On improving the country’s economy, Lyonchhen said that the government is giving a lot of emphasize on agricultural productivity. Lyonchhen said the aim is to increase domestic productivity, replace the need of imported goods and to increase the exports.
PM feels that such actions would able to have both growth and a healthy current account situation. “We will have growth, we have targeted at 10 % on average, and will have growth without excessive pressure on monetary system,” he added.
The other issue raised was maintaining the Rupee reserves, in light of the GDP growth rate as more hydro-projects and lift of import restrictions of goods would result in more Rupee outflow.
In response, Lyonchhen Tshering Tobgay said that the GDP growth rate and the Rupee shortage problem do not have to be one or the other.
“The GDP growth of 2.05% is unacceptable for a small country like ours, and that too compounded with serious fiscal problems, and Rupee issues, foreign currency issues,” he added.
Lyonchhen added that with the opening of trade in areas where it had been closed, the Rupee situation has been improved.
“We have taken corrective action. We opened up trade but also exercising fiscal discipline and ensuring that monetary policy is also reasonable,” the PM added.
The Rupee reserves, as of 30 June 2013, stood at INR5.938bn, and as of 30 September 2014, it was at INR 14.297bn.
“We don’t have a Rupee debt. We have a Rupee surplus,” Lyonchhen said, adding, “We have a foreign currency reserve that is growing to make matters better. We have large amounts of projects at hand.”
This year, as of September 30, USD reserves were recorded at USD 879mn and on June 30, 2013 it was at USD 721mn, which increased by USD 158mn.
Lyonchhen added that the USD reserves have increased by 158mn and rupee reserves by 8.362bn. Lyonchhen added that the figures can also be misleading since the Rupee reserves is also accounted for the money received for Business Opportunity and Innovation Centre, Economic Stimulus Plan and on hydropower constructions.
Lyonchhen also talked on the plans on industries that can produce products for local consumption and export, with the identification of five jewels, like hydropower, agriculture, tourism, small industries and mining.