The economy is having its worst year in the recent history with the GDP growth projected to decline by anywhere between 1-2 percent depending on how long the pandemic lasts.
Economic affairs minister Loknath Sharma shared this projection yesterday to the joint parliamentary committee on Covid-19 preparedness, citing the Royal Monetary Authority.
The economic impact of the Covid-19 pandemic comes at the backdrop of a 3 percent GDP growth in 2018. The commissioning of the Mangdechhu project is projected to lift the GDP growth to 5 percent in 2019, according to a World Bank report.
However, the projected decline is expected to take the GDP growth back to square one with about a 3 percent growth.
An earlier GDP growth projection of National Statistical Bureau in 2020 was around 6.5 percent. The lowest GDP growth was 2.12 percent recorded in 2013.
A concerned economic affairs minister said that the government was desperate to keep the economy going.
He said, “We are more concerned about how fast we revive the economy.” He said that sustenance of the economic growth was crucial for meeting expenditures in other sectors.
The main focus currently and rightly, he said, was on public health safety and containment of the novel coronavirus. But he added the government was also looking at the need to focus on revival and growth of the economy.
The government wants to continue construction of hydropower projects to minimise the impact and revive the economy. It was learnt that the government was worried about stalling of hydropower projects if foreign workers go on leave.
Some observers say that the export of electricity to India could be affected due to closure of industries if the pandemic prolongs. Electricity constitutes about 13 percent of the GDP.
However, the economic affairs minister said that electricity export had not seen any problem as yet. “We might have problems only if the lockdown prolongs and the industries in India shutdown, but as of now there are no issues,” he said.
The government, he said, was trying to keep the manufacturing sector running through interrupted supply of raw materials.
The government is also planning to frontload major infrastructure projects in the 12th Plan across agencies. The 12th Plan average GDP growth is between 5-6 percent.
The pandemic has also forced the government to fast track some of the delayed projects, including industrial marks. According to the economic affairs minister, Dhamdum, Jigmeling and Motanga industrial parks will be prioritised and frontloaded.
The government plans to pursue infrastructure projects like the POL depot in the east, dry port in Gelephu, Nganglam and Pasakha.
The economic affairs minister also briefed the committee about the government’s support and interventions in the trading sector, which include concessional working capital to stockpile essential and other commodities for six months.
As of April 9, banks had released Nu 216.59 million (M) to 16 wholesalers and large retailers. This is expected to complement FCB’s reserves and stockpiling efforts and also supply to retailers across the country.
The joint parliamentary committee shared concerns the hotel, construction sector, entertainment and informal sectors had. Members also raised concerns about rupee and convertible currency reserves and price hike local agricultural products by middlemen.
The committee recommended that there should be major focus on the local agriculture sector through investment. It recommended for investments in public and private schools as well as tertiary education and healthcare services in the country.
The committee’s chairperson Dorji Wangdi said, “We are happy to learn that the ministry is putting great efforts particularly in protecting and managing manufacturing, trading, hydropower sectors and important ensuring food security.”
He added that the government needed to keep improving and strengthening their plans and strategies.