ADB Expands Support for Bhutan Fiscal Management and Green Growth

MANILA, PHILIPPINES (20 June 2024) — The Asian Development Bank (ADB) has approved a $40 million policy-based loan to help Bhutan further strengthen its public financial management and green growth.

The concessional loan builds on the Fiscal Sustainability and Green Recovery Program (Subprogram 1), approved by ADB in October 2022, to support policy reforms in expanding domestic resource mobilization, promoting private sector development, and introducing climate change adaptation and mitigation measures.

“ADB’s financing is supporting the implementation of the country’s 13th 5-year plan and its aspiration to become a high-income country by 2034,” said ADB Public Management Economist Chandan Sapkota. “The reforms under this second subprogram will strengthen the country’s revenue streams, improve the business environment, and incorporate gender concerns in its national adaptation plan to enhance fiscal sustainability and promote sustainable economic growth.”

Domestic resource mobilization will be strengthened by improving customs and property tax administration, implementation of a medium-term revenue strategy, and enhancing the governance and management of state-owned enterprises. These will significantly reduce the gap between current expenditures and tax revenues. The rollout of an integrated financial management information system will improve overall public financial management.

The program will help promote private sector development through the recently established Economic Development Board, approval and implementation of the country’s Trade and Industry Rules 2023, and the Public–Private Partnership Policy 2024. It will support the streamlining, modernization, and digitization of investment, business processes, and trade services to enhance the ease of doing business in the country. 

To foster sustainable economic growth, the program will support reforms that will guide GESI-responsive, long-term adaptation and mitigation measures on climate change in line with the National Adaptation Plan and the nationally determined contribution. It will also assist Bhutan’s participation in the global carbon market and in promoting the diversification of its energy sources.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.