The country’s gross domestic product (GDP) is forecasted to grow by nearly nine percent in 2025, according to the latest Macroeconomic Situation Report released by the finance ministry. This remarkable growth trajectory is attributed to strategic economic policies outlined in the 13th Five-Year Plan, which boasts a budget outlay of over 500 billion ngultrum, along with additional injections through the Economic Stimulus Programme and the expansion of hydropower projects.

The finance ministry’s report also revised GDP estimates for 2023 to 4.5 percent, a significant increase of more than one percentage point from the December projections. The upward revision is credited to stronger-than-expected performance in the hydropower sector and increased spending on public administration services.

The report highlights that in 2023, the country generated over 25 billion ngultrum (25.1 billion) from electricity sales. This figure is anticipated to grow by an additional three billion ngultrum (2.6 billion) this year, reaching nearly 50 billion ngultrum (47.5 billion) in 2025 as the Punatsangchhu II hydropower plant becomes fully operational.

With ongoing investments and economic stimulus measures, the GDP growth for 2024 is projected at a steady 6.3 percent. However, the finance ministry’s report cautions that such significant economic injections could exert pressure on market inflation and foreign exchange reserves, emphasizing the need for prudent management of money supply to prevent increased spending from driving up imports.

In nominal terms, the country’s GDP is expected to reach approximately 280 billion ngultrum (284 billion) in 2024, with an increase to nearly 325 billion ngultrum (324 billion) in 2025.

However, the country’s public debt is also expected to rise significantly in the coming years. The report estimates that total public debt will exceed 300 billion ngultrum (302 billion) in the 2023/2024 fiscal year, with projections indicating further increases to over 325 billion ngultrum in 2024/2025 and 390 billion ngultrum in subsequent years.

Despite the rising debt levels, the government maintains that the situation is manageable, noting that the debt remains within the thresholds set by the Public Debt Management Policy 2023. The policy is designed to ensure that borrowing does not exceed sustainable limits, safeguarding the country’s long-term economic stability.

By Kinley Yonten