Economy in shambles: Opposition

Economy: The government has painted a rosy picture of the country’s economy and pushed its people towards greater dependence, derailing it from the national goal of achieving self-reliance, the Opposition has claimed.

The government has always maintained that it inherited an “empty coffer” and that it took economic growth from 2.1 percent in 2013 to 5.6 percent last year.

“One cannot compare 2013, which is the end of the 10th Plan with current figures derived in the middle of the 11th Plan,” said South Thimphu’s Yeshey Zimba.

Should the figure be compared with that of the mid-10th Plan, Yeshey Zimba said the economic growth was close to 12 percent then. Because 2013 was the end of plan period, he said that most of the budget had been exhausted and even civil servants had been deployed for elections.

Even as the government boasts of achieving a growth rate of 5.6 percent, the Opposition’s Kinga Tshering said “it is not very impressive” because the government pledged to achieve an annual average economic growth of 10 percent in five years.

The Opposition does not believe that current economic growth is sustainable.

Kinga Tshering said that the GDP model of measuring economic success is not as holistic as the GNH model.

“Did the growth of 5.6 percent happen by starting new industries or generating employment?” Kinga Tshering said. The growth, he added, has been fuelled by government expenditure propelled by aid and grants, not because of major investments.

If the contribution to GDP is to be segmented, Kinga Tshering said that most of the contributions were from plant and machineries, and wholesale and retail businesses. This indicates that the country’s imports have increased, while exports have not.

Kinga Tshering said that in 2013, hydropower fund disbursements slowed, which otherwise contributed about 17 percent to GDP.

Lamgong-Wangchang’s Khandu Wangchuk said: “The government takes pride in completing the DPR for the Kuri-Gongri project when it was supposed to be completed in 2013.”

Grants and aid, in form of Rupee or hard currency, is directly put into the reserves and the central bank releases the equivalent amount in ngultrum.

“The Rupee problem would not have surfaced if the economy wasn’t vibrant then,” Khandu Wangchuk added.

Because the economy was vibrant there was a construction boom so it resulted in Rupee shortage. “Rupee shortage is not a negative indicator,” Khandu Wangchuk said. “If there isn’t much economic activity, we can continue to have comfortable Rupee reserve.”

The Rupee and the foreign currency reserve was not accumulated by starting new economic activities, but was gathered from grants and aid.

The Opposition is of the view that value addition and employment generation is important for sustainable growth.

Kinga Tshering said that the country’s debt to GDP ratio of close to 100 percent is next only to Sri Lanka in the region with 60 percent.  Bhutan’s trade deficit is 25 percent of the GDP, the largest in the region, followed by the Maldives at six percent. These figures, he said, are a matter of concern.

The Opposition said that the economic growth has not enhanced domestic production but propelled imports instead.

The Opposition Leader said that in fact goods were imported that could have been produced within the country. He said that the former government had imposed an import ban on furniture and alcohol to stimulate local production.

The Opposition raised the issue of self-reliance when GDP growth is fuelled by “donors’ generosity”.

Rural business tax exemption and free rural electricity are some of the initiatives that are pushing people towards greater dependence, the Opposition said. “At individual levels people can afford to pay for these utilities. There were no complaints either,” said the Opposition Leader. “But at the national level, the revenue foregone has bigger implications.”

Now no politically elected government can re-introduce these taxes and tariffs, he added. More than this, rural people wanted to upgrade their electricity transmission from single phase to three-phase, as the single phase cannot carry the loads of machines.

Parliament has passed a budget of Nu 600 million for helicopter services when hospitals and health units are facing shortage of equipment and the sustainability of central schools are in question, the Opposition Leader said.

Instead of inheriting an “empty coffer,” the Opposition said that the former government laid the foundations for “economic takeoff”.

“Greater access to roads, electricity and communications is what the present government inherited,” Khandu Wangchuk said.

He added that now some industries have closed down while others are operating at half their capacity.

“Production is not taking off and consumption is growing,” said Khandu Wangchuk. He added that through more subsidies and freebees the goal of self-reliance is now going off track when it is time to make full use of the country’s human resources.

“The economy is in shambles,” Pangbang’s Dorji Wangdi said.

By Tshering Dorji

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