INTERIM BUDGET LIKELY TO AFFECT BHUTAN’S GDP GROWTH
The International Monetary Fund’s article IV consultation report states that the country’s GDP growth is projected to decelerate to 4.8 percent in 2019 fiscal year,
The growth, according to the report, reflects a sharp decline in public investment as the 2019 interim budget implies a sharp fiscal withdrawal. However, the report states that growth would be moderated with the coming on stream of the Mangdechhu hydropower plant to about six percent in the 2019-2020 fiscal year. This is projected to further accelerate in 2021–22 fiscal year due to the reportedly expected coming on stream of two other mega hydropower projects.
Given Bhutan’s infrastructure needs, the IMF has also called for higher capital expenditure supported by additional domestic revenue and a modest increase in domestic financing.