Bhutan National Budget 2024–2025

The National Budget for Financial Year 2024–25 (1 July 2024 – 30 June 2025) was presented to the National Assembly on 22 May 2024 by Finance Minister Lekey Dorji of the People's Democratic Party. It was the first annual budget of the 13th Five-Year Plan and the first prepared by the second Tshering Tobgay cabinet, sworn in on 28 January 2024.^[1]

Total expenditure for the year was estimated at Nu 89,295.989 million, of which Nu 41,795.989 million was allocated to current activities and Nu 39,500 million to capital activities, with the balance going to net lending and principal repayment. Total resources were estimated at Nu 73,182.049 million, drawn from domestic revenue of Nu 54,749.944 million, other receipts of Nu 1,910.482 million and external grants of Nu 16,521.623 million. The fiscal deficit was projected at Nu 15,972.169 million, equivalent to about 2.3 per cent of GDP.^[2]

The budget was prepared against the backdrop of Bhutan's graduation from the United Nations Least Developed Country category on 13 December 2023, the launch of the new Gelephu Mindfulness City Special Administrative Region, and the implementation of the Sixth Pay Commission's revised pay structure for the civil service. Lekey Dorji framed the budget around the Plan's twin goals of doubling per-capita income to USD 5,000 and reducing poverty to below five per cent over five years.^[3]

Resource Envelope

Domestic revenue of Nu 54.75 billion was projected to come mainly from corporate income tax, business income tax, the Bhutan Sales Tax and customs duties, with a substantial contribution from hydropower royalties and dividends paid by Druk Holding and Investments. External grants of Nu 16.52 billion were dominated by assistance from the Government of India, which committed roughly INR 25.43 billion in support over the year, including INR 16.74 billion in grants and the balance in concessional loans. India's commitment to Bhutan for FY 2024–25 was the largest single allocation in India's foreign-aid budget that year.^[3]

Other development partners contributing to the grant envelope included the Asian Development Bank, the World Bank, the European Union, Japan, Austria and several United Nations agencies. With graduation from LDC status, the government noted that some concessional financing windows would tighten over the medium term and that increased domestic resource mobilisation would be needed.^[4]

Capital Allocations

Of the Nu 39.5 billion capital budget, the largest single block financed projects under the 13th Plan's first-year work programme. Lekey Dorji highlighted ongoing capital projects including a Nu 300 million mother-and-child hospital in Mongar, a Nu 114 million sixty-bed hospital in another district, the Chundu Armed Forces School in Haa at Nu 100 million, and a series of school-construction, irrigation and farm-road allocations across all twenty dzongkhags.^[1]

The budget also reserved seed funding for early infrastructure work in the Gelephu Mindfulness City Special Administrative Region, although the bulk of GMC's planned capital expenditure was expected to come from external investment, the planned domestic sovereign bond and the Bhutan Sovereign Wealth Fund vehicle proposed by the new government rather than from regular budgetary appropriation.^[5]

Recurrent Spending and Pay Revision

Current expenditure of Nu 41.8 billion was driven principally by salaries and allowances of the civil service, the armed forces and corporate-pay employees, plus debt-service costs. The 2024–25 figures incorporated the full-year cost of the pay revision endorsed under the Sixth Pay Commission report, which had been implemented in 2023. The Pay Commission report recommended an across-the-board increase in basic pay scales, raised the minimum civil-service pay scale, and merged the General Support Personnel I and II categories. Cabinet members, government secretaries and thrompons received a 55 per cent increment in basic pay under the revised structure.^[6]

The budget allocated significant shares to the social sectors, with education and health together accounting for a substantial portion of recurrent spending. The Ministry of Education and Skills Development and the Ministry of Health were among the largest recipient agencies, in line with the Constitutional commitments to free basic education and free public health services.^[1]

Debt and Fiscal Position

Public debt at the end of FY 2024–25 was reported at Nu 298.18 billion, equivalent to about 99.1 per cent of estimated GDP. External debt was dominated by hydropower-project loans from India, with around 61 per cent of external debt attributed to hydropower projects and the remaining 39 per cent to non-hydropower sectors. Finance Ministry projections suggested public debt could rise above 112 per cent of GDP by the end of FY 2025–26 as new hydropower borrowings are drawn down, although debt-service capacity was supported by the foreign-currency revenues from electricity exports.^[7]

The Supplementary Budget Appropriation Bill for FY 2023–24, presented alongside the 2024–25 budget, formalised in-year reallocations under the previous government and the caretaker administration.^[1]

References

1. Finance Minister Presents Annual Budget Report for FY 2024–2025 — National Assembly of Bhutan
2. National Budget Financial Year 2024–25 — Ministry of Finance, June 2024
3. Government secures over 40% of grants for fiscal year 2024-25 — Kuensel
4. Bhutan graduates from LDC status — UN DESA, 13 December 2023
5. Budget Notification for FY 2024–25 — Ministry of Finance
6. Pay Structure Reform & Pay Revision Notification, July 2023 — Ministry of Finance
7. Budget Report for FY 2025–26 — Ministry of Finance