We have just about enough recurrent and capital budget: PM

Yangchen C Rinzin

Should the Covid-19 pandemic continue beyond 2020 the government could be forced to take desperate measures such as cutting down on the allowances. The government had earlier, as one of the temporary cost-cutting measures, deferred the payment of leave travel concession (LTC).

Sharing an update on the budget with the ministers, heads of constitutional bodies and senior government officials on Thursday, Prime Minister Dr Lotay Tshering said that the government had “just about enough budget” for recurrent and capital works.

Lyonchhen said that if the situation continued to worsen the internal resource would not be enough to meet the recurrent expenditure as mandated by the Constitution.

“So, when this happens, we either have to lay off people or cut down salary and allowances, as 56 percent of the recurrent budget constitutes salary and allowances,” Lyonchhen said. “We would be forced to take such measures because there’ll be no option else, recurrent budget is going to be insufficient.”

The meeting was held to draw inspiration and guidance from His Majesty The King during the recent tour of the eastern dzongkhags and to improve coordination and communication across the board.

A civil servant suggested that the government could take an immediate decision and issue an order to do away with the professional allowance.

“When deferring LTC has helped government save  about 50 million, cutting down the professional allowance would also help government coffer,” he said. “When His Majesty is sacrificing so much for people, I’m sure civil servants wouldn’t mind sacrificing their professional allowance.”

Lyonchhen said that the government had decided to defer the LTC and officials could be transferred without transfer grant. The monetisation of vehicle quota had been done away for now.

Many of the civil servants took vehicle quota in cash which amounted to 200 million last year.

“This is why we’re doing away with the monetisation right now and if they want to avail they should buy the vehicle and if they want cash, they can avail only next year,” Lyonchhen said. “Right now the recurrent budget is almost enough but in the long run, we’ll have to take the measures suggested, which is cutting down the allowances as a last option.”

Lyonchhen said that the government hopes such a situation will not arrive but if it does, the finance ministry will come up with such temporary measures. “I am glad that our discussion and civil servants’ thinking are on the same line.”

Updating on the implementation of 12th Plan, Lyonchhen said that majority of the programmes could not be implemented and revenue had dropped by almost 14 percent. The government has only Nu 33 billion for recurrent budget to match the domestic revenue.

‘We are trying to compensate by having more capital budget, which is about 36 billion. To accelerate front-loading of the 12th Plan, 31 percent of the capital outlay has been provisioned for the first time in plan history,” he said.

A monthly exercise will be held among officials of the GNH, finance ministry and Prime Minister’s Office to analyse budget allocation to ensure prudence.

Elaborating on the interventions, Lyonchhen reminded about His Majesty’s Relief Kidu that has saved livelihoods of more than 14,000 families. Lyonchhen said that in the second phase, waiving 100 percent interest on loan was almost not possible, as this could have collapsed the financial institutions.

“We couldn’t do anything and were discussing if we segregate and avail the interest waiver only to those that are genuinely affected and make those who can repay the loan,” Lyonchhen said. “However, His Majesty personally visited me and commanded that kidu should be equal for everyone.”

Majority of those who have availed loan are farmers and civil servants.

Lyonchhen said that His Majesty shared that everyone who has availed the loan was either for education, to build a house and many overseas returnees or job seekers depending directly or indirectly on the civil servants.

“This is why His Majesty commanded to avail interest waiver and deferment to everyone. People are not starving right now because of His Majesty’s kidu.”

Close to 30,000 Bhutanese were looking for jobs, including those affected by the pandemic and others returning from abroad adding to the unemployment pool. Measures are being put in place to address the unemployment issues.

About 8,000 people have returned from 66 different countries, of which 90 percent are those working overseas. The rest are students.

Lyonchhen said that there is no Covid-19 in the country technically. The positive cases are in the quarantine facilities and the government spends about Nu 4M for the quarantine and tests every day.

In agriculture, the government has come up with 36 pick up points for vegetable and 72 pick up points for potatoes. The Food Corporation of Bhutan is supposed to buy and help farmers sell the vegetables during the pandemic.

“Only government can support farmers to sell, if we fail to support this year, next year will be worst,” Lyonchhen said. “Majority of the buyers have started their own vegetable farming and when this happens where do the sellers sell their products, this is worrying.”

Lyonchhen added that this has created a minor crisis and the government was looking into the marketing measures. The government has dispersed about Nu 200M to 20 dzongkhags to plan for agriculture products and Nu 41M to the southern dzongkhags to grow winter vegetables.

He further added that the government would revisit the pledges and would drop those that might not be beneficial to the people during the pandemic.

Lyonchhen said that preparation of Economic Contingency Plan series II was underway, which will focus more on the manufacturing sectors and hotel industry.

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