BKP questions the distribution of 205 utility vehicles

BKP questions the distribution of 205 utility vehicles
Country’s public finance under stress, says party

The government’s decision to distribute utility vehicles to the 205 gewogs is a good idea generating quite an extraordinary ‘feat’, but it is not a sound economic decision, according to Bhutan Kuen-Nyam Party.
In a press release, the party president Sonam Tobgay said that supporting the gewogs with essential mobility should help service delivery and reinforce the principles of empowerment and decentralization of grassroots people doing the actual work deriving the benefits.“However, procurement of vehicles on such a scale requires colossal amount of money and the Bhutanese people must to be informed as to from where the funds are being sourced.”
“With a GDP to debt ratio looming at 114% and current account deficit at 35%, is it really a sound economic decision to force fund the purchase?” “Or shouldn’t the government conduct an objective test on the rightness or wrongness of the decision under such times?”
Sonam Tobgay said that under conditions where austerity measures are encouraged, one can only assume that the money has to come from somewhere by cutting expenses from elsewhere. “If the government is forcing consumption expenditure overwhelmed by campaign pledges, then such targeted spending may not necessarily percolate down to tangible economic growth but rather risks the nation slip deeper into financial debt,” he said. “If unchecked, a tipping point will arise soon whereby current monetary measures taken by the Royal Monetary Authority will no longer hold water to a future financial tempest.”
The government of India has approved a funding of about Nu 142.62 million to procure the 205 Boleros and other related expenses.
On the empowering of local governments, the party said that while it was undoubtedly important to unlock potentials at the grassroots it is equally important to reckon implementation realities within the realms of the national pocket that is not only acutely finite but under severe strain.
The country’s public finance, for example, is under stark economic stress with all capital budget funded by donor grant, loan and aid money, the press release stated. “In an economy that is totally driven by imports and aid money is such a policy that fuels import justifiable? We must as a nation accept that our economic fundamentals are weak and therefore thorough economic rationale is mandatory prior to executing such policy decisions that is not only populace but unsustainable, and eventually counterproductive towards nation building.”
“It is unthinkable to observe conflicting government policies with on one hand supporting import substitution while on the other hand mass imports of vehicles are propagated. It may appear that INR reserves is comfortable at 20 billion but the Bhutanese people should knowthat it comprises i) a Line of Credit with the Government of India worth 7 billion and ii) a currency swap worth another 7 billion. So in total 14 billion of the 20 billion INR reserves is funded by debt.”
At what cost?
The party also questioned the after purchase cost of the Boleros.
“Import of two hundred and five (205) vehicles will further escalate fuel imports and running parts. When maintenance and operation cost increases it should be commensurate with growth in internal revenue. Otherwise, there is the danger of recurrent costs exceeding internal revenue, which is in conflict with the Constitutional requirements,” it stated.
“What happens after the vehicle life ends? How can we sustain the facility in terms of maintenance, driver salary, running parts and fuel expenditure? Do we have the road conditions adequate enough to drive these vehicles, how long is the intra-gewog travel distances to force such a purchase?”
It also questioned the manner the vehicles were purchased.
“There are also potential moral hazards issues with dominant brands and associated dealerships. Therefore, transparent procurement competition has to be enforced with no brands given any defacto opportunities. Thus, careful procurement audit with no due advantage to any particular dealer need to be enforced providing a level playing field to avoid damaging principles of good governance which our benevolent monarchs painstakingly built,” the press release stated.
“If such a decision is not executed well bearing in mind principles of good governance, then there is alarming danger on possible fallouts even from development partners. There is a danger here and everyone should recognize it as responsible citizens. Every one of us is concerned for the future of our nation and effective performance at the local levels, but it can also be misconstrued as a political payback and that will be unfortunate.”
Bhutan Kuen-Nyam Party also questioned if the government had done a study on any possible incremental economic gains that can be achieved at the local level from such an unsettling public expenditure. “Or has there been any empirical evidence testifying lack of mobility or transport amenities in the past have been an impediment to gewog development and growth. Are there any plausible findings that the government has in confidence on measurable economic benefits that can be derived from such unwarranted spending?” it stated.
Importing of utility vehicles will further widen the trade deficit gap with India leading to more outflows of the Indian Rupees, it stated. “Alongside external debt to GDP looming at116%, is it a sound economic decision to force consumption expenditure with total disregard to fiscal prudence under circumstances where we need to work within our means. According to recent Royal Monetary Authority reports, the country is laden with over US$ 2 billion in debt, of which US$ 585 million is in convertible currency driven loans and while more than Nu. 100 billion is in INR debt.”
BKP, the news release stated, will support any measure that brings about economic gains to the country and urges the government not to depart from the overall objectives of economic development and growth.
“BKP alerts the government to avoid embracing political decadence overwhelmed by party pledges by doling out such handouts because it is simply unsustainable for the country in the long run.”

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