During the 16th Meet-the-Press session, the Minister, Ministry of Economic Affairs, Norbu Wangchuk, said the economy is beginning to show signs of robustness.
He said that the government had inherited an empty coffer, made worse by a debt of INR 5.4bn. He further said that they had inherited a growth rate of 2.05 percent, the worst Gross Domestic Product (GDP) growth rate ever since GDP was recorded in 1980, except in 1991 and 1993.
He highlighted that inflation rate was floating at around 7 percent, a serious rupee crisis, lowest unemployment rate of 2.9 percent, where youth unemployment was at its worst at 9.6 percent. Lyonpo Norbu Wangchuk said the trade balance was disproportionately executed, with a much higher import than export ratio. He said there were structural and fundamental flaws in the economy.
“The construction sector was literally frozen in 2012 and 2013 when we took over, banks were not giving credit, and this is the situation that we have to remind ourselves of.” Lyonpo further added the hydropower sector had fund problems. “Basically, we inherited a seriously troubled economy.” He said the 11th FYP was rolled out without a single ngultrum at hand.
He said that government went on a long resource mobilization and secured Nu 45bn, helping to cover the third phase of the 11th FYP. He said the INR debt and obligation have been cleared, which is significant to the improvement of the economy.
He highlighted that the Economic Stimulus Plan (ESP) of Nu 5 bn is rolled out with Nu 2.2 bn injected into the banks. This has helped the banks to give out loans, helping the private sector get credit. “The construction sector is now breathing life and BOiC is under operation and has approved some 1,000 projects, new startup companies in villages and small medium enterprise beginning to take shapes, but fruits of this initiative might take some time,” Lyonpo said.
He stated that the hydro-power projects are under full construction with no problems with fund releases. He said that the government has undertaken a lot of initiatives in the last one year in an effort to revive the economy, and ensure that the fundamental and structural challenges are rectified.
He said FDI policy has been reviewed, with the EDP policy under review. “A sort of blue print and direction to our economy based on the five jewels that the Prime Minister has identified.”
Lyonpo said that the ease of doing business reforms are taking place and Bhutan is ranked at 125 out 189 countries. He said the government aims to be in the top 100 position. He said the licensing policy is being liberalized and mineral development policy, in the making for last 6 to 7 years without being finalized, has now been finalized within one year of the government’s tenure.
He assured that the industrial states are Dhamdum in Samtse, Jigmeling in Gelephu, Motanga in Samdrup Jongkhar and Bondeyma in Mongar would be put on fast track with plot allocation to be made in June or July.
He said the economy is seeing clear signs of improvement, and a strong economy will help control the unemployment problem. Meantime, the ministry is anxiously waiting for the next GDP growth rate projection.