This is Nu 2B more than the revised commitment in 2014
11th plan: Amidst concerns that the country’s development assistance would decline as the country formulates its graduation from the group of least developed countries (LDC), the government has already mobilised Nu 68B in external grants.
Officials from Gross National Happiness Commission (GNHC) said the external grant mobilised is Nu 10B more than the committed, but declined to share the details worried that the article would lead to comparison among donor agencies or countries.
Besides the United Nations (UN) agencies, countries like Japan, Denmark, Switzerland, Austria, Netherlands, Norway and Australia have committed to assist the country’s 11th Plan.
International organisations such as European Union, Save the Children, World Bank, Asian Development Bank (ADB), World Wildlife Fund (WWF), World Health Organisation (WHO), International Fund for Agriculture Development (IFAD) and Global Environment Fund (GEF) are among the list of international development partners.
In 2014, the government announced that international development partners’ commitment has increased from Nu 58B to Nu 66B. This means that the actual fund mobilised in the mid year of 11th Plan is Nu 2B more than the revised commitment.
Should rest of the funds for the planned period come on time, the actual fund mobilised in the 11th Plan could exceed the budget outlay of Nu 213B.
Figures point towards a remarkable fund mobilization rate. As of December 2013, international development partners were able to release only Nu 1.7B.
The external grant figures are again exclusive of government of India’s (GOI) assistance, which alone has committed Nu 50B in the 11th Plan. The GOI has allocated Nu 28B as project tied grants, Nu 8.5B each as programme grants and small development programme. Another Nu 5B has been injected for economic stimulus plan (ESP). This is again exclusive of grants in the hydropower sector.
Earlier, it was revealed that the direct financial implications of Bhutan’s graduation from LDC status will be a loss of 26 percent of the Official Development Assistance (ODA), including those of the UN systems.
However, if the government of India’s assistance were included, only about nine percent of Bhutan’s total aid would be at risk.
Should the projection of declining assistance come true, concessional borrowings would be critical for social and economic projects. It was projected that in 2018, more than 10 percent of the expenditure would have to be financed through concessional borrowings.
An official from GNHC said the country’s plan has been aligned with priorities of globally agreed goals. This could have helped enhance the external grant from development partners.
As the country graduates from the LDC, a local economist said major infrastructures would be in place already and capital expenditure could come down.
Currently, official development assistance (ODA) and grant finances about 34 percent of the country’s development programmes. However, it also a Constitutional mandate that current expenditure should be financed from domestic revenue.
After it was revealed that domestic revenue could fall short of Nu 16B in the Plan during the recent mid term review, those following the economy closely are uncertain of whether the Constitutional mandate could be upheld or not.
In the fiscal year 2015-16, domestic revenue covered over 130 percent of current expenditure.
However, the current expenditure is expected to increase with the establishment of new agencies, salary revisions and interest payment on loans for hydropower projects.
Salary and allowance alone accounts for 46 percent of the total current expenditure.
For a sustainable fiscal balance, domestic revenue should not only cover all the current expenditure but it should also cover some portion of capital expenditure.
“The shortfall in domestic revenue could pose serious threat to sustainable fiscal balance,” an economist said.
The government has also targeted to run an acceptable level of fiscal deficit of less than three percent.