ANNUAL FINANCIAL STATEMENTS of the ROYAL GOVERNMENT of BHUTAN for the YEAR ENDED 30 JUNE 2015 Department of Public Accounts Ministry of Finance Annual Financial Statements of the Royal Government of Bhutan for the Year Ended 30 June 2015 1 2 Annual Financial Statements of the Royal Government of Bhutan for the Year Ended 30 June 2015 Annual Financial Statements of the Royal Government of Bhutan for the Year Ended 30 June 2015 3 4 Annual Financial Statements of the Royal Government of Bhutan for the Year Ended 30 June 2015 Annual Financial Statements of the Royal Government of Bhutan for the Year Ended 30 June 2015 5 6 Annual Financial Statements of the Royal Government of Bhutan for the Year Ended 30 June 2015 LIST OF Abbreviations ADB Asian Development Bank AFS Annual Financial Statements BDBL Bhutan Development Bank Limited BFA Budget Fund Account BHPC Basochhu Hydro Power Corporation BHTF Bhutan Health Trust Fund BoBL Bank of Bhutan Limited BTL Bhutan Telecom Limited CDG Constitutional Development Grant CHPC Chhukha Hydro Power Corporation CIT Corporate Income Tax CFA Consolidated Fund Account RoD (Danida) Representation Office of Denmark DGPCL Druk Green Power Corporation Limited DNB Department of National Budget DPA Department of Public Accounts DRC Department of Revenue and Customs FRR Financial Rules and Regulations FY Fiscal Year GDP Gross Domestic Product GNHC Gross National Happiness Commission GoA Government of Austria GoD Government of Denmark GoI Government of India IDA International Development Assistance IFAD International Fund for Agriculture Development JICA Japan International Cooperation Agency FAED Kuwait Fund for Arab Economic Development KHPC Kurichhu Hydro Power Corporation MYRB Multi-Year Rolling Budget NPPF National Pension and Provident Fund PEMS Public Expenditure Management System PFA Public Finance Act PIT Personal Income Tax RE Rural Electrification RGoB Royal Government of Bhutan RMA Royal Monetary Authority SA Spending Agencies THPC Tala Hydro Power Corporation WB World Bank WMA Ways and Means Advance T-Bills Treasury Bills Annual Financial Statements of the Royal Government of Bhutan for the Year Ended 30 June 2015 7 8 Annual Financial Statements of the Royal Government of Bhutan for the Year Ended 30 June 2015 CONTENTS Page No. 1. INTRODUCTION 13 2. OVERVIEW 13 3. BUDGET ESTIMATES, ACTUAL OUTCOMES AND FINANCING 15 4. RECEIPTS & PAYMENTS 15 5. GOVERNMENT RECEIPTS BY SOURCES 16 5.1. INTERNAL REVENUE 17 5.2 EXTERNAL GRANTS 18 5.3 BORROWINGS 19 5.3.1 INTERNAL BORROWINGS 20 5.3.2 EXTERNAL BORROWINGS 20 5.4 RECOVERY OF LOANS 20 5.5 OTHER RECEIPTS & PAYMENTS 21 6. OPERATIONAL RESULTS 22 6.1 EXPENDITURE GROWTH 22 6.1.1 CURRENT EXPENDITURE 23 6.1.2 SUBSIDY PAYMENTS 25 6.1.3 INTEREST PAYMENT 26 6.1.4 CAPITAL EXPENDITUE 31 6.1.5 ON-LENDING 32 6.1.6 LOAN REPAYMENT 32 6.1.7 SECTOR - WISE EXPENDITURE 37 7. GOVERNMENT DEBT POSITION 39 7.1 DOMESTIC Debt 39 7.2 EXTERNAL Debt 39 8. GOVERNMENT EQUITY HOLDINGS 49 9. GOVERNMENT GUARANTEES 49 Annual Financial Statements of the Royal Government of Bhutan for the Year Ended 30 June 2015 9 10. CONSOLIDATED FUND ACCOUNT 53 11. GOVERNMENT BUDGET FUND ACCOUNT 54 11.1 RECONCILIATION DETAILS 54 