80% of 12th Plan to be fi­nanced through do­mes­tic rev­enue

Business Bhutan - - Money - Jigme Wangchen from Thim­phu

The to­tal out­lay for the 12th Five Year Plan is es­ti­mated at Nu 310bn, an in­crease of 38% from the 11th plan.

The re­source en­ve­lope for the 12th plan is es­ti­mated at Nu 280.77bn of which do­mes­tic rev­enue is Nu 217.72bn. Grant cov­ers Nu 63.04bn.

The es­ti­mated rev­enue is ex­pected to fully cover the cur­rent ex­pen­di­ture and fi­nance at least 21% of cap­i­tal ex­pen­di­ture.

Fur­ther, of the to­tal grant, ex­ter­nal grant com­prises Nu 61.65bn and in­ter­nal grant from trust funds, Nu 13.93bn. Grant con­sti­tutes 22.5% of the to­tal re­sources and is ex­pected to fi­nance at least 54.3% of the cap­i­tal ex­pen­di­ture.

A ma­jor por­tion of ex­ter­nal grant would come from the Gov­ern­ment of In­dia. Other sources are the Euro­pean Union, Ja­pan and United Na­tions agen­cies.

Of the to­tal es­ti­mated ex­pen­di­ture of Nu 310bn for the 12th FYP, the cur­rent ex­pen­di­ture is es­ti­mated at Nu 193.89bn and cap­i­tal ex­pen­di­ture at Nu 116.12bn. Cur­rent ex­pen­di­ture ac­counts for 62.5% of to­tal out­lay. About 54% of the to­tal cap­i­tal ex­pen­di­ture will be met through grants and 21% through do­mes­tic rev­enue sur­plus re­sult­ing in a gap of 25%.

The gov­ern­ment’s fis­cal pol­icy was aimed at en­sur­ing sus­tained eco­nomic growth by broad­en­ing tax base, and ra­tio­nal­iz­ing cap­i­tal and re­cur­rent ex­pen­di­tures.

The fis­cal pro­jec­tion aims to main­tain the av­er­age fis­cal deficit be­low 3% of Gross Do­mes­tic Prod­uct (GDP) and cover at least 80% of to­tal ex­pen­di­ture through do­mes­tic rev­enue.

The tax to GDP ra­tio would be main­tained at 12% and non-hy­dro debt be­low 35%.

The fis­cal deficit is es­ti­mated to be Nu. 29.24bn in the 12th plan, which ac­counts for 2.4% of GDP, well within the tar­get of main­tain­ing fis­cal deficit within 3% of GDP. The deficit would be fi­nanced through ex­ter­nal bor­row­ings mainly from the Asian De­vel­op­ment Bank and the World Bank.

The es­ti­mated net ex­ter­nal bor­row­ing dur­ing the 12th FYP is Nu. 4.07bn and the re­main­ing deficit would be fi­nanced from the do­mes­tic mar­ket through is­suance of gov­ern­ment bond and trea­sury bills.

How­ever, to re­lieve pres­sure on the do­mes­tic credit mar­ket, ef­forts are go­ing to be made through ex­ter­nal grant fi­nanc­ing win­dows such as trust funds and green cli­mate fund.

Mean­while, the to­tal pub­lic debt by the end of the plan is pro­jected to touch Nu 249.23bn which is about 87.6% of es­ti­mated GDP. Of the to­tal debt, ex­ter­nal debt is pro­jected at Nu 215.86bn which is about 75.9% of GDP. Hy­dropower debt will con­sti­tute about 68.4% of the to­tal pub­lic debt and 80% of ex­ter­nal debt.

How­ever, with the ex­pected com­mis­sion­ing of Mangdechhu and Nikachhu Hy­dropower Projects dur­ing the plan, the ex­ter­nal debt stock is pro­jected to de­cline.

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