The Hon’ble Finance Minister along with the senior officials from the Ministry of Finance attended the SASEC Finance Ministers’ meeting on 3rd April, 2017 in New Delhi. During the meeting one important document “The SASEC Vision Document” was launched and a Joint Ministerial Statement was made by the Hon’ble Finance Minister of India on behalf of the SASEC Finance Ministers.
Loan Signing on March 10, 2017
The Royal Government of Bhutan and the World Bank signed today the Second Fiscal Sustainability and Investment Climate Development Policy Credit (DPC2) of US$24 million, which will help improve fiscal sustainability, access to finance, and investment climate.
Bhutan has made impressive progress in poverty reduction and economic growth over the past decade. At the same time, high levels of investment in the hydropower sector have increased pressures on the country’s fiscal balance and external accounts.
The credit was signed by Lyonpo Namgay Dorji, the Royal Government of Bhutan’s Finance Minister, on behalf of the Royal Government of Bhutan, and Mr Yoichiro Ishihara, Resident Representative for Bhutan, on behalf of the World Bank.
This credit is the second of two operations to support Bhutan’s Eleventh Five-Year Plan (11th FYP) (2013–2018) goals of promoting green socio-economic development and achieving self-reliance. DPC2 was approved by the Board of Executive Directors of the World Bank on December 21, 2016.
Internationally, 26th January is celebrated as an International Customs Day (ICD) under the auspices of the World Customs Organization (WCO) since the Convention establishing the Customs Co-operation Council was officially inaugurated in Brussels on 26th January 1953. Subsequently, the Customs administrations of WCO member States organize various national events during the ICD. The WCO on its part dedicates an annual theme that is officially declared on the ICD and the theme for 2017 is “Data Analysis for Effective Border Management”.
Data is generated by every economic activity, including the movement of goods and people and circulates extensively along the global value chain. Collecting and analyzing data to enhance the effectiveness of border management is of paramount importance to Customs administrations. This year, in the context of the International Customs Day, the WCO is introducing the theme “Data Analysis for Effective Border Management” to encourage the global Customs community to pursue their efforts and activities in this area.
The Department of Revenue and Customs (DRC) with effect from 2014 joined the global Customs community in formally celebrating this day. This year’s ICD celebrations main event was organized in Samdrup Jhongkhar and honored being graced by the Hon’ble Finance Minister. On this day, the DRC awarded WCO Merit Certificates to 16 best performing Customs officials as a recognition and appreciation for their hard work, dedication and integrity. The DRC also awarded certificate of appreciation top ten Personal Income Tax payers and also top ten Business and Corporate income taxpayers’ (BIT & CIT) with good compliance record and best performing business entity. The Department also launched the publication of Bhutan Trade Classification, Customs Tariff and Sales Tax Schedule, 2017 edition on this day.
Considering the theme for 2017, Hon’ble Members of Parliaments, senior executives of the Ministry of Finance, senior officials of the DRC from other regional offices, relevant stakeholders, border enforcement agencies and cross-border Customs officials of India, also joined the celebration.
Press Release on the Launch of Economic Early Warning System
The Hon’ble Finance Minister, Lyonpo Namgay Dorji launched the Economic Early Warning System for Bhutan. Also present were Cyn-Young Park (Director, ADB), Yoichiro Ishihara (Resident Representative, World Bank) and officials from ADB, the Ministry of Finance and other key economic agencies.
The development of an Economic Early Warning System (EWS) for Bhutan is one of the initiatives undertaken towards strengthening macroeconomic monitoring and surveillance in the country. The economy’s long term growth prospects of becoming more resilient to adverse economic shocks and being informed of increases in the level of exposure to these shocks is a prerequisite to achieve a sustainable economic growth. Strengthening macroeconomic monitoring and surveillance is crucial to ensure both short and longer term macroeconomic stability which is a key objective of Bhutan’s guiding policy founded on the principles of Gross National Happiness.
An early warning system (EWS) is a mechanism that captures symptoms of any event that is adverse to the economy in advance and can be used to track economic crisis, thereby signaling future crises. It constitutes important tool for authorities to implement optimal policies to prevent or at least attenuate the impact of an economic turmoil. To predict a crisis, policy makers must understand its potential causes and the development of EWS, tailored to Bhutanese economy is expected to assist in timely detection and mitigation.
The system has been developed through the joint collaboration between the Asian Development Bank and Knowledge Sharing Program, the Republic of Korea.
Two day familiarization workshop on EWS was also organized for the members of Macroeconomic Framework Coordination Technical Committee (MFCTC) following the launch.
The Financial Rules & Regulations (FRR 2001) which was implemented with effect from July 2001 has now been revised and will be termed as Financial Rules & Regulations 2016 (FRR 2016). The FRR 2016 has been launched by the Hon’ble Finance Secretary on 27th December 2016 during the Annual Financial Workshop which was themed as “Towards Achieving Excellence in Financial Management”.
