Maenbi Tsaenkhar’s Member of Parliament (MP) questioned the Prime Minister on the slow down in the economy, which would result in numerous issues such as the drop in the Gross Domestic Product (GDP) growth, which at present is three percent, youth unemployment, debt increment and failure of private sectors.
Prime minister Dr Lotay Tshering said that economic diversification was the only solution to curb the economic slow down of the country.
He said that the dependency on hydropower alone cannot sustain the economy. He emphasised on diversification of investment in human capital—health and education, agriculture and tourism.
Considering the challenges the engine of growth—private sector were facing, Lyonchhen said that there were no big issues, although many mentioned about major glitches.
A capital budget of Nu 2.5 Billion (B) was allocated for this fiscal year—2019-20. However, 60 percent of the budget remained unutilised due to formality incurrence, not getting necessity clearance and incomplete designs according to PM.
He said that the aim should be utilising the 65 percent of the budget in the remaining six months.
The government allocated Nu 3B as a capital budget for 2020-2021 financial year which would be the highest capital budget allocated in its entire term.
Lyonchhen said: “We started off at 16-17 percent at the beginning of tenure and the plan was to keep the highest at 2020-2021 and to drop to 15 percent by 2024.”
He said that the government deliberately planned to have less capital expenditure at the beginning of the term because as a new government there was every chance of investing in the wrong infrastructure.
“We deducted 16 percent of the capital budget this year.” But as the year goes by, he said that the government would increase the capital expenditure.
As Bhutan’s currency is pegged with Indian Rupee, the drop in the Indian economy subsequently affects the Bhutanese economy. However, to prevent drastic slowdown, the solution was diversifying the economy.
Lyonchhen said that the drop in GDP growth in 2018 was the result of investments made in the previous year.
Lyonchhen also said that the government had looked into the cause of decline of national account statistics and was working on it.
“Citizens need not worry about the decline in the economy. There won’t be a serious problem.”
The 15 percent drop in electricity production in 2017 caused a decline in capital account statistics in 2017, which was expected to have hampered GDP growth rate in 2018. The drop in electricity production was attributed to inconsistent rainfall, according to Lyonchhen.
In 2017, the capital budget declined by about 11 percent. The decline, according to Lyonchhen was due to the delay in construction of the dam in hydropower projects, delay in completion of Mangdechhu project, and the geological surprises in Punatsangchhu projects.