Investments in GovTech is allowing Bhutan to reap benefits during COVID-19

Bhutan is proving that continued investments in GovTech solutions and reforms help build a strong resilient foundation to shocks like the coronavirus. 

The country follows the unique concept of Gross National Happiness (GNH), which takes a holistic view and approach towards development, to measure prosperity. Under GNH, good governance is a key pillar and Bhutan scores higher on all six World Governance Indicators compared to other countries in South Asia  and has shown continued improvements in these indicators over the last decade. 

A critical component of this success is the steady progress in strengthening PFM policies and systems. The Government has actively taken steps to integrate its financial management information systems (FMIS) with other government systems for greater efficiency. 

When the Government of Bhutan launched the country-wide electronic payments functionality through their electronic Public Expenditure Management System (e-PEMS) as part of the IFMIS development in 2019, they would learn in hindsight that this investment would prove immensely useful a year later as the world grapples with the COVID-19 pandemic. The e-PEMS facilitated smooth delivery of payments to vendors and civil servants  and played a significant role in transferring relief payments to beneficiaries across the country, the latter under a scheme titled Druk Gyalpo’s Relief Kidu which means the Dragon King’s welfare, self-help and assistance. 

Druk Gyalpo’s Relief Kidu is one of the most important measures undertaken under by the Royal Government of Bhutan to provide immediate relief to distressed individuals whose livelihoods have been impacted by the pandemic. Relief is not only limited to cash grants but also covers defraying the cost of living expenses such as shelter, food and medicine. Above all, the objective is to “boost morale and provide assurance of hope despite current hardships”.

Bhumika Monger of Lhamoidzingkha said, “While the future ahead is still bleak in terms of getting a job, I felt reassured with the relief kidu. One thing has become clear to me that no matter how worse the situation turns out to be, I can always count on His Majesty’s compassion.” 

The e-PEMS became the frontline tool that enabled disbursement of cash grants from the Kidu relief fund of almost USD 2.15 million to 14,634 recipients as the first installment in April 2020. The disbursement through e-PEMS has greatly facilitated prompt electronic payments to the beneficiaries directly into their bank accounts. 

By making this process entirely electronic, it also eliminated the need for physical contact helping contain the spread of the virus. Various e-government systems have been integrated with each another thus enabling a more cohesive government service delivery system platform eliminating the need for physical presence. These systems have also facilitated implementing Work from Home (WfH) directives from the Royal Civil Service Commission (RCSC) and making the social and physical distancing requirements much smoother.

As important as technological updates are, they need to be backed by the proper analog components such as legal reforms as well.  The Public Finance Act of 2007 in Bhutan provided a legal framework that would allow the Ministry of Finance to use public funds for emergency expenditures. This framework was then submitted to Parliament which passed the Supplementary Appropriation Bill.  The Ministry of Finance notified the procedures and how activities related to the pandemic would be implemented to ensure proper budgeting, timely disbursement of funds, proper accounting, and finally, audits of the COVID-19 related expenditures.  This is an example where strong systems and good governance converge. 

The citizens of Bhutan have fared better than others around the world during the crisis due to a combination of swift government actions, citizen participation and investments in GovTech that are paying off. 

“Whatever I do, will not be able to repay the debt I owe my King, and the country for the free education, healthcare and now the relief kidu during this most difficult time of my life,” said Tashi, 55, from Pema Gatshel. “Every day, I pray for the good health and long life our King for all that our King has done and continues to do.Because of him, every night I can look forward to the next morning.”

Bhutan, however, has not yet seen the end of the situation yet. The government has taken further prevention and preparedness measures with an emphasis on critical medical services and advisories. Schools and public space closures, work from home and social distancing measures continue to be put in place.  During such an unprecedented time, the public service delivery is critical, and it is clear that having an efficient and effective PFM system is all the more important. e-PEMS and other PFM reforms in Bhutan are being supported by the Public Financial Management-Multi-Donor Fund Program which is administered by The World Bank and funded by Austrian Development Agency and European Union. 

As demonstrated in the above case in Bhutan, strengthened PFM systems helped the country to better manage the challenges created by the pandemic.