𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐒𝐭𝐢𝐦𝐮𝐥𝐮𝐬 𝐏𝐫𝐨𝐠𝐫𝐚𝐦𝐦𝐞 𝐅𝐚𝐜𝐞𝐬 𝐃𝐞𝐥𝐚𝐲 𝐚𝐬 𝐅𝐢𝐧𝐚𝐧𝐜𝐞 𝐌𝐢𝐧𝐢𝐬𝐭𝐞𝐫 𝐂𝐢𝐭𝐞𝐬 𝐂𝐡𝐚𝐥𝐥𝐞𝐧𝐠𝐞𝐬 𝐰𝐢𝐭𝐡 𝐅𝐫𝐚𝐦𝐞𝐰𝐨𝐫𝐤 𝐚𝐧𝐝 𝐒𝐲𝐬𝐭𝐞𝐦 𝐒𝐞𝐭𝐮𝐩

… 𝑷𝒉𝒂𝒔𝒆 𝑰 𝒊𝒔 𝑫𝒆𝒍𝒂𝒚𝒆𝒅 𝒂𝒔 𝒕𝒉𝒆 𝑮𝒐𝒗𝒆𝒓𝒏𝒎𝒆𝒏𝒕 𝑭𝒊𝒏𝒂𝒍𝒊𝒛𝒆𝒔 𝑰𝒎𝒑𝒍𝒆𝒎𝒆𝒏𝒕𝒂𝒕𝒊𝒐𝒏 𝑮𝒖𝒊𝒅𝒆𝒍𝒊𝒏𝒆𝒔 𝒘𝒊𝒕𝒉 𝑪𝒐𝒏𝒄𝒆𝒔𝒔𝒊𝒐𝒏𝒂𝒍 𝑪𝒓𝒆𝒅𝒊𝒕 𝑳𝒊𝒏𝒆 𝒂𝒏𝒅 𝑹𝒆𝒊𝒏𝒗𝒊𝒈𝒐𝒓𝒂𝒕𝒊𝒐𝒏 𝑭𝒖𝒏𝒅 𝑺𝒆𝒕 𝒕𝒐 𝑳𝒂𝒖𝒏𝒄𝒉 𝒐𝒏 𝑺𝒆𝒑𝒕𝒆𝒎𝒃𝒆𝒓 2

By Yeshey Lhadon

The eagerly awaited rollout of Bhutan’s Economic Stimulus Programme (ESP) has encountered significant delays, causing widespread anticipation and concern among stakeholders. Finance Minister Lyonpo Lekey Dorji addressed the delays in a recent press briefing, highlighting the challenges faced in finalizing the framework and operational procedures necessary for the program’s launch.

The Finance Minister explained that the primary obstacles delaying the ESP’s implementation are related to the finalization of a comprehensive assessment framework and the establishment of a unified internal operating procedure. “The ESP’s rollout has been delayed due to the time required to develop a robust assessment framework and finalize the Standard Operating Procedures (SoP),” Lyonpo stated.

He elaborated that the SoP required approval from both the boards of Participating Financial Institutions (PFIs) and the Financial Institutions Association of Bhutan (FIAB). Additionally, the Royal Monetary Authority (RMA) is working on a real time reporting framework to oversee the distribution and monitoring of funds, adding another layer of complexity to the process.

Officially launched on May 19, 2024, with a substantial support of Nu 15 billion from the Government of India, the ESP is designed to aid Bhutan’s economic recovery from the Covid-19 pandemic. The program aims to stimulate domestic production, increase employment, and foster self-employment. It is divided into two main components, the concessional credit line and the reinvigoration fund (RGF).

The concessional credit line, totaling Nu 3.3 billion, provides loans at a reduced interest rate of 4% with no collateral required. This initiative targets new and scaling businesses across various sectors. The RGF, amounting to Nu 2 billion, is intended to subsidize interest rates for distressed borrowers and businesses struggling to recover from pandemic related setbacks.

The ESP’s Phase I, which involves a total budget of Nu 5.3 billion, includes substantial allocations for concessional credit and the reinvigoration fund. The concessional credit line will be distributed among various PFIs, including Bank of Bhutan, Bhutan National Bank, Bhutan Development Bank, T Bank, Druk PNB, Royal Insurance Corporation of Bhutan, Bhutan Insurance Ltd., and the National Pension and Provident Fund. The concessional loans, which will be available at a 4% interest rate, are collateral free for up to three years, with non-performing loans (NPLs) managed by the PFIs.

In terms of implementation, Finance Minister confirmed that the updated guidelines for the credit lines, which were officially launched on August 7, 2024, have been distributed to the PFIs. These guidelines outline the procedures for accessing the concessional loans and reinvigoration funds. Despite the delays, applications for the ESP are scheduled to open on September 2, 2024. Financial institutions will begin accepting applications from this date, and the process will involve a thorough review based on each institution’s criteria.

The application process will require potential beneficiaries to submit their proposals to the PFIs by December 31, 2024. Each application will be subject to a detailed review, and applicants may be asked to provide additional information as needed. The receipt of an application does not guarantee approval of funds.

With the ESP’s Phase I now poised for a September 2 launch, the emphasis will be on smooth implementation and ensuring that the economic stimulus provides the anticipated benefits to the nation’s economy. The government’s continued commitment to refining the program and addressing the identified challenges will be crucial in achieving the desired outcomes and fostering economic recovery in Bhutan.