Budget Report 2010-2011

Budget Report 2010-2011

NATIONAL BUDGET FINANCIAL YEAR 2010-11 MINISTRY OF FINANCE JUNE 2010 TABLE OF CONTENTS INTRODUCTION........................................................................................1 CHAPTER I: ANNUAL FINANCIAL STATEMENTS OF THE FY 2008-09 ................................................................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: REVISED BUDGET ESTIMATES OF THE FY 2009-10 ........................................................................8 2.1 Expenditure estimate ............................................................................9 2.1.1 Current expenditure ..................................................................9 2.1.2 Capital expenditure ...................................................................9 2.2 Domestic revenue estimate .................................................................10 2.3 External grants ....................................................................................11 2.4 Fiscal deficit & resource gap ...............................................................11 2.5 Borrowings ..........................................................................................11 2.6 Debt and debt servicing ......................................................................11 2.6 Supplementary funds granted during the year ....................................12 CHAPTER III: ECONOMIC PERFORMANCE IN THE LAST TWO YEARS .....................................................18 3.1 Gross Domestic Product (GDP) .........................................................19 3.2 Employment .......................................................................................19 3.3 Balance of Payments ..........................................................................19 3.4 Foregin Exchange Reserves ...............................................................20 3.5 Exchange Rate ....................................................................................20 3.6 Debt & Debt Service ..........................................................................20 3.7 Price Movement .................................................................................21 3.8 Banking and the Financial Sector .......................................................21 3.8.1 Credit .......................................................................................21 3.8.2 Non--performing loans ............................................................21 3.9 Foregin direct Investment (FDI) ........................................................21 CHAPTER IV: BUDGET ESTIMATES FOR the FY 2010-11 ..............23 4.1 Resources ...........................................................................................25 4.1.1 Domestic revenue ....................................................................25 4.1.2 Grants ......................................................................................27 4.2 Expenditure outlay .............................................................................28 4.2.1 Current expenditure ................................................................28 4.2.2 Capital expenditure .................................................................29 4.2.3 Net lending .............................................................................29 4.3 Financing ............................................................................................29 4.3.1 External borrowing .................................................................29 4.3.2 Internal borrowing ..................................................................30 4.3.3 Debt servicing (principal repayments) ...................................30 4.4 Budget Estimates for Activities implemented by Dzongkhags and Gewogs ...................................................................31 4.5 Allocations on Sector Basis ................................................................33 4.5.1 Social services ........................................................................33 4.5.2 Human Resource Development (HRD) .................................39 4.5.3 Renewable Natural Resources (RNR) sector ........................41 4.5.4 Trade, industry and private sector development ...................45 4.5.5 Tourism sector .......................................................................46 4.5.6 Vocational training and employment .....................................47 4.5.7 Roads .....................................................................................49 4.5.8 Urban development, housing and public amenities ..............53 4.5.9 Communications and transport ..............................................55 4.5.10 Energy ...................................................................................57 4.5.11 Cultural services ....................................................................59 4.5.12 Law and order ........................................................................60 4.5.13 General public service ...........................................................62 4.6 Budget for Legislative, Judiciary and Constitutional bodies .............65 4.6.1 National Assembly (NA) .......................................................66 4.6.2 National Council (NC) ...........................................................67 4.6.3 Anti-Corruption Commission (ACC) ....................................67 4.6.4 Election Commission (EC) ....................................................67 4.6.5 Judiciary .................................................................................69 4.6.6 Royal Audit Authority (RAA) ...............................................69 4.6.7 Royal Civil Service Commission (RCSC).............................70 CHAPTER V: TAX REFORMS and incentives .....................................71 5.1 Rationalization of Sales Tax and Customs Duty rates .......................71 5.2 Broadening the Sales Tax Base ..........................................................73 5.3 Fiscal incentives ................................................................................73 CHAPTER VI: Economic Outlook and Projections For FY 2010-11 and Beyond ................................................75 6.1 Economic growth ...............................................................................78 6.2 Inflation ..............................................................................................78 6.3 Employment .......................................................................................79 6.4 Fiscal projection ................................................................................79 6.4 1. Domestic revenue and external grant assistance ...................80 6.4 2. Expenditure ...........................................................................80 6.4 3. Fiscal balance and Resource Gap ..........................................80 6.4.4 Debt stock and Debt service .................................................80 6.5 Balance of payments and FE reserves ...............................................82 CHAPTER VII: REPORT ON STATE-OWNED ENTERPRISES AND GOVERNMENT’S SHARES IN COMPANIES ...............................................................84 7.1 Financial performance .......................................................................84 7.1.1 Assets & net worth ...................................................................84 7.1.2 Income & Profitability .............................................................85 7.1.3 Contribution to Government revenue ......................................88 7.1.4 Subsidies and grants .................................................................88 7.2 Druk Holdings Corporation ...............................................................88 7.2.1 Financial indicators ..................................................................88 7.2.2 Investments ..............................................................................89 CHAPTER VII: REPORT ON THE NATIONAL PENSION AND PROVIDENT FUND (NPPF) AND THE ROYAL MONETARY AUTHORITY (RMA) ........................90 8.1 National Pension & Provident Fund ..................................................90 8.2 Royal Monetary Authority .................................................................91 CHAPTER IX: DEVELOPMENTS IN THE FINANCIAL SECTOR ........................................................................92 9.1 Financial Institutions .........................................................................92 9.2 Legislative Reforms ...........................................................................92 9.3 Rural Credit .......................................................................................93 CHAPTER X: REPORT ON TRUST FUNDS .......................................94 10.1 Trust Funds ........................................................................................94 10.1.1 Bhutan Trust Fund for Environmental Conversation (BTFEC) ...............................................................................94

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