World Bank Launches New Partnership Strategy with Bhutan

March 21, 2011

THIMPHU, March 21, 2011 - On the occasion of her second official visit to Bhutan as Vice President of the South Asia Region, Isabel Guerrero today launched the new joint World Bank-International Finance Corporation Country Partnership Strategy (CPS) along with the Chief Guest, Hon’b Lyonpo Wangdi Norbu, Minister of Finance, Royal Government of Bhutan.
The CPS, which was discussed by the Board of Executive Directors of the World Bank on November 30, 2010, takes a medium- to long-term vision of Bhutan as a middle-income country. It is aligned with Bhutan’s unique development philosophy of Gross National Happiness (GNH) and prioritizes Bhutan’s development goals as described in its Poverty Reductions Strategy (PRSP), which is underpinned by the Royal Government of Bhutan’s Tenth Five-Year Plan. The funding total from the International Development Association (IDA), the World Bank’s concessionary lending arm, over the term of the CPS (FY2011-14) is expected to be approximately US$78 million.
Specifically, the new CPS will support the Royal Government’s efforts to diversify the economy and generate employment through private sector growth and provide services to populations in rural and expanding urban areas that lack them while addressing emerging social challenges. It is based on lessons learned from the previous Country Partnership Strategy and through feedback gained during broad-based consultations with the Royal Government, civil society, private sector, and other development partners.
Bhutan has made great progress in improving the living standards of its population over the past 30 years,” said Guerrero. “Today, Bhutan faces a new set of challenges as it experiences a rapid transition from a mostly rural, agrarian society to one characterized by increasing levels of education, shifting expectations of the people, and a larger number of young people who are looking for more opportunities.”
Guerrero added: “This Country Partnership Strategy aims to address these challenges by working in partnership with the Royal Government, relying on the strong relationship the World Bank Group has built over many years.”
In conjunction with the launch of the CPS, Guerrero and officials of the Royal Government of Bhutan signed the lending documents for the First Development Policy Credit (DPC-1) for US$24.75 million and an additional grant for US$5 million to the ongoing Decentralized Rural Development Project (DRDP).
DPC-1, with funding from IDA will strengthen institutions in order to help make government more effective through sound public financial management and procurement and strong public administration. In addition, it will assist in private sector development by improving policies and creating productive employment opportunities. The project will increase access to infrastructure (roads, urban, ICT) in an environmentally sustainable manner.
The grant for DRDP is being made available from the Global Food Crisis Response Program Multi-Donor Food Price Crisis Response Trust Fund. It will help finance the costs associated with the impact of the continuing high prices associated with essential food commodities.
Including these newly signed projects, the Bank has nine ongoing operations in Bhutan with a total commitment value of US$114.3 million.
The Bank team also used this opportunity to launch the Public Expenditure and Financial Accountability (PEFA) report. This assessment of public financial management in Bhutan was conducted in the last half of 2009 by a core team from the Royal Government along with a team from the World Bank. The results from this assessment will help provide a roadmap for improvements that can usefully serve as the baseline against which future public financial management performance can be monitored.
The CPS and PEFA launches and the two project signings were conducted on the occasion of the opening of the new World Bank and IFC office in Bhutan.

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