12. REFUNDABLE DEPOSIT, REVOLVING AND TRUST FUNDS 55 13. CURRENT DEPOSITS ACCOUNT 56 GRAPHS I GOVERNMENT RECEIPTS BY SOURCES 17 II Total EXPENDITURE FOR FY 2013-14 & 2014-15 23 III INTERNAL REVENUE AND CURRENT EXPENDITURE comparison 24 IV Statement OF INTEREST payments 27 V Repayment OF Principal LOANS 33 VI Summary OF EXPENDITURE BY Sectors 38 TABLE TABLE 1: FINANCING AND VARIANCE FOR THE FY 2014-2015 14 TABLE 2: CONSOLIDATED RECEIPTS AND PAYMENTS STATEMENT FOR THE YEAR ENDED 30 JUNE 2015 (NU. IN MILLION) 16 TABLE 3: GOVERNMENT RECEIPTS BY SOURCES 17 TABLE 4: SUMMARY OF REVENUE COLLECTIONS 18 TABLE 5: INTERNATIONAL ASSISTANCE (GRANTS) RECEIVED 19 TABLE 6: EXTERNAL LOANS RECEIVED DURING THE FISCAL YEAR 2014-2015 20 TABLE 7: STATEMENT OF RECOVERY OF LOANS DURING THE FISCAL YEAR 2014-15 20 TABLE 8: STATEMENT OF OTHER RECEIPTS AND PAYMENTS FOR THE FY 2014-2015 21 TABLE 9: SUMMARY OF EXPENDITURES 22 TABLE 10: CURRENT EXPENDITURE AND INTERNAL REVENUE COMPARISON 24 TABLE 11: GOVERNMENT SUBSIDY PROVIDED DURING THE FISCAL YEAR 2014-2015 25 10 Annual Financial Statements of the Royal Government of Bhutan for the Year Ended 30 June 2015 TABLE 12: STATEMENT OF INTEREST PAYMENTS 26 TABLE 13: STATEMENT OF INTEREST PAYMENT MADE DURING THE FISCAL YEAR 2014-2015: BY LENDER 27 TABLE 14: STATEMENT OF INTEREST PAYMENT MADE DURING THE FISCAL YEAR 2014-2015: BY LENDER 29 TABLE 15: CAPITAL EXPENDITURE AND REPAYMENT COMPARED WITH GRANTS AND BORROWINGS 32 TABLE 16: STATEMENT OF ON-LENDING FOR THE FISCAL YEAR 2014-2015 32 TABLE 17: STATEMENT OF PRINCIPAL LOAN REPAYMENT 33 TABLE 18: STATEMENT OF PRINCIPAL LOAN REPAYMENT MADE DURING THE FISCAL YEAR 2014-2015: BY LENDER 34 TABLE 19: STATEMENT OF PRINCIPAL LOAN REPAYMENT DURING THE FISCAL YEAR 2014-2015: BY CORPORATIONS & RGOB 35 TABLE 20: SUMMARY OF EXPENDITURE BY SECTORS FOR THE FY 2014-2015 37 TABLE 21: SUMMARY OF REVISED BUDGET & ACTUAL EXPENDITURE COMPARISION FOR THE FY 2014-2015 39 TABLE 22: SUMMARY STATEMENT OF OUTSTANDING DEBT OF THE GOVERNMENT FOR THE PERIOD ENDED JUNE 30, 2015 41 TABLE 23: THE DETAILED STATEMENT OF OUTSTANDING DEBT OF THE GOVERNMENT FOR THE PERIOD ENDED JUNE 30, 2015 42 TABLE 24: STATEMENT OF GOVERNMENT EQUITY PORTFOLIO FOR THE YEAR ENDED 30TH JUNE 2015 AMOUNT (NU. IN MILLION) 50 TABLE 25: Statement OF SOVEREIGN GUARANTEE ISSUED BY GOVERNMENT AS OF 30TH JUNE 2015 52 TABLE 26: RECONCILIATION OF GOVERNMENT CONSOLIDATED FUND ACCOUNT FOR THE FISCAL YEAR 2014-2015 53 TABLE 27: RECONCILIATION OF GOVERNMENT BUDGET FUND ACCOUNT FOR THE FISCAL YEAR 2014-2015 54 Annual Financial Statements of the Royal Government of Bhutan for the Year Ended 30 June 2015 11 ANNEXURE - 1 : CREDITS AS PER CASH BOOK BUT NOT IN BANK 54 ANNEXURE - 2 : CREDITS AS PER BANK BUT NOT IN CASH BOOK 55 TABLE 28: STATEMENT OF OPERATION OF REFUNDABLE DEPOSIT ACCOUNTS, REVOLVING FUNDS AND TRUST FUNDS FOR THE FY-2014-15 55 TABLE 29: Statement OF CURRENT DEPOSITS (CD) ACCOUNTS 56 SCHEDULE SCHEDULE 1: SCHEDULE OF BOOKED EXPENDITURE/REVISED BUDGET COMPARISION BY AU 57 SCHEDULE 2- EXPENDITURE SUMMARY BY OBJECT CLASS FOR FY 2014-2015 75 SCHEDULE 3: SCHEDULE OF INTERNATIONAL ASSISTANCE (GRANT) RECEIVED BY DONOR DURING THE FY 2014-15 78 SCHEDULE 4: SCHEDULE