𝐉𝐮𝐧𝐞 𝟑𝟎, 𝟐𝟎𝟐𝟏
The COVID-19 pandemic continues to pose serious risks to the health and livelihood of our people. The containment measures and lockdowns have adversely affected everyday life and business, creating economic hardship. In order to mitigate the impact, build resilience and give confidence and security to our people, His Majesty The King commanded at the very start of the pandemic that the State must extend substantive, timely and inclusive support to affected citizens and communities.
The Druk Gyalpo’s Relief Kidu (DGRK) in the form of Income Support and Loan Interest Payment Support were provided for the last twelve months (April 2020 to March 2021). It is being continued for another fifteen months until June 2022.
While the DGRK has been the most effective form of intervention to the general public, conventional forms of monetary measures have also complemented the Royal Kidu in shielding the individual borrowers and business entities from the consequences of the prolonged pandemic. The Phase II monetary and fiscal measures have been in force since July 1, 2020 and will come to an end by June 30, 2021.
As there is no sign of the pandemic or its consequences abating anytime soon, some key monetary and fiscal measures shall be continued as follows:
𝐈. 𝐌𝐨𝐧𝐞𝐭𝐚𝐫𝐲 𝐌𝐞𝐚𝐬𝐮𝐫𝐞𝐬, 𝐉𝐮𝐥𝐲 𝟐𝟎𝟐𝟏 – 𝐉𝐮𝐧𝐞 𝟐𝟎𝟐𝟐
(a) Continuation of deferment of loan repayments
Considering the continued impact and uncertainties posed by the COVID-19 pandemic, the deferment of loan repayment shall be continued as follows:
(i) All loans sanctioned as of June 30, 2020 shall be eligible for the deferment of loan repayment for another one year until June, 2022.
(ii) Notwithstanding the above provision, the Financial Service Providers (FSPs) may negotiate with the borrowers for revival/rehabilitation or foreclosure of non-performing loans.
(iii) In order to ease the burden of loan repayment on the borrowers, the FSPs may extend the loan tenure by the deferred period or by up to five years depending on the repayment capacity of the borrowers.
(b) Incentive for regular repayments during the deferment period
As the provision of interest rate rebate proved effective in motivating the borrowers to make regular repayment, the interest rate rebate for loans during the deferment period shall be continued as below:
The FSPs shall continue to provide one percent interest rate reduction (rebate) on term loans for another one year from July 2021 to June 2022 to the borrowers who service their loan installments (after adjustment of 50 percent interest payment support) during the deferment period.
(c) Non-capitalization of interest accrued during the deferment period
The FSPs shall not capitalize the interest accrued during the deferment period. The total accumulated interest from April 2020 to June 2022 shall be payable in equal installments after the end of the deferment period.
(d) Treatment of Bridging Loans/ Soft Term Loans sanctioned under Phase II Monetary Measures
(i) The FSPs shall provide gestation for another one year until June 2022 for the Bridging Loans or Soft Term Loans granted to the business entities under the Phase II Monetary Measures.
(ii) The FSPs shall not capitalize the interest accrued during the gestation period. The total accumulated interest from April 2020 to June 2022 shall be payable in equal installments after the end of the gestation period.
(e) Loan-to-Value (LTV) limit and Land valuation
(i) In case of project financing/ business loans, the FSPs may provide loans up to the LTV limit of 100 percent of the collateral value. However, the maximum debt-to-equity financing limit shall continue to apply. The LTV limits for housing loans and vehicle loans shall remain unchanged.
(ii) As proposed by Financial Institutions Association of Bhutan (FIAB), the FSPs may adopt uniform land rates for the valuation purposes as per the agreed modality among the FSPs.
𝘕𝘰𝘵𝘦: 𝘛𝘩𝘦 𝘙𝘔𝘈 𝘸𝘪𝘭𝘭 𝘪𝘴𝘴𝘶𝘦 𝘢 𝘴𝘦𝘱𝘢𝘳𝘢𝘵𝘦 𝘚𝘵𝘢𝘯𝘥𝘢𝘳𝘥 𝘖𝘱𝘦𝘳𝘢𝘵𝘪𝘯𝘨 𝘗𝘳𝘰𝘤𝘦𝘥𝘶𝘳𝘦𝘴 𝘧𝘰𝘳 𝘵𝘩𝘦 𝘴𝘮𝘰𝘰𝘵𝘩 𝘪𝘮𝘱𝘭𝘦𝘮𝘦𝘯𝘵𝘢𝘵𝘪𝘰𝘯 𝘰𝘧 𝘵𝘩𝘦 𝘗𝘩𝘢𝘴𝘦 𝘐𝘐𝘐 𝘔𝘰𝘯𝘦𝘵𝘢𝘳𝘺 𝘔𝘦𝘢𝘴𝘶𝘳𝘦𝘴.
𝐈𝐈. 𝐅𝐢𝐬𝐜𝐚𝐥 𝐌𝐞𝐚𝐬𝐮𝐫𝐞𝐬 (𝐉𝐮𝐥-𝐃𝐞𝐜 𝟐𝟎𝟐𝟏)
In order to ensure sustained economic stability and support resilient recovery, the Government has allocated one of the highest capital budget at 33 percent of the 12 FYP capital outlay for the Fiscal year 2021-22. In addition, following fiscal measures will be extended during the period July to December, 2021.
1. CIT/BIT deferral: Income tax deferral for income year 2019 for tourism and allied sectors including entertainment sector shall be considered on a case by case basis upon application for the period July to December, 2021. In order to enable business entities to settle CIT & BIT outstanding, installment payment of incomes tax shall be extended to the business entities.
2. Electricity charges for industries: Industries shall continue to pay demand charges based on actual consumption for the period July to December, 2021. Payment of electricity charge for industries shall be considered for deferral on a case by case basis upon application. In order to ensure that the deferrals are targeted towards industries actually impacted by the current situation, the MoEA and MoF shall verify the eligibility criteria during the extended period.
3. Electricity & WiFi charges for Hotels used as quarantine facility: WiFi and electricity shall be provided free of charges to the hotels used as quarantine facility up to December 2021.
4. Waiver of payment of monthly rent and other charges: As the tourism and the aviation sectors continue to be severely impacted, waiver of payment of monthly rent and other charges for tourism related business entities leasing government property shall be continued up to December 2021.
5. Revised Customs Duty: The rationalization and simplification of customs duty has been passed by the 4th session of the 3rd Parliament as ‘Customs Duty Act 2021’. The implementation of the revised customs duty is expected to stimulate economic activities, promote export and contain inflation.
6. Fiscal Incentives: The existing fiscal incentives expires by December 31, 2021. In this regard, the Government will review the existing fiscal incentives and propose revision of incentives to ensure business continuity and stability besides supporting a resilient economic recovery.
The effectiveness of the fiscal measures will be reviewed by December 2021 and extended based on the situation of the pandemic.