A recent government forecast shows that the country’s gross domestic product (GDP) is projected to grow by almost nine percent in 2025. The finance ministry’s Macroeconomic Situation Report for the third quarter attributes this strong growth trajectory to the 13th Five-Year Plan, which has a budget outlay of over 500 billion ngultrum, additional injections through the Economic Stimulus Programme, and the construction of more hydropower plants.
Apart from anticipating strong growth in the coming years, the finance ministry has also revised the GDP estimates for 2023 to 4.5 percent, up by over one percentage point from its December estimates.
The report attributes the upward revision to better-than-anticipated performance in the hydropower sector and higher spending on public administration services.
In 2023, the country earned over 25 billion ngultrum (25.1 billion) from electricity sales.
Revenue from electricity is estimated to increase by about three billion ngultrum (2.6 billion) this year and to almost 50 billion ngultrum (47.5 billion) in 2025 as Punatsangchhu II becomes fully operational this year.
With significant investments and economic stimulus injections in the pipeline, growth for this year is also projected at a steady 6.3 percent.
However, the report warns that such a significant increase in economic injections can exert pressure on market inflation and foreign exchange reserves.
It cautions the need for prudent management of money supply in the market to ensure that increased spending does not directly translate to imports.
In nominal terms, the country’s GDP is projected to be around 280 billion ngultrum (284bn) this year and to increase to almost 325 billion ngultrum (324bn) next year.
Meanwhile, total public debt will also see a significant increase in the coming years.
Public debt is estimated to be slightly over 300 billion ngultrum (302 billion) in the 2023/2024 fiscal year.
This number is projected to increase to over 325 billion and 390 billion in the coming years.
However, the government considers the debt manageable as it is within the threshold prescribed by the Public Debt Management Policy 2023.
Dechen Choden
Edited by Sherub Dorji
