(On economy, borrowings and trade deficit – responses from Meet the Press)
Lyonpo Wangdi Norbu, Finance Minister
We have to speak about the current situation which you assume is bad and based on that assumption your argument is being made. We have all along said the situation is not bad.
Look at the macro indicators: most of them are very good. For example, GDP growth - one of the ways to assess the economy – is around 9 percent and the unemployment rate – another important indicator – is down from 4.5 to 2.1 recently, quite low by any standard.
While we had rupee shortage, we did not have overall reserves problem. Within the overall reserves, rupee is just one part of it, albeit a large part because our trade is largely with India. The correct yardstick is how much of reserves do we have to sustain how many months of our import requirements. This is a constitutional requirement. We have total reserve sufficient to cover more than one year’s essential imports. When we have rupee shortage we use dollars and when we have dollar shortage, we use other currencies. If you look at many other countries it is much lower.
The economy is not in bad shape, rather this government, during the five years, has added a lot of economic structures to take the country and economy forward. So the prospects are very good for the next government, including the benefits they can reap from the commissioning of some hydropower projects. Small problems will crop up from time to time and I think the next government will resort to similar measures like ours.
Lyonpo Khandu Wangchuk, Economic Affairs Minister
Let’s go into the context. The DPT government coincided with the global economic meltdown, not to speak of our own inherent difficulties such as landlockedness, high costs of transportation, shortage of labor skills, technology and market. We cannot be totally insulated from what is happening in the world.
We have witnessed 8–9 % average growth over the years. In terms of actual GDP value, in 2008, our GDP was 54 billion. In 2011 it went up to 85 billion - a huge growth in terms of values.
Over the last four years, corporate taxes grew by 122%, business tax by 135 %. In terms of value, corporate tax jumped from Nu 2.3 billion to 5.1 billion, business tax from less than half a billion to 1.2 billion.
Or look at the credit from the financial institutions. The credit given to different sectors in 2008 was Nu 22 billion. In 2012 (September), it was Nu 54 billion – meaning, a huge surge in economic activities.
Of the total of over 29,000 trade licenses in the country, 16,000 were issued in the last four years. Of the total 37,000 industrial licenses, over 11,000 were issued in the last four years. Why take licenses if there is no growth?
Look at GDP per-capita growth pattern in the last three years – 2,277 dollars to 2,590 to 2,986. We have already 62 high-end hotels; in 2012 alone, 48 new hotels were issued construction licenses. From one aircraft, we now have 4. More Bhutanese are travelling than ever before.
I met Indian leaders several times and they are impressed with the growth of our economy. The IMF rated us, in 2012, the fourth fastest growing economy, and The Economic magazine in 2013 forecast that Bhutan will be the fastest growing economy. ADB has said we are the best performing country in 2012.
In the past, the FIs had huge liquidity problems. Now there are more FIs, more capital, liquidity. Why? They are not keeping the money; it is all being invested in the economy.
What we are leaving behind is a very strong legacy. Let me tell you this: we have laid very strong fundamentals for the new government to enjoy higher growth rate because of investments, policies, strategies that we have adopted. All in all, let me tell you, the economy has never been stronger.
Prime Minister Lyonchhen Jigmi Y. Thinley
Have any of your friends, relatives, brothers and sisters lost their jobs in the government or the private sector because the economy is performing badly? Have anyone of you lost your homes, cannot afford the homes and apartments you are living in? Has your lifestyle changed? Have you stopped driving your cars? Have you stopped consuming what you are used to? Do you see fewer people going on pilgrimage? Do you see fewer people going abroad to places like Bangkok for holidays?
Are you receiving lesser care from the health sector because we can no longer afford medicines because we can no longer continue to afford the same kind of services because the economy is in poor shape? Have you heard that the Health Ministry has stopped sending people abroad for super specialized treatment? More and more people are going to Kolkatta, Bangalore, Delhi.
Where are the signs that our economy is performing poorly? Have you heard that there is capital flight out of Bhutan, that investors have stopped investing in Bhutan and in fact they are withdrawing the money as in cases where the economies are crumbling, where economies are indeed crippled? Have you heard that the Indian money, rupees, has stopped flowing into the country? I haven’t heard, I haven’t experienced.
Have you heard the farmers - the majority of our people – complaining? What I have heard is that they are very happy with the growth of market for their produces? Where is the economy hurting, who is hurting among you? Don’t build images and don’t build false perceptions. Don’t built sense of insecurity. We are doing well and the IMF–World Bank pre-assessment team is here. What they said - and you should interview them – is that the Bhutanese Economy is on sound footing. We know that and that is why despite the entire world going through an economic downturn we are projecting a minimum of 8 percent growth in the 11th FYP.
