The wrath of the credit crisis has been felt by the private sector and private home builders. However, as the next elections are just around the corner, political parties are likely to join the bandwagon for they require millions to compete for office in the 2013 elections.
A major chunk of party expenditure for the country’s first elections came from loans from local banks. While almost 60% of the incumbent, Druk Phuensum Tshogpa’s (DPT) funds amounting to Nu 15mn comprised loans, about 55% of the opposition, People Democratic Party’s (PDP) funds came from loans.
Both parties managed to clear their dues only this year.
Currently about a total of Nu 9bn of liquidity exists in the banking system which bankers said comprise mainly short-term deposits or corporate deposits that could be withdrawn any moment due to which banks cannot use it for lending purposes. The liquidity situation with all the banks is unlikely to improve and credit from banks for political parties looks bleak.
An optimistic Central bank deputy governor Eden Dema said “as far as I am concerned I don’t think there will be an impact on the 2013 elections”.
She said that there isn’t a liquidity crisis as such in the banking sector but the deposits mainly comprised corporate or short term deposits. “As far as the requirements of loans by parties are for short-term, I don’t think there should be any problem.”
Although the Election commission of Bhutan (ECB) has approved a 30% raise over the previous amount of Nu 100,000 per Demkhong (constituency)/Political Party/Candidate for the campaign fund for Parliamentary Elections, the new amount of Nu 130,000, aspiring political parties say wouldn’t suffice the entire campaign.
Each political party contesting the primary round may, in addition to the Election Campaign Fund, spend from its own funds up to an equivalent amount as the Funds provided by the State.
Chief election commissioner (CEC) Dasho Kunzang Wangdi said “parties can take loans from financial institutions but it cannot be used for election campaigning”.
Following the financial crunch of existing parties, ECB earlier increased the registration fees cap to Nu 5,000 and voluntary contributions to Nu 500,000 from Nu 100,000.
Interim president of Druk Chirwang Tshogpa (DCT) Lily Wangchhuk said “the party will need to try and manage our activities leading up to the elections with our own limited resources mobilized through membership fees and voluntary contributions”.
The DCT, however have plans in the pipeline to manage its expenses over the election season. “We are currently trying to establish a proper working system and procedures including transparent and well-defined controls and checks for more effective financial management, and higher accountability. We also intend to strictly comply with the standards and principles of generally accepted accounting principles while maintaining proper and transparent book of accounts,” Lily Wangchhuk said.
The party also intends to appoint an Internal Auditor to audit the financial transactions of the Party.Lily said the country’s current financial situation provides advantage to the incumbent and established parties while new aspiring parties are put to disadvantage. “However, since we do not have a choice the only option is to adopt cost-cutting measures and judicious use of our limited funds,” she said.
The interim president of Druk Mitser Tshogpa (DMT), Dasho Penjor Dorji said “the established parties have an advantage but at the same time we must realize that these are the parties that would have already come to a lot of pressure from those who have been helping to bail them out”.
Dasho Penjor Dorji said loans are necessary for political parties and non-availability of loans might endanger democracy. “Parties will have to avail loans, and in the absence of that parties may succumb to the pressures and finances of the well-to-do. And they will dictate the terms otherwise. This is all likely to happen unless funds are made available,” he said. He raised questions on how the two existing parties managed to clear their dues. “We need to look how suddenly DPT and PDP managed to bail out of their loans.,” he said.
“Now the parties will not go for the bank loans but opt for the business houses with surplus liquidity. This is the danger we are trying to make aware to everyone,” he concluded.
President of the People’s Democratic Party (PDP), Tshering Tobgay said meeting expenses through bank loans during the 2008 elections was a mistake. The party now plans to be cautious in its spending and ruled out any impact of the country’s credit crunch on its 2013 journey.
“We don’t have a choice, we need to live within our means and can’t spend what we don’t have. Last time was a mistake and a lot of money was spent for familiarization,” the opposition leader said.
Interim president of Bhutan Kuengyam Party (BKP), Sonam Tobgay shared the same opinion as that of PDP with regard to sources of funds.
“A party’s income as far as BKP sees is only from three sources; membership fees, registration fees and voluntary contribution by party members. We will have to use these sources and beyond that there is no other source of income,” Sonam Tobgay said. “There is no issue of liquidity crisis or bank loans as far as BKP is concerned”
He added the party will strictly “conform to the legal instruments” and have no intentions of availing loans”
“There is no issue of availing loans by a political party because the party has to sustain in conformity to the Public Election Fund Act of the kingdom of Bhutan 2008,” he said. “One cannot and should not fund the campaign from any other source”.
He said it is important that funds should be spent “judiciously and prudently” in conformity to the election laws.
The interim president insisted “If one goes by the books, is sincere in terms of their engagement and confident of their ideologies, I don’t see any reason to avail loans. If you are availing loans, it means you don’t have adequate supporters. You have to make everyone concerned and engage everyone and make everyone responsible”.
He said more important than loans or money was the dedication of party members “who can make small contributions, free services, engage in youth volunteers, community volunteers and senior citizen volunteers which will entail more participation, more engagement and more ownership from the heart.”
DPT, Secretary General Thinley Gyamtsho said the party isn’t expecting huge voluntary contribution from its members and at the same time have no intention of availing loans. “Because of our past experiences where we had difficulty in paying back, we have no plans to take any loans,” he said.
The secretary general concluded that the liquidity crisis with commercial banks shall not have an impact on the party in 2013.
He said the party will try to manage as far as possible with whatever fund is provided by ECB.