Covid-19 saves government’s face

MB Subba

After investing most of its first year in “laying a foundation for change”, the third government announced that it would get into action of implementing its plans and policies. But then came the Covid-19 as it ushered into the second year.

The government completed two years in office yesterday amid a mixed bag of achievements and failures. No press conference has been announced on the completion of the milestone although the government’s media officials are expected to release the two-year report card.

Some observers Kuensel talked to for their reaction rated the government’s overall performance “below average” mainly on the grounds of unfulfilled promises. However, they were generally forgiving due to the Covid-19 pandemic.

Ruling party members, however, said they were satisfied with the government’s overall performance. One of the members, Athang Thedtsho MP Kinley Wangchuk, gave eight out of 10, when asked to rate the performance.

For Economic Affairs Minister Loknath Sharma, the government’s overall performance was “average” considering much of the efforts had to be diverted to Covid-19 measures.

“And had it not been for the Covid-19 pandemic, we would have done fairly well in the last two years,” he said, reasoning that the beginning of 2020 was promising. But he takes solace in the fact that Bhutan was in a much better position when it comes to the impact of the pandemic.

The government under the leadership of His Majesty The King has won praises both at home and from international agencies. There have been zero deaths because of Covid-19 and the local transmission in Phuentsholing was successfully contained.

However, former economic affairs minister and PDP member, Lekey Dorji, who shared his thoughts said that the first two years of the DNT government had seen the economy in a mess.

“Developments particularly in rural areas and fighting corruption have taken a back seat, and narrowing the gap is just a lip service. Most of all, our Constitution and the rule of law have greatly suffered,” he said.

Bhutan Kuen-Nyam Party (BKP)’s president in-charge, Sonam Tobgay, said that as far as BKP was concerned, the fight against the pandemic must be attributed to the leadership of His Majesty The King and the Fourth Druk Gyalpo.

“With this burden lifted, DNT has no excuses but to prove worthy of its pledges beyond the rhetorics of seeking public sympathy drowned in derailed eloquence. Most of us are experiencing the ills of the pandemic with many families and businesses on the verge of closing down,” he said in an email response.

Sonam Tobgay said that it was the primary responsibility of the DNT team to safeguard the economy optimising limited resources in a prudent manner. He said that the private sector had worked hard all these years and deserved better stimulus packages and a more friendly business environment.

“Implementation of rescue plans must be intelligently devised following principles of good governance with the government of the day setting an example to the rest of the country. If pledges are deserted to jingles of “tshagye malang”, then the electorate will be left with no choice but to pass on a severe verdict against them come election time,” he said.

The Opposition Party, which is supposed to keep track of the government’s performance, did not comment when contacted. It said it would issue a “formal report” soon.

A former People’s Democratic Party MP said that the government’s performance had been dismal given that many pledges like “a vehicle quota for each household” and regularization of contract civil servants were not fulfilled.

Some of the government’s top priorities have taken the backseat as development activities and programmes had to be re-prioritised in the wake of the pandemic.

The government deferred more than 13 major capital budget activities, including construction of a new technical training institute and establishment of premier schools for science, technology, engineering and mathematics. The proposed Maokhola bridge, for which a total of Nu 400 million (M) was allocated, is perhaps the biggest infrastructure project to be deferred.


On economy

The main vision was to boost the economy and generate employment. However, just the opposite happened as about 50,000 people lost their jobs as the Covid-19 control measures hit the economy hard.

As part of its strategy to boost the economy, the government in the third Parliament session partially implemented its strategies of narrowing the gap, at the heart of which were tax reforms and enactment of a new Mines and Minerals Bill. But the slogan hasn’t been heard since.

Trade deficit that had been widening for many years now due to large imports. But in what was a positive indication, the country’s trade deficit improved by -32.42 percent last year.

Trade deficit in current prices decreased to Nu 29.124 billion (B) (16.34 percent of GDP) in 2019 from Nu 41.951B (25.07 percent of GDP) in the previous year.

Economic affairs minister Loknath Sharma said improvement in the indicators were a result of initiatives, including the amendment of the CSI policy aimed at enhancing access and outreach to finance. “More people were interested to start businesses after we launched the new CSI policy,” he said.

He said that government spending propelled growth, which was accelerated as soon as the government came to power. The Mangdechhu project, which started generating electricity in July 2019, was a major contributing factor.

“The coming of the new government brought hope among people and ignited economic activities,” lyonpo Loknath Sharma said.

However, Covid-19 has brought the economy back to square one. The government, he said, was expecting to have a GDP of 6.9 percent in 2020, but it has been revised downward to negative 2.1 after the country went into its first ever lockdown in August.

In what seemingly appears to be a good indicator, the provisional figures with the Ministry of Finance, the country’s trade deficit declined by 32 percent in the first half of 2020 compared to figures for the same period of last year.

In absolute figures, the trade deficit decreased to Nu 12.84 billion (B) from Nu 19B in the same period last year.

Imports decreased to Nu 30.84B in the first half of this year from Nu 32B for the same period of last year. Exports increased to Nu 18B in the first half of this year from Nu13B for the same period last year.

However, officials say that decrease in imports in itself is not enough as a positive indicator. A decrease in import of raw materials, they say, would affect not only industrial production but also consumption.

Lyonpo said that minerals like coal and dolomites had been major exports but that their exports have been affected recently as the lease expired.  The Covid-19 has delayed the government’s efforts to pass the Mines and Minerals Bill 2020.


Private sector

The government describes the private sector as the engine of growth but many in the sector feel that the economic growth is still government-driven. One of the first initiatives was the establishment of a private sector development committee, which was expected to bridge the gap between the private sector and the government in addressing problems related to the private sector.

However, the committee had just a few rounds of meetings, according to Bhutan Chamber of Commerce and Industry (BCCI). The BCCI secretary general Sonam Dorji said that the committee could not meet as the key members were engaged in Covid-19 measures.

“The government has been trying, but Covid-19 came not letting us feel the impact of the policy reforms.”

Sonam Dorji said that the Druk Gyalpo’s Relief Kidu immensely benefited the private sector but added that the private sector had started to feel the heat since the interest waivers have been partially lifted. He also said that the private sector people had complained that they were not able to get concessional loans due to mortgage requirements.

The issues of entertainment centres like drayangs remain unaddressed for more than six months. “They have made huge investments and are paying rents,” the BCCI general secretary said.

A farm entrepreneur said that the private sector had been unable to make best use of the Covid-19 situation. He reasoned that interest rates on agriculture loans (7 percent) were still high and access to finance was still a major impediment due to collateral requirements.

Among other initiatives, the government recently launched the National Credit Guarantee Scheme (NCGS) aimed at providing collateral-free loans for investments in the cottage and small category.