Budget Report 2011-2012
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NATIONAL BUDGET FINANCIAL YEAR 2011-12 MINISTRY OF FINANCE JUNE 2011 TABLE OF CONTENTS INTRODUCTION............................................................ 1 CHAPTER I: ANNUAL FINANCIAL STATEMENTS OF THE FY 2009-10 .............................. 4 1.1 Overall financial position ..................................................................4 1.2 Actual budget outcome .....................................................................6 1.2.1 Expenditure ...........................................................................6 1.2.2 Domestic revenue: ................................................................6 1.2.3 Grants: ..................................................................................7 1.2.4 Debt: ...................................................................................7 CHAPTER II: MACRO-ECONOMIC DEVELOPMENTS ................................ 9 2.1 Gross Domestic Product (GDP) .......................................................9 2.2 Employment ...................................................................................9 2.3 Balance of Payments ........................................................................9 2.4 Foreign Exchange Reserves and FDI .............................................10 2.5 Debt & Debt Service .......................................................................10 2.6 Exchange Rate ................................................................................11 2.7 Price .................................................................................11 2.8 Banking and the Financial Sector ...................................................11 2.8.1 Credit .................................................................................11 2.8.2 Non-performing Loans (NPLs) ..........................................12 CHAPTER III: REVISED BUDGET ESTIMATES OF FY 2010-11 .......................................... 13 3.1 Expenditure estimate ......................................................................14 3.1.1 Current expenditure ............................................................14 3.1.2 Capital expenditure .............................................................15 3.2 Domestic revenue estimate .............................................................18 3.3 External grants ................................................................................20 NATIONAL BUDGET FOR THE FINANCIAL YEAR 2011-12 i 3.4 Fiscal deficit & resource gap ..........................................................20 3.5 Borrowings .................................................................................21 3.6 Debt and debt servicing ..................................................................21 CHAPTER IV: BUDGET ESTIMATES FOR THE FY 2011-12 .................................................. 23 4.1 Resources .................................................................................25 4.1.1 Domestic revenue ..............................................................25 4.1.2 Grants ................................................................................26 4.2 Expenditure outlay ..........................................................................27 4.2.1 Current expenditure estimate ............................................27 4.2.2 Capital expenditure ...........................................................29 4.2.3 Net lending ........................................................................29 4.3 Financing .................................................................................30 4.3.1 External borrowing ...........................................................30 4.3.2 Internal borrowing ............................................................30 4.3.3 Debt servicing (principal repayments) ..............................31 4.4 Budget on Sector Basis ...................................................................31 4.4.1 Health ................................................................................32 4.4.2 Education ..........................................................................36 4.4.3 Renewable Natural Resources (RNR) sector ....................39 4.4.5. Vocational training and employment ................................43 4.4.6 Roads.................................................................................45 4.4.7 Urban development, housing and public amenities ..........49 4.4.8 Communications and transport .........................................51 4.4.9 Trade, industry and private sector development ...............54 4.4.10 Tourism sector ...................................................................56 4.4.11 Energy ...............................................................................58 4.4.12 Cultural services ................................................................61 4.4.13 Law and order ...................................................................63 4.4.14 General public service .......................................................65 4.5 Budget for Legislative, Judiciary and Constitutional bodies ..........71 4.5.1 National Assembly (NA) ...................................................71 4.5.2 National Council (NC) .......................................................72 4.5.3 Anti-Corruption Commission ............................................72 4.5.4 Election Commission (EC) ................................................73 4.5.5 Judiciary .............................................................................74 NATIONAL BUDGET FOR THE FINANCIAL YEAR 2011-12 ii 4.5.6 Royal Audit Authority (RAA) ...........................................75 4.5.7 Royal Civil Service Commission ......................................75 CHAPTER V: TAX MEASURES ................................. 77 CHAPTER VI: ECONOMIC OUTLOOK IN THE MEDIUM TERM ................................ 82 6.1 Economic Growth ...........................................................................84 6.2 Inflation .................................................................................84 6.3 Employment .................................................................................85 6.4 Fiscal Projections ............................................................................85 6.4.1 Domestic Revenue and External Grant Assistance ...........86 6.4.2 Expenditure .......................................................................86 6.4.3 Fiscal Balance ...................................................................87 6.4.4 Debt Stock and Debt Service ............................................87 6.5 Balance of Payments and Foreign Exchange Reserves ..................88 CHAPTER VII: REPORT ON STATE-OWNED ENTERPRISES AND COMPANIES WITH GOVERNMENT SHAREHOLDINGS ......................... 91 7.1 Government Portfolio in the SOEs and Other Companies: ............91 7.2 Financial Overview of State-Owned and Partially-owned Enterprises: .................................................................................92 7.2.1 Assets & net worth .........................................................................92 7.2.2 Earnings & Profitability ....................................................94 7.2.3 Government’s Revenue from its Equity in Companies: ....96 7.2.4 Subsidy and Grants: ..........................................................96 7.2.5 Government Guarantees for SOE Borrowings: .................96 7.2.6 Report on Financial Irregularities in the SOEs: ................97 7.3 Druk Holding & Investments: ........................................................97 7.3.1 Assets and Equity: .............................................................97 7.3.2 Investments: ......................................................................99 NATIONAL BUDGET FOR THE FINANCIAL YEAR 2011-12 iii CHAPTER VIII: REPORT ON THE NATIONAL PENSION AND PROVIDENT FUND AND THE ROYAL MONETARY AUTHORITY ................................. 100 8.1 National Pension and Provident Fund ..........................................100 8.2 Royal Monetary Authority (RMA) ...............................................101 CHAPTER IX: DEVELOPMENTS IN THE FINANCIAL SECTOR ..................... 103 9.1 Financial Institutions ....................................................................103 9.2 Rural Credit ...............................................................................103 CHAPTER X: REPORT ON TRUST FUNDS .......... 105 10.1 Trust Funds ...............................................................................105 10.1.1 Bhutan Trust Fund for Environmental Conservation (BTFEC) ............................................................................105 10.1.2 Bhutan Health Trust Fund (BHTF) ....................................105 10.1.3 Cultural Trust Fund (CTF) .................................................105 10.1.4 Universal Service Fund for ICT .........................................106 CHAPTER XI- CONCLUSION ................................. 107 ANNEXURES ............................................................. 109 NATIONAL BUDGET FOR THE FINANCIAL YEAR 2011-12 iv INTRODUCTION Honourable Speaker, As we come to the end of the third year of the first democratic government of our country, I have the honour to present to Parliament, the Royal Government’s budget for the financial year (FY) 2011-12. I present this budget with a great sense of pride and joy as the new financial year will witness one of the most historic moments of our times, the Royal Wedding of our beloved King, which will further