Of 1, 336 applications, only 171 loans have been approved as of November 14

Thukten Zangpo

The Economic Stimulus Programme (ESP), introduced to revive the country’s ailing economy, is facing challenges of its own, with delays and a sluggish rollout of loans.

Despite its ambitious launch earlier this year, the pace of loan disbursements under the programme has been slower than expected. This has raised concerns from various quarters whether the ESP will meet its targets before the application window closes on December 31.

Launched on May 18, 2023, the Nu 15 billion ESP is a crucial part of the government’s strategy to stimulate economic recovery in the wake of the pandemic.

The programme includes two key credit windows: Window-I, which offers collateral-free concessional loans at an interest rate of 4 percent, and Window-II, the reinvigoration fund, which offers a 4 percent interest subsidy on both existing and new loans for businesses affected by Covid-19 pandemic.

The concessional credit line is allocated Nu 3.3 billion and the reinvigoration fund Nu 2 billion.

However, the progress of both initiatives has been sluggish. 

According to the Royal Monetary Authority, the seven participating financial institutions (FIs) approved 158 applications worth Nu 96.65 million under the window-1 concessional loans as of November 14.

The FIs received a total 1, 249 applications with the proposed amount of Nu 2.89 billion.

About 83 applications were rejected and remaining under assessment.

Among the participating FIs, Bhutan Development Bank Limited (BDBL) approved the highest loans with 142 loans amounting to Nu 66.69 million, followed by 13 applications amounting to Nu 28.69 million by Bank of Bhutan Limited (BOBL), one application amounting to Nu 0.6 million by the Bhutan National Bank Limited, and two amounting to Nu 0.68 million by Royal Insurance Corporation of Bhutan Limited (RICBL).

Sector wise, agriculture and livestock have seen the highest volume of applications—1,047 in total—but only 126 of these have been approved for a total of Nu 60.94 million. The production and manufacturing sectors, meanwhile, have received 202 applications, with just 32 approved for loans worth Nu 35.71 million.

Among dzongkhags, Thimphu saw the highest applicants with 145, followed by Samtse at 136, and 130 applicants in Chukha.

Agriculture and livestock sectors include fishery and aquaculture, poultry farming, piggery, cattle raising, raising of other animals, mixed farming, agriculture machineries, and agri-infrastructures and transport.

The production and manufacturing sector encompasses a wide range of industries, including groceries, vehicles, machinery, electronics, and home and office furnishings. It also covers garments, textiles, jewelry, arts and crafts, as well as medicines, cosmetics, stationery, and construction materials. Additionally, the sector includes renewable and non-renewable energy, printing and media production, chemical and petroleum manufacturing, as well as silviculture, logging, and forestry equipment.

Under the window-II, business reinvigoration fund, a total of 87 applications were received, of which 13 have been approved amounting to Nu 87.73 million.

Agriculture and livestock sector received eight applications, two applications each in the hotel and tourism sector and loan to contractors, four in mining and quarrying, 44 in production and manufacturing, eight in service sector, and 19 in transport sector.

The FIs has declined six applicants while 66 are under review. 

The BOBL received the highest applications for business reinvigoration fund, approving nine out of 28. The BDBL approved only one application from 21 received, and the RICBL approved two from three applications.

Among the dzongkhags, Thimphu has the highest applications with 40, followed by 16 from Chukha, and seven from Sarpang, among others.