The Royal Government of Bhutan and the World Bank today signed a $40 million budget support loan agreement to help Bhutan undertake a comprehensive reform program to enhance its fiscal management and realize its development goals. The agreement was signed by Finance Minister Lyonpo Namgay Tshering and Tenzin Lhaden, Acting Country Representative, on behalf of the World Bank.
“The reforms supported under this Development Policy Credit will allow the Royal Government of Bhutan to strengthen its fiscal and economic policy in key areas, including domestic resource mobilization, public financial management, and the implementation of countercyclical fiscal policy,” said Bhutan’s Finance Minister Lyonpo Namgay Tshering. “This operation will also support the government in responding to the evolving COVID-19 pandemic and reducing the impacts of COVID-19 in the economy.”
The reform program supported by the operation is structured under two pillars and focuses on strengthening fiscal management and enhancing private sector employment opportunities in Bhutan. The first pillar focuses on stabilizing and enhancing the sustainability of fiscal policy. The second pillar focuses on payment system stability, access to finance, competition policy, human capital and a strengthened policy environment for foreign investment. The operation also supports the government’s efforts to ensure a sustainable economic growth model and equality of opportunities.
“Bhutan has achieved remarkable poverty reduction in recent years. At the same time, the global COVID-19 pandemic poses substantial human and economic risks to the country,” said Mercy Tembon, the World Bank’s Country Director for Bangladesh and Bhutan. “The operation will support Bhutan to address the economic impact of the pandemic, continue its economic growth trajectory, and achieve its long-term development goals.”
The development policy series is funded by a credit from the International Development Association (IDA), which is the World Bank’s concessionary lending arm.