The government can do better

News that the government recently borrowed around Nu. 3bn from the banks through Treasury Bills and directly through the Royal Monetary Authority to finance budgetary needs attention as it will impact the private sector negatively.

This is so because- in a situation where credit is limited due to the limited liquidity or cash deposits with banks, the government’s move will even squeeze the credit market tighter.

In fact, such borrowings could nullify the impact of the Economic Stimulus Plan (ESP) that injects Nu. 4bn in the banking system.

In 2013 alone, the current and former government combined have taken and paid back around Nu.12.85bn in Treasury Bills. In 2012 this figure was Nu.16bn.

The above figures may also throw some new light on the debate over the extent of the government’s contribution to the credit crunch that hit Bhutan from early 2012 onwards.

In this scenario, the government and the banks are the winners- as the former gets the money to use and the latter gets a good interest rate, but the losers will be the already weak private and ordinary citizens looking for loans.

On the other hand, despite the budget being approved and money being allotted -various reasons from bureaucratic red tape to computer glitches have ensured that many in the private sector are yet to be paid their bills.

This has resulted in many private companies defaulting on loans with banks with some even losing their valuable collateral assets.

The above examples along with several issues could very well mean that the government as a whole in itself is the biggest hurdle in the development of the Bhutanese economy.

The 11th plan of the new government is only a slightly updated version of the plan drawn up by the former government. It is, in fact, a bigger replication of the 10th plan which had flaws both in planning and implementation. A small example would be the many poor quality farm roads, most of which were unusable during the monsoon season or the domestic airports where the previous government wasted hundreds of millions for substandard airports- which are yet to be fully functional.

There is also increasing feeling and growing resentment in the private sector among others- on how a growing and bloated government consumes more resources in delivering services than the services itself.

A case in point is the 11th plan where of the Nu. 213bn around Nu. 121bn is for current expenditure that is focused mainly on the salaries, DSA, fuel, entertainment of around 20,000 plus bureaucrats. The remaining Nu.92bn is for developmental works like water supply, roads, schools etc.

What is not helping matters is that the 2013 election- despite bringing in change asked for by the majority has been a populist election with most parties including the ruling party making populist promises that will further impact the Exchequer.

Though it is still in the early days for the ruling party- there is also an increasing feeling that the party is not as well-coordinated and organized, and as a result is only picking up and continuing where DPT left off.

Stronger critics suggest that except for some cosmetic changes- the current government given its similarity in policies and programs to the DPT government and inability to bring about systemic changes is becoming eerily similar to its predecessor.

For the sake of the country, its economy and governance- the government must rapidly address some issues.

Instead of being goaded by the Opposition party and its own electoral fears to fulfill every inconceivable promise, the government should be brave and smart enough to make it clear that some promises, made in the heat of elections, are either not feasible or need to be watered down due to budgetary and governance issues.

In short, the government should not fall into the trap of expensive populism and instead should focus on good governance that will really benefit the people and ensures better service delivery.

The new politicians and ministers- instead of being taken for a comfortable ride by the system- should grab the bull by its horns and bring in positive systemic changes like transparency, fairness, efficiency, and clearing the bottlenecks.

Every agency or ministry will have its own bureaucratic or complacent work culture and systems that hinder progress and change. The minister can comfortably fit into this bureaucratic and systemic inertia and achieve nothing or bring about some real positive changes. For example, the reluctance and hesitation over RTI is a matter of concern.

Ministers should already be troubled to hear that an increasing number of people see little difference in the way the ministry functions compared to the past even with a new minister in.

At the end of the day- will the new ministers want to be seen functioning within the 11th plan, systemic framework and organizational culture created by the past government for them? The new government should stop appearing like an interim government and should bring in necessary and positive changes.

When it comes to the economy- the new government should stop repeating old methods that do not work or could only exacerbate the problem. So far, there is little by way of programs and policies to show that the Bhutanese economy will be heading somewhere new and stable.

The new government, unlike its predecessor, does not have any ‘flexi-time’ with the voters- especially with a strong Opposition party seemingly intent on the 2018 polls and unending economic woes.

The government, as evident from the recent 2013 polls, should know that public opinion can turn overnight, elections are not kind to those who cannot perform and history can repeat itself if the same mistakes are repeated.

“Elections determine who is in power, but they do not determine how power is used.”

Paul Collier

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