𝐍𝐮 𝟓.𝟑 𝐁𝐢𝐥𝐥𝐢𝐨𝐧 𝐀𝐥𝐥𝐨𝐜𝐚𝐭𝐞𝐝 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐟𝐢𝐫𝐬𝐭 𝐩𝐡𝐚𝐬𝐞 𝐨𝐟 𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐒𝐭𝐢𝐦𝐮𝐥𝐮𝐬 𝐏𝐫𝐨𝐠𝐫𝐚𝐦𝐦𝐞 𝐭𝐨 𝐑𝐞𝐯𝐢𝐭𝐚𝐥𝐢𝐳𝐞 𝐊𝐞𝐲 𝐒𝐞𝐜𝐭𝐨𝐫𝐬

…𝒇𝒊𝒓𝒔𝒕 𝒑𝒉𝒂𝒔𝒆 𝒇𝒐𝒄𝒖𝒔𝒆𝒔 𝒐𝒏 𝒔𝒖𝒑𝒑𝒐𝒓𝒕𝒊𝒏𝒈 𝒅𝒊𝒔𝒕𝒓𝒆𝒔𝒔𝒆𝒅 𝒃𝒖𝒔𝒊𝒏𝒆𝒔𝒔𝒆𝒔, 𝒂𝒈𝒓𝒊𝒄𝒖𝒍𝒕𝒖𝒓𝒆, 𝒂𝒏𝒅 𝒄𝒓𝒆𝒂𝒕𝒊𝒗𝒆 𝒊𝒏𝒅𝒖𝒔𝒕𝒓𝒊𝒆𝒔

By Nedup Dorji

In an ambitious move to jumpstart its post-pandemic economic recovery, the government has launched the first phase of its Economic Stimulus Programme (ESP), dedicating a substantial Nu 5.3 billion (B) of the total Nu 15B to support distressed businesses, boost agricultural and livestock sectors, and promote the creative industries.
Officially unveiled on May 19, 2024, this comprehensive initiative aims to address the most pressing economic challenges, ensuring a swift and sustainable resurgence across the country.

One of the primary objectives of the ESP’s first phase is to provide financial relief to businesses that have borne the brunt of the COVID-19 pandemic and other economic downturns. To this end, the government has allocated Nu 2 B specifically to assist these distressed businesses. The intention behind this significant allocation is to facilitate the recovery of businesses that are vital to Bhutan’s economic structure, ensuring that they continue to generate employment and contribute to national economic growth.

The targeted support is expected to create a ripple effect, revitalizing not only the businesses themselves but also the broader economy. By focusing on enterprises that have the potential to rebound, the ESP aims to stimulate economic activity across various sectors, creating jobs and fostering a more resilient economy.

Recognizing the crucial role of agriculture and livestock in Bhutan’s economic stability and food security, the ESP has allocated Nu 500 million to these sectors. This funding is directed toward small-scale investments, with eligible businesses able to access loans at a concessional interest rate of 4%, with a maximum loan amount of Nu 1 million.

The support for agriculture and livestock covers a wide range of activities, including crop cultivation, fishery and aquaculture, poultry farming, piggery, cattle raising, mixed farming, and dairy production. Additionally, investments in agricultural machinery and infrastructure are also eligible for funding. By providing affordable financial support to these essential sectors, the government aims to boost productivity and ensure long-term sustainability in rural areas, contributing to Bhutan’s overall economic resilience.

The emphasis on agriculture and livestock is part of a broader strategy to enhance food security, reduce dependency on imports, and promote self-sufficiency. The government’s focus on these sectors is also expected to create new opportunities for farmers and rural communities, driving economic development at the grassroots level.

The ESP also places significant importance on the growth and development of Cottage and Small Industries (CSIs), which play a vital role in Bhutan’s economy by fostering innovation, creating jobs, and promoting sustainable development. To support these industries, the government has allocated Nu 500 million for small-scale investments up to Nu 10 million. This funding excludes services, construction, raw form mining, and primary agriculture, which are addressed through other initiatives.

