Macro modeling in Bhutan Rinzin Dorji, Ministry of Finance Lekey Wangdi, GNHC

Macro modeling in
Bhutan
Rinzin Dorji, Ministry of Finance
Lekey Wangdi, GNHC
Karma Lhendup, NSB
Workshop on Macroeconomic Modeling in Asia and the Pacific
8‐11 December, 2015
Bangkok, Thailand
Bhutan
Area – 38,394 sq.km
Population – 757,042
GDP – $ 1.9 bn (2014)
GDP per capita - $ 2,591 (2014)
Unemployment – 2.6% (2014)
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Background
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• Result of reforms in Good Governance (2005).
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• Adopted as per the Public Finance Act 2007.
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• A necessary step for implementing Multi-year
Rolling Budgets (MYRBs).
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• Links policies and plans (i.e. Five Year Plans,
Vision 2020, and MDGs) to the annual budgets.
• 2012 Indian Rupee Shortage
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Set Macro-Fiscal Targets;
Budget Ceiling; and, Resource
targets in the Medium Term/FYP
Projections of macroeconomic
and fiscal aggregates in the
medium term
Institutional Framework
Macroeconomic Framework Coordination Committee
(MFCC)
: Policy level coordination body
Macroeconomic Framework Coordination Technical Committee
(MFCTC)
: Agency-level technical analysis body
Policy &
Planning
Division,
Ministry of
Finance
* Compilation
and/or Fiscal
Projections *
DHPS &
DoT, MEA
RMA
Electricity
& Trade
BoP &
MB
NSB
GNHC
GDP
Grants
DRC,
MoF
DPA,
MoF
DNB,
MoF
TCB
Revenue
Debt
Expenditure
Tourism
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Process (File Linkage)
Debt File
-Disbursement Flow
- Debt payment
schedules
BoP File
- Hydropower
related import &
export.
- Disbursement flow
debt & debt
payment.
Electricity File
(e.g. Puna I Project )
Revenue File
- Interest Payment.
- Revenue Flow Proj.
GDP file
- Hydro. related
Construction, income,
mining etc
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Methodologies
• Microsoft excel based frameworks
• Basic method of forecasting
– Trend analysis
– Moving averages
• GDP: – By economic sector at 12 broad group levels
• Government’s economic polices
• Other indicators like hydropower, tourist arrivals, adhoc policy changes
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Outcomes
– Medium term projections of economic indicators
– Policy directives
– Resource envelope
– Improved coordination (fiscal and monetary)
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Way forward:
– Advanced methodology
– Econometrics
– More advanced platform/software
– Robust modeling
– New features like determining potential output gap
– More resources in terms of finance and capacity building
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Thank You
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