The FRR has been revised in accordance to the Public Finance Act; the web based Budgeting and Accounting Systems (MYRB & PEMS) and various circulars and guidelines issued by the Ministry of Finance. In the revised
manual, the accounting, budgeting and reporting systems have been simplified and redundancies have been removed making it more dynamic and user friendly.
Induction Programs for new officers (Graduate officers -PGDFM) and Revenue/Customs Inspectors
The Ministry of Finance (MOF) organised Induction Program for University Graduate Officers (PGDFM) who got their placement in the MOF on 5th January 2017 in the Ministry of Finance, Thimphu. The Officers have been selected through Bhutan Civil Service Examination, completed one year PGDFM course at Royal Institute of Management (RIM) and have been placed in the Ministry of Finance at various positions effective from 1st January 2017.
The Hon’ble Finance Secretary congratulated each of them for successfully completing their course at the RIM and having got their placements in the MOF. The graduates were made familiar with the core mandates of MOF and its importance in nation building through dynamic fiscal policies and sound financial management through maximization of resource generation, efficient allocation and prudent expenditure. Moreover, Dasho urged them to uphold high level of integrity in terms of complying with the various provisions of the Rules and maintain clean track records since they are the key officials to manage the financial resources and their positions fall under vulnerable category. With the right attitude and ability to deliver effectively, he informed the new officers that their prospects in the MOF in terms of career progression and the HR related opportunities are enormous.
A total of 23 PGDFM graduates comprising of 11 Assistant Customs/Revenue/Tax/Sales Tax Officers, 6 Assistant Accounts Officers, 4 Assistant Procurement Officers, 1 Assistant Internal Audit Officer and 1 Assistant Budget Officer attended the above Session. Further, these new Officers will be attached with the respective Departments/Sectors for another two to three weeks to familiarise with the work and organisational culture before they join their new place of postings. The Hon’ble Finance Secretary also briefed the newly recruited 33 Revenue/Customs/Sales Inspectors on 6 January 2017
The Ministry of Finance organised the award ceremony of the “2016 Dedicated Civil Service Awards” on 16th December 2016. Addressing the Award Ceremony by the Hon’ble Finance Secretary, he stated today’s civil service awards which was initiated by the government at the command of His Majesty the King reflects the recognition for distinguished contribution and hard work of all the recipients. He congratulated all of them
The Hon’ble Finance Secretary stated that it was an excellent opportunity of all the award recipients and the employee of MoF to pay tribute and rededicate our commitment and loyalty to Tsa-Wa-Sum. There were 170 recipients in MoF which includes (1) Lifetime (superannuated employee) – 25; (2) 30 years and above (Gold Medal) – 28; (3) 20 years and above (Silver Medal) – 29; (4) 10 years and above (Bronze Medal) – 88.
The 2016 Annual Meetings of the Board of Governors of the World Bank Group (WBG) and International Monetary Fund (IMF) was held in Washington, D.C. from 7-9 October 2016. Hon’ble Finance Minister Lyonpo Namgay Dorji, in the capacity of the Board of Governors to the WBG led the RGoB delegation.
The Board of Governors of the WBG and the Board of Governors of the IMF meet once a year to discuss the work of their respective institutions. The Annual Meetings bring together central bankers, ministers of finance and development, private sector executives, and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness. The meeting also features seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world’s financial system.
On the sideline of Annual Meetings, the RGoB delegation also held bilateral meetings with various donor agencies and senior management of the World Bank Group and IMF and discussed issues of mutual interest. Hon’ble Finance Minister also had courtesy meeting with Indian Finance Minister H.E. Mr. Arun Jaitley.
En-route to Bhutan, Hon’ble Finance Minister attended the launch of Foreign Currency Account Facility for Non-resident Bhutanese in New York.
The Royal Monetary Authority of Bhutan in collaboration with the Ministry of Finance, the Bank of Bhutan and the Bhutan National Bank launched the Foreign Currency Account Facility for the Non-resident Bhutanese on 9th October 2016 in New York, USA. The launch was graced by Hon’ble Finance Minister, Lyonpo Namgay Dorji.
The scheme is being introduced in recognition of the significant role that inward foreign currency remittances can play in boosting the country’s foreign exchange reserves and in promoting personal savings. The facility is being made available exclusively to the Non-resident Bhutanese who live, work or study overseas, to enable them to remit their earnings and savings to their personal foreign currency accounts or to their family members in Bhutan.
The RMA has developed a safe and secure web-based online system called RemitBhutan (www.remitbhutan.bt) to facilitate Non-resident Bhutanese to conveniently and safely apply for and open non-face-to-face foreign currency account online.
Speaking to about more than 200 Non-resident Bhutanese in New York, Lyonpo Namgay Dorji highlighted the importance of foreign currency remittances in boosting the country’s foreign exchange reserves and in inculcating savings culture. Lyonpo Namgay Dorji also handed over the International Debit Cards to those Non-resident Bhutanese who have already applied online and opened the Foreign Currency Account.
