NGAWANG JAMPHEL
Thimphu
The Chairperson of the Economic and Finance Committee, Bartsham-Shongphu MP Rinchen Wangdi, presented seven key recommendations aimed at boosting the impact of Bhutan’s Economic Stimulus Program (ESP) during a session on November 29. The recommendations were designed to address issues hindering the efficient implementation of the program and to ensure faster economic recovery for the nation.
The committee’s primary concerns focused on delays in the disbursement of funds, sectoral exclusions, and the inefficiency of existing loan processing systems. The ESP, which was allocated Nu.15 billion by the Lhengye Zhungtshog, was launched in May 2024 and formally began implementation in September 2024. Despite the significant budget, only Nu.5 billion (33.33%) of the allocated amount has been disbursed so far.
The committee highlighted the urgent need for the immediate disbursement of the remaining Nu.10 billion to accelerate Bhutan’s economic recovery. With only one-third of the funds disbursed, the committee believes the current tranche-based release process is too slow, mirroring the usual development plan disbursements, which are not equipped to address the current economic urgency.
“We need faster access to the remaining funds to ensure that businesses and sectors critical for recovery can move forward,” said the committee’s Chairperson.
Another concern raised by the committee was the allocation of funds to recurrent expenditures, such as capacity building, instead of high-return investments. The committee recommended that the government prioritize funding projects that offer higher economic returns and align more closely with the overall objectives of the ESP, particularly in the areas of infrastructure, job creation, and long-term economic resilience.
The committee also urged the government to introduce risk-sharing mechanisms, such as subordinate debt, to encourage lending under the ESP. According to the committee, the reluctance of participating financial institutions (PFIs) to offer concessional credit stems from concerns about the high risks associated with lending to some businesses. By mitigating these risks, the government can increase the flow of credit and foster recovery in key sectors.
The current ESP framework has excluded certain high-potential sectors, including hospitality, export, and mining, from receiving support. The committee emphasized the need to expand the program’s coverage to these sectors, which play a vital role in Bhutan’s economy and have the potential to drive significant economic recovery.
“The exclusion of these sectors limits the full potential of the program, and including them would ensure a more holistic recovery,” stated the Chairperson.
The committee also pointed out that inconsistent procedural guidelines and varying loan processing timelines across PFIs have created confusion and delays in the program’s implementation. To address these challenges, the committee recommended the development of standardized operational procedures and fixed loan processing timelines to ensure smooth and timely implementation of the program.
The committee noted that the application process for accessing the ESP funds has been hampered by lengthy processing times and excessive documentation. To enhance accessibility, it recommended simplifying the application process and ensuring a fixed processing timeline for all loan applications, making the program more efficient and user-friendly.
In light of rising non-performing loans (NPLs) and increased insolvency risks, the committee called for the swift passage of a new Insolvency Bill to manage NPLs and prevent further financial instability. The committee emphasized that a robust insolvency framework would help to address the growing concerns over loan defaults and improve the recovery prospects for businesses.
In response to the committee’s recommendations, Finance Minister Lekey Dorji assured the public and lawmakers that the Ministry is working closely with both the Steering and Technical Committees overseeing the ESP to address these concerns. The Minister acknowledged the committee’s valuable input, noting that many of the issues raised are being actively addressed through ongoing reforms.
The Minister reiterated that the ESP had been designed to avoid government favouritism by coordinating with both commercial and non-commercial financial institutions, ensuring that loans are granted based on merit and business potential, rather than political influence. The government has allocated Nu.3.3 billion for the credit line, with the Bank of Bhutan overseeing its management.
“The ESP’s current focus is on making the program more public-friendly and ensuring that all businesses, regardless of size, have access to the financial support they need,” the Minister stated.
The National Assembly commended the Ministry of Finance for its efforts to enhance the accessibility and efficiency of the ESP. Lawmakers expressed strong support for the committee’s recommendations and emphasized the importance of collaborating with local governments and providing more advocacy to the general public about the program.
The committee’s recommendations were overwhelmingly endorsed by the House, with the majority of members raising their hands in support. Several members also highlighted the importance of aligning future government initiatives with these recommendations to ensure a more effective and equitable recovery process for the Bhutanese economy.
