Bhutan political crisis, Debt Bhutan political crisis, Debt scenario and International scenario and International

Financial InstitutionFinancial Institution

Presented by : Mohan TamangPresented by : Mohan TamangDemocratic Youth of BhutanDemocratic Youth of Bhutan

1515thth Jan 2009 Jan 2009

Bhutan at a glanceBhutan at a glance

Area-46,000 sq kmArea-46,000 sq kmDistricts:20Districts:20Population: 700,000Population: 700,000GDP-3.359 billion US$GDP-3.359 billion US$Per Capita income: US$1400Per Capita income: US$1400

Development activities-1965Development activities-1965

First Five year plan 1965-70 (India, 60% of First Five year plan 1965-70 (India, 60% of the aid)the aid)

AgricultureAgriculture Infrastructure, Roads, Hydro power, Infrastructure, Roads, Hydro power,

Educational institutionEducational institution Annual budget 23,072 (11,500 million as Annual budget 23,072 (11,500 million as

current expenditure and Nu 11,571 m as current expenditure and Nu 11,571 m as capital expenditure 2008-2009).capital expenditure 2008-2009).

Primary focus-service sectors, Primary focus-service sectors, health/Education.health/Education.

Economic performanceEconomic performance

GDP growth double to 17% (GDP (PPP)-US$ 3.359 billion estimateGDP growth double to 17% (GDP (PPP)-US$ 3.359 billion estimate

Tala hydropower generation-tripled generation capacity doublingTala hydropower generation-tripled generation capacity doubling

460 MW+1,020 MW=1480 MW. Commissioned in 2006.460 MW+1,020 MW=1480 MW. Commissioned in 2006.

BoP improved in FY2007 (power and non power sector exports shot BoP improved in FY2007 (power and non power sector exports shot up 76.6% and 63.7% respectively)up 76.6% and 63.7% respectively)

Tourism-21.6% visitors =24.2%Tourism-21.6% visitors =24.2%

Target visitors 30,000/Nu 600. US, Europe, JapanTarget visitors 30,000/Nu 600. US, Europe, Japan

Punatsangchu I-1,095 MW under construction-2014.Punatsangchu I-1,095 MW under construction-2014. Mangdechu-670 MW and Punatsangchu II- 990 MW: 2009-2016 Mangdechu-670 MW and Punatsangchu II- 990 MW: 2009-2016

(4,235) (4,235)

EmploymentEmployment

Hydropower-creating few jobsHydropower-creating few jobs

Government encouraging privatization.Government encouraging privatization.

Royal families taking over Schools.Royal families taking over Schools.

Gedu Plywood (Kuwait Fund)Gedu Plywood (Kuwait Fund)

Mining exploration/PrivatizationMining exploration/Privatization

Massive exploration by Cos owned by Massive exploration by Cos owned by Royal familiesRoyal families

Singye Construction, Lhaki groups, Singye Construction, Lhaki groups, Tashi CommercialsTashi Commercials

Pugli, khakara khola dolomite.500 Pugli, khakara khola dolomite.500 Million NuMillion Nu

Kalapani-calcium carbonate.Kalapani-calcium carbonate.

Immensely damaging Immensely damaging Environment/ecology. Environment/ecology.

Global financial crisis-1930s Global financial crisis-1930s depressiondepression

Ngultrum depreciated by 15-18% (one US$=Nu 49.30)Ngultrum depreciated by 15-18% (one US$=Nu 49.30)

Constant decline-third country imports expensive-technology/raw Constant decline-third country imports expensive-technology/raw material.material.

Current Account surplus 10.1% of GDP.Current Account surplus 10.1% of GDP. FY2009 construction phase/imports will lower current account FY2009 construction phase/imports will lower current account

surplus to 2.4% of GDP.surplus to 2.4% of GDP.

Public sector debt to stay around 70% (IMF and WB debt Public sector debt to stay around 70% (IMF and WB debt sustainability analysis in 2007. Debt - Nu 16.5 billion (excluding sustainability analysis in 2007. Debt - Nu 16.5 billion (excluding India)India)

Debt to development partners 10 m dollars 2008 but when Debt to development partners 10 m dollars 2008 but when exchange rate was Nu41/dollar (excluding New Delhi). Debt is long exchange rate was Nu41/dollar (excluding New Delhi). Debt is long term 12-30 yrs, concessional.term 12-30 yrs, concessional.

India, JICA, Austria,DANIDA,Helvetas-10India, JICA, Austria,DANIDA,Helvetas-10thth five year plan. (GoI five year plan. (GoI Nu.100 billion)Nu.100 billion)

Aid won’t affect-GNHAid won’t affect-GNH

IMF consultation report 2007IMF consultation report 20071919thth-31st July 2007,Thimphu.Art IV,AoA.-31st July 2007,Thimphu.Art IV,AoA.

Legitimizing Legitimizing MonarchyMonarchy

Report suggests that Report suggests that under the vibrant under the vibrant leadership of Jigme leadership of Jigme Khesar……Khesar……

Tashi cho Dzong Tashi cho Dzong (Fort)(Fort)

Pertinent threats in the pretext to Pertinent threats in the pretext to eradicate unemploymenteradicate unemployment

Education- market needsEducation- market needs Liberalizing trade regimeLiberalizing trade regime implementing financial sectors implementing financial sectors

reformsreforms Investing in lower non – labor costs.Investing in lower non – labor costs.

Poverty ReportPoverty Report

RGoB Poverty analysis report 2004. RGoB Poverty analysis report 2004.

32 % under poverty. Big gap between 32 % under poverty. Big gap between rich and poor. Nu 740/month) or rich and poor. Nu 740/month) or US$17.US$17.

Constraints: landlock, limited scope for Constraints: landlock, limited scope for diversification of production.diversification of production.

So paradox is the Gross National So paradox is the Gross National HappinessHappiness

VoicesVoices Continued movementContinued movement

Demystify GNH. Eco Demystify GNH. Eco variables inevitable variables inevitable indexes for development.indexes for development.

Set Human rights records Set Human rights records as pre requisites for as pre requisites for extending grants.extending grants.

Defense Expenditure 2002-Defense Expenditure 2002-9.3 million US$9.3 million US$

2007-13.7 million US$.2007-13.7 million US$. Ethnicisation of State Ethnicisation of State

Militia recruitment.Militia recruitment.

ObstaclesObstacles IFIs including neighboring IFIs including neighboring

countries-India, Nepal.countries-India, Nepal.

International CommunitiesInternational Communities

USA, New Zealand, Canada, USA, New Zealand, Canada, Denmark, Australia, Denmark, Australia, Norway, Netherlands-Norway, Netherlands-ResettlementResettlement

8,500/1,08,0008,500/1,08,000

You and IYou and Imust stand to fight tomust stand to fight to

End monarch and cronies like IMF and End monarch and cronies like IMF and WB. JUSTICEWB. JUSTICE

The EndThe End