The annual allocation decreases by Nu 2.55B
Amid a widening trade deficit and a burgeoning public debt, the government has unveiled a budget of Nu 81.8 billion (B) for the fiscal year 2022-23.
The annual budget was presented by Finance Minister Namgay Tshering in the National Assembly yesterday.
The total allocation, excluding the allocations for on-lending (government lending) and principal repayments, however, is Nu 74.8B, of which the recurrent and capital budgets are Nu 36.34B and Nu 38.466B respectively.
Even as the total allocation has decreased by Nu 2.55B from the previous fiscal year, the fiscal deficit has widened to Nu 22.882B in the new fiscal year from Nu 17.498B in the previous fiscal year. The total revised budget for the fiscal year 2021-22 is Nu 84.35B.
Presenting the budget, the finance minister said that the capital works would be funded through external grants, and deficit financing through domestic borrowings and concessional external borrowings although the public debt has been increasing significantly.
The total public debt stock as of March 31 this year was Nu 247.681B, which is 130.9 percent of estimated gross domestic product (GDP).
The domestic revenue is projected to increase by 2.2 percent to Nu 36.368B in view of an increase in direct taxes. However, the domestic revenue is just enough to meet the recurrent expenditure, which is Nu 36.34B.
“Efforts have been made to adjust the recurrent budget within the estimated domestic revenue,” the finance minister said.
Given the modest revenue forecast and the constitutional requirement to meet the recurrent expenditure through the domestic revenue, the government has announced the suspension of daily subsistence allowance (DSA) for in-country training programmes in addition to current austerity measures.
Another new measure is the suspension of the daily allowance (DA) for in-country travels if employees can return to the place of work within a day’s time.
Lyonpo Namgay Tshering said the budget was formulated with the objective of “accelerating economic recovery through strategic investments in the areas of food self-sufficiency, human capital development, sustainable infrastructure development and improved social security.”
The government, he said, would continue to make concerted efforts to mobilise additional grants and concessional external borrowings to reduce the internal borrowings and improve the convertible currency reserve.
The budget report projects the economic growth for the fiscal year 2022-23 at 4.5 percent in view of the normalisation of the Covid-19 protocols.
The finance minister said that although the economy was projected to rebound, the increase in inflation rates was a concern. The inflation rate increased from 5.6 percent in 2020 to 7.4 percent in 2021.
Budgetary agencies and local governments (LGs) will continue to receive the budget in the form of annual grants. However, the finance minister said that local governments should align their programmes with national priorities.
The budget allocation for local governments is Nu 22.769B, of which Nu 10B is for capital works.
The government has allocated Nu 8.979B, comprising 11 percent of the total budget, for development of “critical infrastructure”, especially roads.
The finance minister said the investment in infrastructure development would create an enabling environment for economic recovery and employment creation.
The budget includes Nu 1.5B for the granular sub-base (GSB) phase II second priority and Nu 3.19B under the respective dzongkhags for GSB phase II first priority.
The government has also allocated Nu 444 million (M) for blacktopping of gewog centre (GC) roads in various dzongkhags.
A total of Nu 863.68M has been allocated for development of primary national highways (PNH) in the country.
Some of the major activities include pavement and strengthening of the Gomphu-Pangbang highway in Zhemgang, for which the government has allocated Nu 49.5M.
The government has allocated Nu 60M for improvement of Tingtibi-Phophel highway in Zhemgang and Nu 81.695M for pavement of Jumja-Raidak highway.
The new fiscal year will also see improvement of the Sengor-Dramaling highway with Nu 194M. About Nu 167M has been allocated for the improvement of Ura-Yongkola-Rothpashong highway.
The government has also allocated Nu 86.987M for infrastructure development activities such as upgradation of highways to dzongkhag headquarters.
A total of Nu 244M has been provided for construction and improvement of secondary national highways (SNH) across the country.
Some of the activities are improvement of Tshelingore-Khothakpa SNH and construction of a bridge over the Diana river in Samtse. About Nu 72.8M has been allocated for the bridge.
The budget report has been referred to the National Assembly’s economic affairs committee for a review. The new fiscal year will commence from July 1.