… includes a provision to initiate GST regime
To effectively manage public resources, Bhutan’s financial management system ought to be strengthened and reformed, the World Bank has stated.
To this effect the World Bank has initiated a multi-donor fund and secured a commitment of Euro 4 million (M).
The European Union (EU) signed an agreement with the World Bank to join the multi-donor fund to strengthen Bhutan’s public financial management and contributed Euro 3M yesterday. The Austrian government has committed an additional Euro 1M.
During the signing ceremony, finance secretary Nim Dorji said the fund would be used to strengthen the budgeting process, procurement and the taxation system.
The Indian government will be implementing the goods and services tax (GST) regime starting July 1 this year. Since Bhutan’s economy is closely linked with the Indian economy, the finance secretary said that there will be some implication on Bhutan and it is appropriate to initiate the process of tax reform. “We need to study the implications of Indian GST and work on our own GST,” he said.
GST is a single tax on supply of goods and services, right from the manufacturers to supplier. It reduces the cascading effects of different tax regimes.
The resident representative of the World Bank Yoichiro Ishihara said there is a need to extend services of the electronic procurement system throughout the agencies. He also said that several assessments have been conducted in the past including one on public expenditure. All the assessments indicate a need to strengthen public financial management.
The World Bank will monitor the fund and support the government to implement the reforms to strengthen public financial management. Nim Dorji said the World Bank will add value to the multi-donor fund given its expertise.
“Strengthening public financial management is a cross cutting theme that will have a positive impact in all the projects and schemes in the country, irrespective of their funding source,” said Johann Hesse, head of delegation from the European Union for Bhutan. He also said that activities could be done more efficiently with joint efforts from the three stakeholders.