The Bhutanese Leading the way.
The State of the Nation report delivered by Prime Minister Dasho Tshering Tobgay provided an in-depth look at the country’s economic strategies, revealing a comprehensive plan to address key financial aspects.
The Prime Minister shared that the Gross Domestic Product (GDP) of Nu. 227 billion, has demonstrated a steady growth rate of 4.5 percent in 2023.
The Royal Monetary Authority as the country’s Central Bank, has strengthened its role, providing robust stewardship to the nation’s financial institutions.
Significant allocations have been made to various sectors to ensure continued development. This includes Nu. 68 billion for infrastructure development, Nu. 10 billion for ICT development, Nu. 72 billion for local government, and Nu. 60 billion for human resource development.
The upcoming 13th Five Year Plan aims to fortify Bhutan’s economic foundation, distinguishing itself with a budget nearly double that of the 12th Five Year Plan. The primary objective is to double the economy’s size, ensuring robustness and stability. Of the Nu. 512 billion allocated, Nu. 267 billion is designated for recurrent expenditure and Nu. 245 billion for capital expenditure.
Lyonchhen Dasho Tshering Tobgay also shared our development partners, with the Government of India leading with Nu. 85 billion in support for the 13th Five Year Plan – double the amount provided for the 12th Plan. The other partners include the European Union, Japan, the Asian Development Bank, the World Bank, the United Nations, and various other governments and agencies.
Recognizing hydropower as a key pillar of economic development, the government plans to increase its installed capacity by 3,119 MW over the next five years, reaching a total capacity of approximately 5,500 MW. With a budget allocation of Nu. 527 billion outside the 13th Five Year Plan, it underscores the country’s commitment to sustainable energy development. Additionally, strategies are in place to boost foreign direct investment (FDI) to Nu. 500 billion as well.
Several new policies and programs are set to launch. These include interest-free loans for youth pursuing higher education abroad, low-interest loan programs for farmers to purchase power tillers, and policies for crop and livestock compensation and insurance.
Additional priorities for this financial year include facilitating home ownership through low-interest loans, increasing rural life insurance, and providing allowances for mothers giving birth to a third child.
Addressing the challenges of a small economy necessitates timely action. Central to the economic strategy is the historic Gelephu Mindfulness City (GMC), inspired by His Majesty The King’s profound vision. This initiative is anticipated to secure both present well-being and future prosperity for the country, promising economic growth, private sector opportunities, solutions to youth unemployment, and agricultural market expansion. It also aims to encourage Bhutanese expatriates to return and provide security for future generations.
While specific details on new tax policies were not extensively covered in the address, however PM mentioned the potential for revise the Tax Amendment Bill in the winter session. This bill aims to support private sector development and economic growth, likely by changing tax policies to make them more favorable for businesses.
The GMC remains a cornerstone of the country’s strategy to address and overcome pressing economic challenges. Alongside this initiative, the Economic Stimulus Programme and the 13th Five Year Plan are poised to significantly boost economic development. Further stimulation is expected from hydropower projects, tourism initiatives, and foreign direct investments.
