…deficit projected at Nu 15.55 billion this FY 2023-24

Thukten Zangpo

Increased estimated domestic revenue by 7.1 percent is helping narrow the fiscal deficit with the deficit projected at Nu 15.55 billion for the current fiscal year 2023-24.

This translates to 5.83 percent of gross domestic product (GDP), lower than the initial budget estimate.

The deficit is down from the Nu 21.35 billion or 9.7% of GDP initially projected.

Domestic revenue increased to an estimated Nu 53.53 billion, exceeding the initial budget estimate of Nu 46.25 billion. This increase was partly due to higher profit transfer of Nu 5.27 billion from the Royal Monetary Authority, compared to the budgeted Nu 800 million.

The ministry estimated that the deficit would be financed through the net external borrowing of Nu 2.23 billion and net domestic borrowing of Nu 7.98 billion, with the net lending estimated at Nu 5.34 billion.

Fiscal deficit refers to the shortfall between a government’s income and its spending.

As of December, last year, domestic revenue was recorded at Nu 24.34 billion that accounted for 49.1 percent of the revised estimate, including the one-time profit transfer from RMA and Mangdechhu hydro project.

At the same time, Bhutan received Nu 2.73 billion in grants. This comprises 39.8 percent of the total grants estimate of Nu 6.86 billion for this fiscal year.

For this fiscal year 2023-24, the government had revised expenditure at Nu 75.94 billion, which is a 1.4 percent increase from the approved budget, based on the additional interest payments for the new borrowings.

As of December, last year, the expenditure utilisation had reached 35.7 percent of the revised estimate, totaling Nu 27.13 billion.

For the next fiscal year 2024-25, the resource and budget outlays were estimated at Nu 68.68 billion and Nu 78.49 billion, respectively. The fiscal deficit was estimated at Nu 9.82 billion, equivalent to 3.48 percent of GDP.

At the same time, the total resources for the fiscal year 2025-26 were estimated at Nu 97.9 billion with budget outlay of Nu 106.75 billion. The fiscal deficit was projected at Nu 8.85 billion, equivalent to 2.82 percent of the GDP.

The 13th Plan commences in fiscal year 2024-25, with the resource outlook subject to change depending on government approval and implementation of programmes and activities during the plan period.

Earlier, Finance Minister Lekey Dorji said the government aims to maintain a fiscal deficit below 3 percent of GDP during the 13th Plan.

The government, he said, would take a consistent and predictable economic and fiscal policy to ensure growth and financial stability to achieve the high-income Gross National Happiness economy by the end of 2024.

The deficit for the 13th Plan is estimated at 3 percent of GDP (Nu 40.6 billion) with total resources of Nu 363.91 billion and expenditures of Nu 404.51 billion.

The government will cover the financing gap through borrowing from both external and domestic sources.