The Bhutanese Leading the way.
2024-25 Budget total size is Nu 97.654 billion which comprises of total expenditire of Nu 89.154 bn which in turn is made up of Nu 50.809 bn current expenditure (salaries, maintenance), 38.344 bn capital expenditure (roads, schools etc).
The total budget also includes Nu 6.182 bn loan repayment and Nu 2.138 bn of lending.
Of the total expenditure of Nu 89.154 bn the total resources available is Nu 73.182 bn which means a fiscal deficit of Nu 15.972 bn or 5.2% of GDP.
During the first sitting of the National Assembly, the finance minister Lekey Dorji shared that the fiscal deficit for FY 2024-25 is estimated at 5.2 percent of GDP.
As per the report, the fiscal policy statement for the 13th FYP aims to maintain an average fiscal deficit of 3 percent of GDP.
Lyonpo Lekey Dorji presented the economic outlook for the fiscal year 2024-25, marked by ambitious growth projections and strategic fiscal measures aimed at sustaining momentum amid global economic uncertainties.
The key to this strategy is the management of the fiscal deficit, which plays a critical role in balancing economic expansion with sustainable debt management practices.
The Gross Domestic Growth (GDP) is expected for substantial growth, with projections indicating a 6.3% in 2024, followed by a notable surge to 8.9% in 2025.
This growth is expected to be contributed by the commissioning of the Punatsangchhu II hydropower project, anticipated improvements in key sectors like manufacturing and tourism, and the stimulative effects of the Economic Stimulus Package (ESP).
To meet its fiscal requirements, the government plans to raise Nu.9.114 billion through external borrowings in FY 2024-25, with a significant portion earmarked for program and project-tied initiatives. Domestic borrowing remains essential, covering approximately 45.7 percent of Gross Fiscal Needs (GFN), highlighting country’s reliance on both external concessional funds and domestic debt instruments to finance developmental priorities.
The projected fiscal deficit of Nu. 55.938 billion in the 13th plan, equivalent to 2.97% of GDP, underscores efforts to maintain fiscal discipline while financing essential developmental initiatives.
The government’s fiscal strategy for FY 2024-25 exemplifies a balanced approach towards economic growth and sustainability amidst global economic uncertainties. By focusing on managing the fiscal deficit through strategic investments and prudent debt management, the government aims to foster long-term economic resilience and prosperity.
The fiscal deficit is the gap between a government’s total expenditures and its total revenues (excluding borrowing). When a government spends more than it earns, it runs a fiscal deficit.
For FY 2023-24, the current account deficit is expected to contract to 19.1 percent of GDP mainly on account of improvement in the trade balance. Trade balance is estimated to reduce to Nu.-51.69 bn in FY 2023-24 compared to Nu.-72.97 bn in the previous FY due to the reduction in imports by 8.5 percent.
The latest reserve position as of 3rd June 2024 stands at USD 608.260 million adequate for around 15 months’ worth of imports.
As of 31st March 2024, the public debt stock stood at Nu.293. 08 bn, accounting for 109.8 percent of the FY 2023-24 GDP estimate.
The total public debt stock comprises the external debt of Nu .261.122 bn (97.8 percent of GDP) and the domestic debt of Nu.31.966 bn (12 percent of GDP).
The major portion of the external debt disbursed were for the development of hydropower projects, as hydropower debt constitutes 64.1 percent (Nu.167.497 bn) and non-hydropower debt constitutes 35.9 percent (Nu.93.624 bn) of total external debt.
As on 31st March 2024, the Central Government (CGO) debt stood at Nu. 107.310 bn, constituting 36.6 percent of total public debt and 40.2 percent of estimated GDP.
