Meet the Press: The government claims it has been successful in containing the current account deficit and is working towards further improving the economy.
Finance minister Namgay Dorji said the current account deficit suddenly shot from Nu 3.6B in 2008-09 to Nu 14.8B the following year and to Nu 23.6B in 2010-11. Currently it stands at around Nu 24B.
According to the minister, this was contained due to fiscal measures such as tax raise and rationalisation of government expenditure. “But the current account deficit, for a developing country like ours, will always increase,” he said.
For instance, construction of government offices and buildings has been deferred unless absolutely necessary. The deficit is also largely attributed to trade balance, which is also in red.
“Our trade balance is bad because of billions worth of import for equipment and fuel for hydropower,” the Prime Minister said during the 19th meet the press. He said the country imports almost every thing including services like labour and consultancy.
However, the overall balance of payment, he said has improved from negative Nu 9B in 2012 to Nu 9.2B in positive last fiscal year.
“But this is not the best scenario because all the financing has been through grants and loans,” he said.
The government does expect a rise in hydropower loans but assured that non-hydro loans will not rise.
The hydro-loan, lyonchoen said was a component of subsidised loan and grant. “It is a good investment,” he said adding the country’s debt is expected to rise as the country develops more hydro projects.
“To dismiss hydro loan as self liquidating and not working on this is carelessness,” he said. The government, he said has to take loans for hydro but will be cautious.
He said that over the next few years, the country could expect a revolution in agriculture, with small enterprises and tourism spreading across the country all these consequently creating more jobs, offsetting imports and enhancing domestic production.
“Although our economy is a lot more stable now, it is still vulnerable because our GDP is not that big,” Lyonchoen said.