Reflections on the 13th Five-Year Plan

The new government, helmed by the People’s Democratic Party (PDP), embarks on an ambitious journey with the 13th Five-Year Plan, signaling a profound economic and social transformation.

With a substantial budget outlay of Nu 512.28 billion, marking a staggering 63 percent increase from previous plans, the government underlines its aspiration to elevate Bhutan to a high-income nation by the plan’s conclusion.

Central to this endeavor is the goal of achieving a GDP of USD 5 billion, leveraging innovation and sustainability across sectors. Finance Minister Lekey Dorji, in his address to parliament, outlined a strategic roadmap encompassing economic growth, social equity, environmental stewardship, and governance reform.

The plan not only aims for economic prosperity but also emphasizes equitable access to health, education, and social protection, aligning closely with international commitments such as the Sustainable Development Goals (SDGs).

However, amidst these aspirations, the fiscal landscape presents challenges. The budget deficit, amounting to Nu 55.93 billion, highlights a reliance on deficit financing to bridge the gap between available resources and expenditure.

Domestic revenue and grants are projected to cover a significant portion, yet deficit financing remains crucial, raising concerns about fiscal sustainability and long-term debt management.

Capital expenditure, earmarked at Nu 245 billion, underscores investments in infrastructure and strategic sectors, funded by revenue surplus, grants, and external borrowings.

While these investments are pivotal for economic diversification and resilience, the balance between leveraging external funds and managing debt levels requires prudent oversight to avoid over-reliance on external creditors.

Moreover, the plan’s emphasis on good governance and public sector reform is commendable but necessitates rigorous implementation to realize its full potential.

Initiatives aimed at enhancing transparency, digital infrastructure, and citizen-centric governance are essential for building trust and accountability within our society.

Critically, the projected public debt, estimated at Nu 474,419.06 million by the plan’s end, raises concerns about sustainability. External borrowing, particularly from concessional sources like the Asian Development Bank and the World Bank, offers favorable terms but poses risks if not managed judiciously.

The composition of debt, with a substantial portion tied to hydropower projects, underscores the economic dependency on this sector and the vulnerabilities associated with it. Furthermore, achieving the targeted GDP growth necessitates overcoming structural challenges, including enhancing productivity, diversifying markets, and fostering innovation.

These goals require not only financial investments but also systemic reforms to empower local industries, promote entrepreneurship, and ensure inclusive growth across regions and demographics.

While the 13th Five-Year Plan sets a bold vision for Bhutan’s future, its success hinges on effective implementation, fiscal prudence, and adaptive governance. Balancing economic growth with social equity and environmental sustainability remains paramount, requiring sustained commitment from policymakers, stakeholders, and citizens alike.

As Bhutan navigates this transformative phase, vigilance and strategic foresight will be indispensable in realizing its aspirations while safeguarding its unique cultural heritage and natural resources for generations to come.

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