𝐎𝐏𝐈𝐍𝐈𝐎𝐍- 𝐅𝐫𝐨𝐦 𝐃𝐞𝐥𝐚𝐲𝐬 𝐭𝐨 𝐃𝐞𝐥𝐢𝐯𝐞𝐫𝐲: 𝐓𝐡𝐞 𝐉𝐨𝐮𝐫𝐧𝐞𝐲 𝐨𝐟 𝐁𝐡𝐮𝐭𝐚𝐧’𝐬 𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐒𝐭𝐢𝐦𝐮𝐥𝐮𝐬 𝐏𝐫𝐨𝐠𝐫𝐚𝐦𝐦𝐞 𝐚𝐧𝐝 𝐈𝐭𝐬 𝐈𝐦𝐩𝐥𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬

Bhutan’s Economic Stimulus Programme (ESP), officially launched in May 2024 with significant backing from the Government of India, represents a bold effort to rejuvenate the nation’s economy after the disruptive impact of the Covid-19 pandemic. The program’s objective is clear: to bolster domestic production, create jobs, and support businesses that have been hit hard by the pandemic. However, the recent delay in rolling out Phase I of the ESP has sparked a mix of concern and frustration among the public and businesses alike.

The Finance Minister, Lyonpo Lekey Dorji, has attributed the delay to the complexities Involved in finalizing a comprehensive assessment framework and establishing a robust system of operations. Specifically, the development of the Standard Operating Procedures (SoP) required extensive collaboration and approval from various stakeholders, including Participating Financial Institutions (PFIs), the Financial Institutions Association of Bhutan (FIAB), and the Royal Monetary Authority (RMA). The process of creating a real-time reporting framework to monitor fund distribution has also contributed to the delay.

While such administrative challenges are not uncommon in the rollout of large-scale programs, they can have significant repercussions. The delay affects not only the speed with which businesses can access the much-needed financial support but also raises questions about the readiness of the framework to handle the program’s ambitious goals. The lack of immediate access to funds can stall recovery efforts and dampen the enthusiasm of businesses eager to capitalize on the opportunities promised by the ESP.

Despite these delays, the ESP holds considerable promise for Bhutan’s economic recovery. With an allocation of Nu 15 billion, the programme is designed to stimulate various sectors through two main components: concessional credit lines and a reinvigoration fund. The concessional credit line, worth Nu 3.3 billion, aims to provide low-interest loans to businesses, while the reinvigoration fund, totaling Nu 2 billion, is targeted at supporting distressed borrowers.

The concessional credit line, offering loans at a reduced interest rate of 4% with no collateral required, is particularly noteworthy. This component is poised to provide critical financial support to new and scaling businesses in key sectors, potentially leading to job creation and enhanced domestic production. The reinvigoration fund, on the other hand, will provide subsidies to help distressed businesses recover, addressing the lingering impacts of the pandemic and other external challenges.

The implementation of the ESP is set to begin on September 2, 2024, when applications will be accepted by eight Participating Financial Institutions (PFIs), including major banks and insurance companies. This marks an important step forward, but the effectiveness of the program will largely depend on how well it is executed. Key factors to consider include the efficiency of the application review process, the speed of fund disbursement, and the ability of the PFIs to manage and monitor non-performing loans (NPLs).

There is also the matter of communication and transparency. The government must ensure that the criteria for loan approval and the process for accessing funds are clearly communicated to potential applicants. Businesses should be well-informed about how to apply, what documentation is required, and the timeline for receiving funds. Any ambiguity or delay in this process could lead to further frustration and hinder the overall effectiveness of the program.

The delay in the rollout of the ESP has elicited mixed reactions from the public. Many businesses and individuals who were counting on the program to help them recover from financial setbacks are understandably frustrated by the postponement. The government’s handling of the situation is under scrutiny, with some critics arguing that more proactive measures could have been taken to expedite the process.

Moreover, there are broader concerns about the government’s approach to economic management. Some citizens have questioned whether the ESP is sufficient to address the underlying structural issues in the economy, such as high vehicle pricing and market inefficiencies. There are also debates about the effectiveness of certain aspects of the program, such as the green tax, given Bhutan’s extensive forest cover and the unique challenges faced by the country.

As Bhutan navigates the complexities of implementing the ESP, it is crucial to keep the focus on the program’s intended goals: economic recovery, job creation, and support for businesses. The government must remain transparent about the challenges it faces and the steps being taken to overcome them. Ensuring that the program delivers on its promises will require diligent oversight, effective communication, and a commitment to addressing any issues that arise.

While the delay in the ESP’s rollout is unfortunate, it is not insurmountable. The program’s potential to drive economic recovery and support businesses remains significant. With the right measures in place to address the current challenges, Bhutan can move forward with renewed hope and determination, working to achieve the goals set out in the Economic Stimulus Programme.

Tshering Zangmo, Thimphu