Thukten Zangpo 

Economy growth of the country in 2021 would be neutral or zero percent, according to Lyonchhen Dr Lotay Tshering.

The economic growth measured in the gross domestic product (GDP) dropped to Nu 171.57 billion (B) that is -10.08 percent in 2020 from Nu 178.56B (5.75 percent) in 2019.

Bhutan experienced negative economic growth due to lockdowns in 2020 and every lockdown contributed -2 percent to -3 percent in economic growth, Lyonchhen said.

“Economy is man-made and induced mainly because of severe Covid-19 restrictions, as and when we lift the Covid-19 restrictions, the economy curve will slowly shift towards normalisation,” Lyonchhen said.

Without Covid-19, Lyonchhen said that the country’s economy would have been comfortably sailing at 6 percent to 7 percent.

Finance Minister Namgay Tshering said that the economic performance in 2021 would be better compared to 2020 based on the fiscal performance, the taxes collected from businesses as an economic projection indicator. 

However, he said that the total aggregation of the GDP for the year 2021 is yet to be published since it requires the data to be collected from diverse key economic agents.

Lyonpo said that the improvement is because of the access to finance and cash flow to the business entities.

Druk Gyalpo’s Relief Kidu in the form of interest payment support, loan deferment, and income support to the laid-off workers until June 2022 helped to revive the economy, he said. 

Lyonpo also said that the economy contingency plan of Nu 4B pumped in the construction, tourism, and agriculture sector brought the growth of 19 percent of GDP at the current price in the agriculture sector in 2020 compared to 15 percent in 2019. 

He added that the government took the expansionary fiscal measures in the fiscal year 2020-21 despite the pandemic injecting a higher share of capital budget into the economy with an 80 percent budget utilisation rate.

He added that the government will continue the expansionary fiscal measures in the next FY 2022-23. Government spending contributes 37 percent of the GDP.

After June 2022, Lyonpo said that the ministry is in dialogue with the Royal Monetary Authority and financial service providers to restructure the interest rate.

He also said that the fiscal incentives bill passed in the recent parliament was aligned towards supporting underperforming sectors.

“Ministry is diagnosing sectors in the economy, and the focus has to be towards the underperforming sectors,” Lyonpo said.

According to the budget call notification on December 30, the finance ministry projected the economy to grow at 3.3 percent in 2021. However, the risk of infections with the outbreak of Omicron in the region may slow down the recovery than anticipated in the medium-term impacting growth and government avenues.