Bhutan's Economic Contingency Plan addresses vulnerabilities in the small, open economy including dependence on hydropower revenues, Indian rupee liquidity constraints, and the challenges of LDC graduation.
Overview
Bhutan's Economic Contingency Plans (ECP I and II) were emergency measures developed in response to the COVID-19 pandemic, designed to mitigate economic shocks and protect public health through integrated social, fiscal, monetary, and programmatic approaches.[1]
Key Measures
National Resilience Fund
King Jigme Khesar Namgyel Wangchuck announced the creation of the National Resilience Fund (NRF) with approximately Nu 30 billion, aimed at providing relief and economic stability.[1]
Fiscal Response
The government reprioritised plan programmes to create a fiscal space of Nu 3.7 billion. ECP I concentrated on three sectors: "Build Bhutan" (construction), "Tourism Resilience," and "Food Self-sufficiency and Nutrition Security."[1]
Druk Gyalpo's Relief Kidu
Direct income support was provided to citizens who lost their livelihoods, through the Kidu system.[1]
Economic Impact
Bhutan's US$2.4 billion economy contracted by 2.4% in FY2019-20 and 3.7% the following year. The 2021 Fiscal Incentives Act provided tax incentives to ease the economic fallout.[2]
References
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