In what could be called a special budget arrangement, the finance minister presented the budget appropriation Bill for 2018-19 fiscal year, which, upon passing, would supersede the budget appropriation Act 2018-19.
This arrangement was made because the previous government’s tenure and electoral process consumed half of the first fiscal year of 2018-19.
In consideration to the Constitutional provision and the time lapse, the second Parliament approved an interim budget of Nu 36.3B in the 11th session.
The earlier budget that was passed in June last year, comprises of the current expenditure for the whole fiscal year (Nu 29B) and capital budget for only six months (June-December, 2018) to execute spillover works and few critical regular activities. Consequently, capital expenditure in the earlier budget was allotted only Nu 5.3B.
However, the earlier budget of Nu 36.3B is now subsumed in the new budget with an outlay of Nu 47.69B. It is estimated that the country would require Nu 10.66B for capital works between January and June this year. This takes the total capital budget for 2018-19 to Nu 16B, including the capital expenditure approved for last six months.
A total expenditure of about Nu 45B was estimated for the first fiscal year, of which around Nu 29B is for current expenditure and over Nu 16B for capital expenditure. The outlay of Nu 47B is including loan repayment and lending.
However, the country’s available resources or domestic revenue totted up with external grant, was estimated at Nu 39.9B, which is around Nu 5.2B short to meet the expenditure. This leaves a fiscal deficit of 2.7 percent of the GDP, which would be financed through borrowings.
The domestic revenue is being revised downward from Nu 35.8B in the earlier budget to Nu 33.9B. This, according to the new budget report is mainly on account of fall in tax revenue, delay in commissioning of Mangdechhu project costing Nu 797M to the government coffer and decrease in electricity production due to poor hydrology.
Compared to the interim budget, total resources has increased by Nu 1.29B from Nu 38.6B. This is because of the increase in external grant from Nu 2.7B to Nu 5.9B. The external grant from government of India for 2018-19 is provisioned at Nu 3B, of which almost half is for spillover activities. The remaining portion of external grant is expected from the European Union, World Bank, Asian Development Bank and other UN agencies for ongoing projects.
Current expenditure forms more than 85 percent of the domestic revenue. It is a constitutional requirement to meet the entire current expenditure from domestic revenue.
Flagship programs are high priority multi-sectoral interventions of the 12th Plan to address national issues. For the 2018-19, budget has been provisioned to start implementing two-flagship projects-One Gewog One Product (OGOP) and ensuring 24X7 drinking water supply.
For the two programmes, a budget of Nu 172M has been earmarked. According to the budget report, the program will require end-to-end intervention of multiple agencies and dzongkhags.
A major chuck of capital budget, Nu 2.36B is allocated to works and human settlement ministry. This is mainly to finance the on-going widening of east-west highway, construction of Dagapela-Dalbari and Khamna-Jenkana road in Haa. The allocation also includes expansion of urban infrastructures and amenities in thromdes.
The finance ministry is allocated a budget of Nu 1.98B, of which close to Nu 1B is for general reserves and more than Nu 606M is earmarked for subsidies, transfers and equity.
The agriculture ministry is allocated with a capital budget of Nu 545M. Major activities include livestock development, construction and renovation of irrigation cannels, conservation of natural resources, RNR marketing and value chain programs.
A capital budget of Nu 511M is allocated to the home ministry. A major chunk of the budget will go in the construction of dzongs in Wangduephodrang, Pemagatshel, Drukgyel and Gasa. Specialised vehicles would also be purchased for the Royal Bhutan Police from this budget.
The health ministry is allotted a capital budget of Nu 442M. The construction of Gyaltsuen Jetsun Pema Mother and Child hospital, 40-bed Dewathang hospital and human resource development programmes include some of the major activities.
The information and communications ministry is allocated Nu 295M for relocation of air force elements and development of domestic airports among others. Funds are also earmarked to construct film studios and theatres in five dzongkhags, among others.
The education ministry will get Nu 269M capital budget to complete the spillover works of constructing central schools. A budget of Nu 259M is allotted to the labour ministry, of which major activities include expansion of TTIs and employment facilitation program.
Capital budget of Nu 187.9M is allocated for the economic affairs ministry for development of industrial estates, dry ports and preparing DPR of the hydropower projects.
The foreign ministry is allotted with the least capital budget of Nu 37.5M.