Says, instead of bemoaning what has not been achieved, the success must be celebrated
While the government will not be able to achieve an average economic growth of 10 percent during its tenure, the pace at which the economy is progressing since 2013 is nothing short of spectacular, prime minister Tshering Tobgay said.
According to World Bank figures from 2013 to 2016, Lyonchhen said that Bhutan’s economic growth jumped from 134th to 6th fastest growing economy in the world.
“Ten percent growth rate in our manifesto was quite conservative,” he said. “It was not plucked from thin air. It is consistent with experts’ projection.”
In the 11th Plan document, which was drafted in the 10th Plan, GDP growth rate was projected to average 12 percent per annum. In 2013, the country’s GDP was estimated to grow by 7.07 percent but Bhutan experienced one of the lowest growth rates at around 2 percent.
In the 2016-17 fiscal year, the growth rate was projected at 17.36 percent while it was 24.02 percent in 2017-2018. The basis of this projection was the commissioning of Punatshangchhu I hydropower project in 2017 and Mangdechhu project in 2018.
Finance minister, Namgay Dorji accepted that the government will not be able to achieve 10 percent growth mainly because of the delay in commissioning of hydropower projects. As per the Plan, Punatshangchhu I was supposed to commission last month and Punatshangchhu II in November 2018.
“All these mega projects are deferred for reasons beyond the government’s control,” he said.
By any economic theory, finance minister said that it takes between 10 to 15 years for the economy to recover after a downturn, which happened in 2013. “In our case, with policy interventions, result was immediate and impressive,” Lyonpo Namgay Dorji, said.
Lyonchhen also highlighted the International Monetary Fund’s (IMF) outlook, which projected Bhutan’s growth rate to be around 8.4 percent in 2017, placing Bhutan as the third fastest growing economy in the world.
He said a projection made by The Economist states that Bhutan will be fastest growing economy in the world next year with a growth rate of 9.2 percent.
“While accepting we have not been able to grow at 10 percent per annum, what I submit is, growth measured by World Bank and projected by IMF and The Economist is nothing short of spectacular,” Lyonchhen said.
This momentum, he said will continue because the interest rates have fallen, the Rural Enterprise Development Corporation Limited (REDCL) has expanded and Priority Sector Lending (PSL) scheme has taken off. “Between the REDCL and PSL, we will see huge investments in cottage and small industries,” he said.
Since the introduction of minimum lending rate policy, which replaced the base rate, interest rates have fallen by an average of three percent. For PSL, banks will be injecting Nu 1.5B to support CSIs.
In the hydropower sector, Mangdechhu will commission next year followed by the two Punatsangchhu projects. The special economic zones along the border, he said are progressing well on track to facilitate the growth of industries. This, he said will be realised with more power coming on line.
“So, we might want to celebrate our successes rather than bemoaning the fact that we’ve not achieved 10 percent,” Lyonchhen said.