The Druk Gyalpo’s Relief Kidu (DGRK), delivered in the form of income support and loan interest payment support, which were provided for the last twelve months is still being continued and will extend until June next year.
Recently the government announced that, considering the continued impact and uncertainties posed by the Covid-19 pandemic, all loans sanctioned as of 30 June last year are eligible for the deferment of loan repayment for another one year until June, 2022.
This is in view of the Covid-19 pandemic continues to pose serious risks to the health and livelihood of our people.
Notwithstanding the given provision, the Financial Service Providers (FSPs) may negotiate with the borrowers for revival or rehabilitation or foreclosure of non-performing loans.
According to the press release from the Prime Minister’s Office, the containment measures and lock downs have adversely affected everyday life and business, creating economic hardship.
“In order to mitigate the impact, build resilience and give confidence and security to our people, His Majesty The King commanded at the very start of the pandemic that the State must extend substantive, timely and inclusive support to affected citizens and communities,” the press release stated.
It further stated that while the DGRK has been the most effective form of intervention to the general public, conventional forms of monetary measures have also complemented the Royal Kidu in shielding the individual borrowers and business entities from the consequences of the prolonged pandemic.
The Phase-II monetary and fiscal measures have been in force since 1 July last year and an ended on 30 June.
In order to ease the burden of loan repayment on the borrowers, the press release states that the FSPs may extend the loan tenure by the deferred period or by up to five years depending on the repayment capacity of the borrowers.
The FSPs would continue to provide one percent interest rate reduction (rebate) on term loans for another one year from July 2021 to June 2022 to the borrowers who service their loan installments (after adjustment of 50 percent interest payment support) during the deferment period.
However, the FSPs will not capitalize the interest accrued during the deferment period. The total accumulated interest from April 2020 to June 2022 shall be payable in equal installments after the end of the deferment period.
The press release further states that the FSPs will provide gestation for another one year until June 2022 for the bridging loans or soft term loans granted to the business entities under the phase-II monetary measures but the FSPs will not capitalize the interest accrued during the gestation period.
“The total accumulated interest from April 2020 to June 2022 will be payable in equal installments after the end of the gestation period,” it states.
In case of project financing or business loans, the FSPs may provide loans up to the loan-to-value (LTV) limit of 100 percent of the collateral value. However, the maximum debt-to-equity financing limit shall continue to apply. Whereas the LTV limits for housing loans and vehicle loans will remain unchanged.
As proposed by Financial Institutions Association of Bhutan (FIAB), the FSPs may adopt uniform land rates for the valuation purposes as per the agreed modality among the FSPs, added the press release.
Meanwhile, in order to ensure sustained economic stability and support resilient recovery, the Government has allocated one of the highest capital budget at 33 percent of the 12 Five Year Plan capital outlay for the Fiscal year 2021-22.
In addition, fiscal measures will be extended during the period from July to December, 2021 that comprises of corporate income tax (CIT) or business income tax (BIT) deferral.
The press release added that the income tax deferral for income year 2019 for tourism and allied sectors including entertainment sector would be considered on a case by case basis upon application for the period July to December, 2021.
“In order to enable business entities to settle CIT & BIT outstanding, installment payment of incomes tax would be extended to the business entities,” it states.
Similarly, industries would continue to pay demand charges based on actual consumption for the period July to December, 2021. Payment of electricity charge for industries would be considered for deferral on a case by case basis upon application.
In order to ensure that the deferrals are targeted towards industries actually impacted by the current situation, the Ministry of Economic Affairs and Ministry of Finance would verify the eligibility criteria during the extended period, added the press release.
It further added that Wi-Fi and electricity would be provided free of charges to the hotels used as quarantine facility and waiver of payment of monthly rent and other charges for tourism related business entities leasing government property would be continued up to December 2021.
While the rationalization and simplification of customs duty has been passed by the 4th session of the 3rd Parliament as ‘Customs Duty Act 2021’.
The implementation of the revised customs duty is expected to stimulate economic activities, promote export and contain inflation and as the existing fiscal incentives expires by this December.
Further, the government would review the existing fiscal incentives and propose revision of incentives to ensure business continuity and stability besides supporting a resilient economic recovery.