Washington DC, March 39, 2018 —The World Bank today approved a $30 million project to help Bhutan realize its development goals through improving fiscal management and supporting policies to create more job to increase prosperity.
Bhutan has made impressive progress in poverty reduction and economic growth over the past decade. At the same time, high levels of investment in the hydropower sector have increased pressures on the country’s fiscal balance and external accounts.
The First Fiscal Management and Private Sector Employment Opportunities (DPC1) is the first of three operations to support Bhutan’s current and future Five-Year Plans’ goals promoting green socio-economic development and achieving self-reliance. It strengthens policies to improve fiscal management and promotes private sector employment opportunities.
Bhutan’s record in reducing poverty and promoting shared prosperity is strong. A key challenge going forward is to put in place policies that will help the private sector to grow and create more and better jobs,” said Qimiao Fan, the World Bank’s Country Director for Bangladesh, Bhutan and Nepal. “Through thoughtful and well-executed policies that strengthen fiscal sustainability, increase access to credit, and improve the investment climate, Bhutan has a strong opportunity to realize its full development potential.”
The policy reforms supported by DPC1 are expected to mobilize domestic revenue, increase the number of cottage and small industries under the incubation centers, increase access to finance, expand the number of teachers that meet new teachings standards and reduce the energy consumption in terms of oil consumption.
“The Royal Government of Bhutan will be using the proposed operation 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.
The development policy series will be funded by credit from the International Development Association (IDA) – the World Bank’s concessionary lending arm with 0% interest rate and 40-year repayment period.
The Kingdom of Bhutan and the WBG have had a long-standing relationship, culminating in the establishment of the Country Office in 2011. Bhutan became the member of the World Bank (International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA)) in 1981 followed by its membership with the International Finance Corporation (IFC) in 2003 and the Multilateral Investment Guarantee Agency (MIGA) in 2014. The WBG’s partnership with Bhutan is fully aligned with the country’s development vision as envisioned in its Constitution, Bhutan Vision 2020, and the 11th five-year plan.