The facility comes with different schemes and has various attractive incentives, such as preferential interest on deposits, full repatriation of the principal amount and these accounts can act as security deposit to avail Ngultrum loan. Furthermore, the account holder can open the account with zero balance and will be provided with International Debit Cards and access to the Internet and Mobile banking facilities. The banks will maintain strict confidentiality of account holders and be able to enjoy other exclusive incentives on these accounts from time to time.
The event was facilitated by Permanent Mission of the Kingdom of Bhutan in New York.
The RemitBhutan was officially launched by His Excellency Lyonchhen Tshering Tobgay on 21st September 2016 in Thimphu.
The Department of Macroeconomic Affairs in the Ministry of Finance was formally inaugurated by the Hon’ble Finance Minister, Lyonpo Namgay Dorji on 26th September, 2016. The inaugural ceremony was attended by officials from the Ministry of Finance and RCSC.
The new Department will be the main coordinating agency which is responsible for formulating and monitoring macroeconomic policies and programs. The Department shall advise the Government on macroeconomic and public finance management. The Department will support MoF to fulfill its mandates with regard to macroeconomic coordination and facilitation as enshrined in the Public Finance Act.
2. The Government has recognized the need for a comprehensive public debt policy to proactively guide its investment and ensure that financing decisions are prudent and public debt is maintained at a sustainable level. Following the directives from 40th Lhengye Zhungtshog Session held on June 24, 2014, the Policy was drafted by a Committee comprising of representatives from Ministry of Finance, Royal Monetary Authority, Gross National Happiness Commission Secretariat, National Statistics Bureau and Department of Hydropower and Power Systems.
3. The Policy is governed by the Constitution of the Kingdom of Bhutan, the Public Finance Act of Bhutan 2007, the Audit Act of Bhutan 2006 and the Royal Monetary Authority of Bhutan Act 2010, and amendments thereof.
4. This Policy extends to all Public and Publicly Guaranteed External and Domestic Debt of Bhutan. However, given the nascent stage of development of domestic debt market, the thresholds in this Policy shall apply only to External Debt, until such time the thresholds for domestic debt can be determined to compliment this Policy. The broad guiding principles for raising debt are categorized by type of liability (direct or contingent) and by sector of borrower (General Government, Public Corporations and RMA).
5. Given the unique nature of Bhutan’s debt dynamics, which is primarily driven by investments in the development of hydropower, the thresholds set out in this Policy have been framed in a manner to allow Bhutan to continue to pursue and optimize its hydropower resources. As such, the draft policy provides debt thresholds for two categories of debt viz., (i) Non-hydropower debt (ii) Hydropower debt.
6. The threshold for Non-hydro External Debt, inter alia, shall not exceed thirty-five percent (35%) of GDP during a five- year period. Similarly, for Hydropower External Debt, inter alia, the ratio of hydropower debt service to hydropower export revenue shall be maintained within forty percent (40%), in any given year. The overall threshold for Total External Debt however is, provided in terms of Debt Service Ratio (ratio of annual debt service obligation to exports of goods and services) which shall not exceed twenty-five percent (25%).
7. The thresholds are proposed to reduce the undue debt burden that might arise from indiscriminate borrowing for social projects which do not necessarily generate financial returns. Other considerations are aimed at to ensure fiscal discipline and avoid ad-hoc, short-term borrowing which are generally costly.
8. The Policy was formally approved by Lhengye Zhungtshog during the 109th Session held on 2nd August 2016.
At the invitation of the Government of Islamic Republic of Pakistan, Royal Government of Bhutan participated in the Eight Meetings of the SAARC Finance Ministers and Secretaries in Islamabad, Pakistan. The Finance Ministers’ Meeting was held on 26th August 2016 preceded by the Finance Secretaries’ Meeting on 25th August 2016.
The main objective of the SAARC Finance Ministers was to review the processes towards establishment of the South Asian Economic Union (SAEU).
In this regards, the Islamabad Meeting reviewed the status on economic and financial cooperation including investment, progress in customs cooperation, regional economic integration and SAARCFINANCE. The Meeting also assessed the overall performance economic outlook of each Member State and discussed opportunities/challenges for South Asia.
As the SAARC Finance Ministers in their capacity as the Governing Council of SDF, discussed measures to strengthen SDF and expedite the operationalization of Economic and Infrastructure Windows.
SAARC Finance Ministers normally meet once a year. The Ministers also meet in informal settings on the sidelines of annual meetings of the World Bank and Asian Development Bank. Bi-lateral Meetings between Member States are also organized, when requested.
His Excellency Lyonpo Namgay Dorji, Finance Minister led the Bhutanese delegation to the Eight Meeting of SAARC Finance Ministers. The delegation comprised of senior officials from the Ministry of Finance and Ministry of Foreign Affairs.
The next SAARC Finance Ministers’ Meeting is scheduled in Afghanistan.