An additional Nu 300 million has been set aside specifically to scale up existing startups, reflecting the government’s commitment to nurturing entrepreneurial talent and fostering a dynamic business environment. This support is expected to help startups expand their operations, innovate, and contribute more significantly to the economy.

A particularly noteworthy aspect of the ESP is its focus on Bhutan’s creative industries, with a specific emphasis on the film sector. The government has recognized the cultural and economic potential of the film industry and has allocated Nu 200 million for movie production. Filmmakers can access loans of up to Nu 10 million at a concessional interest rate, providing the financial backing needed to produce high-quality films that can compete on regional and international stages.

The support for the film industry is part of a broader effort to promote Bhutanese culture and heritage while also contributing to the economy. By encouraging the production of films that reflect Bhutanese values and traditions, the government hopes to strengthen the cultural identity of the nation and showcase it to a global audience.

In addition to sector-specific allocations, the ESP includes a Reinvigoration Fund designed to assist businesses facing financial pressures. The fund, which has a total allocation of Nu 2 billion, offers two options for distressed businesses: an interest subsidy that lowers the borrower’s interest rate by 4%, or additional loans at the same subsidized rate. However, borrowers are required to choose only one of these options, ensuring that the support provided is focused and effective.

The Reinvigoration Fund is designed to provide a lifeline to businesses that have the potential to recover and stimulate economic growth. However, it is important to note that this support does not cover all sectors. Excluded from the fund are businesses in housing, personal transport, construction, services, raw mining, import-oriented enterprises, personal loans, staff incentives, and the hotels and tourism sectors. These sectors will need to seek alternative sources of financial assistance.

The successful implementation of the ESP will depend heavily on the participation of financial institutions across the country. Five commercial banks and three non-banking financial entities have been enlisted to manage the concessional loans and reinvigoration funds. These institutions will be responsible for evaluating loan applications based on the eligibility criteria set by the ESP, ensuring that the funds are distributed effectively and reach the businesses and sectors that need them the most.

The commercial banks involved in the programme include the Bank of Bhutan Limited, Bhutan National Bank Limited, Bhutan Development Bank Limited, Druk PNB, and T-bank Limited. The non-banking financial institutions are the Royal Insurance Corporation of Bhutan, Bhutan Insurance Limited, and the National Pension and Provident Fund. Their role in the ESP is critical, as they will be the primary channels through which the stimulus funds are disbursed.

The application process for accessing funds under the ESP is designed to be straightforward, with detailed information provided through public announcements. The government has set an application deadline of December 31, 2024, giving businesses ample time to prepare and submit their applications. This extended application window is intended to ensure that all eligible businesses have the opportunity to benefit from the programme.

While the first phase of the ESP focuses on providing immediate financial relief and support to distressed businesses and key sectors, the government is already planning for the second phase of the programme. The second phase is expected to focus on developing common infrastructure and business ecosystems, with the aim of creating a more conducive environment for economic growth and development.

This phase will be implemented by the government or state-owned enterprises and will cover additional sectors and priority areas that were not addressed in the first phase. By broadening the scope of the ESP, the government hopes to ensure that the programme has a lasting impact on Bhutan’s economy, paving the way for sustainable growth and development.

The launch of the Nu 5.3 billion Economic Stimulus Programme represents a bold and strategic effort by the Bhutanese government to revitalize the economy in the wake of the COVID-19 pandemic and other economic challenges. By focusing on key sectors such as agriculture, manufacturing, and the creative industries, the ESP aims to create a ripple effect that will boost economic activity across the country.

As Bhutan navigates the challenges of the post-pandemic world, initiatives like the ESP will be crucial in ensuring a resilient and sustainable economic recovery. The success of the programme will depend on effective collaboration between the government, financial institutions, and the business community, working together to achieve the shared goals of economic growth, job creation, and long-term prosperity for Bhutan.