Assembly: The government has so far pumped Nu 2.3 billion (B) in pre-financing donor committed projects in the 11th Plan.
However, of the pre-financed fund, Nu 1.192B has been adjusted. This means that the government has financed projects worth Nu 2.3B before the donor funds actually came in and later adjusted after the receipt of donor funds. So, of the Nu 2.3B, Nu 1.192B has been received. The remaining Nu 1.170B is yet to be adjusted.
“Pre-financing was done to achieve timely completion of projects,” the finance minister Namgay Dorji said, adding pre-financing was also done in the past.
He was responding to the Bartsham Shongphu representative’s query during the Question Hour yesterday in the Assembly.
But unlike in the past, he said pre-financing was neither done through the government revenue nor from the reserve. Lyonpo said that funds for pre-financing were met from the grant released by the Government of India (GoI) for project tied assistance (PTA) and small development projects (SDP). “One project’s fund were used to pre-finance other,” he said. Doing so, he said would not have any impact on the fiscal balance
GoI has committed Nu 45B in the current plan, of which Nu 20.15B is on the account of SDP and PTA.
Lyonpo Namgay Dorji informed that pre-financing of the fourth batch of small development projects (SDP) by the previous government had implications on the current Plan’s capital expenditure.
The previous government pre-financed Nu 660 million on SDP from its coffers to complete the activities. Later, GoI declined to release the fund for not completing some formalities.
The previous government’s task force also recognised pre-financing of small development projects as a major contributor of the INR shortage because projects were implemented before the money was received.
When projects were pre-financed, INR the economy earned was used in importing from India.
The current government at the beginning of their term also decided not to resort to pre-financing. However in December 2014, the finance minster announced that the government decided to pre-finance after extensive discussion in the Cabinet because donor committed funds took time to reach the projects.