OF INTERNATIONAL ASSISTANCE (LOAN) RECEIVED DURING FY 2014-2015: BY LENDER 114 SCHEDULE 5: EXPENDITURE SUMMARY BY IMF FUNCTIONAL CLASSIFICATION 116 SCHEDULE 6: SCHEDULE OF NON-REVENUE DEPOSITS DURING THE FY 2014-2015 184 SCHEDULE 7: SCHEDULE OF OTHER RECOVERIES AND Remittances FOR THE FY 2014-15: BY AU 185 SCHEDULE 8: SCHEDULE OF REVENUE RECEIPTS AND Remittances FOR THE FY 2014-15; BY AU 209 SCHEDULE 9: SCHEDULE OF MISCELLANEOUS RECEIPTS AND Payments FOR THE FY 2014-15; BY AU 227 SCHEDULE 10: SCHEDULE OF UNCASHED CHEQUES OF THE FY 2014-15 252 SCHEDULE 11: SCHEDULE OF ADVANCES AND SUSPENSE FOR THE FY 2014-15 257 SCHEDULE 12: SCHEDULE OF GOVERNMENT CURRENT DEPOSIT ACCOUNTS FOR THE FY 2014-15 301 SCHEDULE 13: SCHEDULE OF REVENUE COLLECTION FOR THE 12 Annual FinancialFY 2014-15 Statements of the Royal Government of Bhutan for the Year Ended 30 June318 2015 1. INTRODUCTION The Annual Financial Statements (AFS) reporting on the budgetary operations of the Royal Government of Bhutan (RGoB) for the Fiscal Year (FY) 2014-2015 has been prepared by the Department of Public Accounts (DPA) as per the provisions of the Public Finance Act, 2007 (PFA 2007) and Public Finance (Amendment) Act 2012 and the Financial Rules and Regulations, 2001 (FRR 2001). The financial statements are based on the monthly accounts of the budgetary bodies recorded in the Public Expenditure Management System (PEMS) and information received from other relevant agencies and organizations. The statements and schedules presented in the AFS reflect the financial position of the RGoB as on 30th June 2015. 2. OVERVIEW The FY 2014-15 started with an approved budget of Nu. 35,406.325 million and an estimated resources of Nu. 31,959.263 million, resulting in a fiscal deficit1 of Nu. 3,447.062 million and a budget deficit2 of Nu. 4,805.202 million. At the end of the FY, the revised budget was Nu. 39,685.797 million with a fiscal deficit of Nu. 2,065.741 million and a budget deficit of Nu. 3,956.167 million. However, with an actual realized resources of Nu. 36,231.052 million and the actual outcome of Nu. 34,334.258 million, the FY 2014-15 ended with a fiscal surplus of Nu. 1,896.795 million and a budget surplus of Nu. 810.386 million. The budget surplus is about 0.6 percent of GDP3. The Government outstanding debt stock as on 30th June 2015 was Nu. 120,783.002 million equivalent to US$ 1,887.944 million4 which is about 96.5 percent of GDP. The Government Equity Holdings and Government Guarantees as on 30th June 2014 are Nu. 47,712.200 million and Nu. 401.430 million5 respectively. The statement of the comparison of approved and revised budget with that of actual outcomes and its financing is presented in Table 1. 1 Fiscal deficit/surplus = (taxes + fees and income from property and enterprises +proceeds from sale of land and other capital assets + recovery of on-lending + grants) – (current expenditures + capital expenditures + lending) 2 Budget deficit/surplus = (taxes + fees and income from property and enterprises + proceeds from sale of land and other capital assets + recovery of on-lending + grants + project tied borrowings) (current expenditures + capital expenditures + on-lending + repayments).