WASHINGTON DC, August 23, 2023 — The World Bank approved a $50 million financing to help the Royal Government of Bhutan strengthen policies for a more resilient and sustainable economy that can better withstand future shocks and ensure green growth.
The Second Green and Resilient Growth Development Policy Credit—the last in a series of two credits—will help strengthen private sector-led growth through fiscal sustainability and enhanced access to finance and markets, as well as foster green growth focused on renewable natural resources.
“Overlapping global crises have a significant impact on Bhutan’s economy,” said Abdoulaye Seck, World Bank Country Director for Bangladesh and Bhutan. “This financing will help the Royal Government of Bhutan strengthen its policies to pave the way for sustainable recovery and build a green, resilient, inclusive economy.”
The program will help improve monitoring of public debt and fiscal risks from state-owned enterprises. It will help boost the digital economy and e-trade by facilitating domestic and international digital payment transactions, including for small businesses and individuals, and reduce trade costs to facilitate cross-border trade and access to international markets. To improve access to international finance for firms, the Ministry of Finance approved the 2023 External Commercial Borrowing guidelines.
“A vibrant private sector and diversified economy will help Bhutan create jobs and sustainable use of natural resources will be crucial to build resilience and ensure green growth,” said Adama Coulibaly, World Bank Resident Representative for Bhutan. “The program will help Bhutan seize new opportunities, including boosting e-commerce and leveraging its renewable natural resources and carbon-negative status to create jobs and protect its economy from future shocks.”
The country’s natural resources, including forests and agriculture, are highly vulnerable to climate change. The program will help the country ensure a commercially sustainable, climate-smart, and resilient agricultural sector along with food and nutrition security. The program further supports the Biodiversity Act and Rules to promote the conservation and sustainable use of Bhutan’s biodiversity and enhance rural livelihoods. To monetize emission offsets from hydropower and other renewable natural resources, the Royal Government of Bhutan has adopted Carbon Market Rules.
“The financing will support Bhutan’s access to carbon markets to generate carbon credits from hydropower and other natural resources that can be channeled toward additional climate investments, thereby contributing to additional climate mitigation and adaptation in the country.” said Melanie Trost, World Bank Task Team Leader of the project.