Thimphu, March 12, 2017 — The Royal Government of Bhutan and the World Bank have signed a $24 million credit that will help promote fiscal discipline, increase access to finance for enterprises, and improve the climate for business entry and investment in Bhutan.
Bhutan has made impressive progress in poverty reduction and economic growth over the past decade but high levels of investment in the hydropower sector have increased pressures on the country’s fiscal balance and external accounts.
“Together with other programs, this policy credit is effectively supporting the Royal Government’s reform momentum,” said Yoichiro Ishihara, the World Bank’s Resident Representative for Bhutan. “With this policy credit, Bhutan will be better equipped to enact policies to foster private sector development and create more employment opportunities, especially for its youth.”
The Second Fiscal Sustainability and Investment Climate Development Policy Credit (DPC2) was signed by Namgay Dorji, the Royal Government of Bhutan’s Finance Minister, on behalf of the Royal Government of Bhutan, and Yoichiro Ishihara, Resident Representative for Bhutan, on behalf of the World Bank.
This credit is the second of two World Bank-supported initiatives to support Bhutan’s Eleventh Five-Year Plan (11th FYP) (2013–2018) goals of promoting green socio-economic development and achieving self-reliance. DPC2 was approved by the Board of Executive Directors of the World Bank on December 21, 2016.
“The Royal Government of Bhutan has used the policy credit to support institutional strengthening measures in some key areas, building on the momentum and lessons learnt from the past budget support operations to accelerate development in Bhutan,” said Namgay Dorji, the Royal Government of Bhutan’s Finance Minister. “Improving fiscal sustainability, access to finance and investment climate are critical to achieve the goals of the 11th Five Year Plan.”
The development policy series will be funded by credit from the International Development Association (IDA), the World Bank’s grant and low-interest credit arm. The credit has a maturity of 25 years, including a 5-year grace period.