Regions and Countries

	Table of Contents
p. 18 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Bhutan

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VII. ADB’s Operational Program

A. The Proposed Program

88. The lending program for 2001-2003 will be maintained at an average annual level of up to $10 million per year, taking into account Bhutan's absorptive capacity. Average one loan per year is envisaged during the program period. ADB's future operations in Bhutan will be linked to country performance particularly in macroeconomic management, efforts for poverty reduction, improvement in governance, and portfolio management. In addition, Government's contribution would need to finance more than 20 percent of total project cost as evidence of its commitment and ownership. ADB investments will be limited to a relatively narrow range of sectors consistent with the new COS. The lending and TA program for 1999-2003 is presented in Table 1 (see Appendix 4, page 1 for details).

89. ADB will assist the Government in making progress towards a policy and institutional environment conducive to the generation and sustainability of the desired development impact of government and ADB programs. ADB's TA operations will focus on: (i) strengthening institutional capacity, policy formulation capability and the legislative and regulatory environment; and (ii) directly supporting lending operations, either through advisory and operational or project preparatory activities. Through regional technical assistance, ADB will also seek to play a proactive role in subregional economic cooperation, and to stand ready to facilitate research and policy dialogue in potential areas of mutual interest.

90. The Government has requested ADB to consider raising the current level which is inadequate to fully meet the crucial need for institutional development and capacity building to support private sector development and to improve the effectiveness of development administration. The implementation of the new COS with the overarching objective of poverty reduction also requires necessary institutional development and capacity building for effectively plan, formulate, monitor, and evaluate poverty interventions. As such, the annual indicative planning figure (IPF) for ADB's current TA program in Bhutan is raised by 10 percent to $2.2 million. Institutional capacity to produce timely and reliable data for assessing, monitoring, and evaluating the progress and achievement of poverty reduction will need to be developed in order to fully implement the new COS as well as the proposed partnership agreement. The details of TA program for 2001-2003 is presented in Appendix 4, page 2.

91. One to two loans per year are envisaged during the program period except for 2002, when no firm loans are proposed. TA grants total $6.6 million for 15 TA projects, of which three are for PPTAs and 12 ADTAs. Three projects in the lending pipeline 2001-2003 include one other development interventions and two poverty interventions. In volume terms, more than 55 percent of ADB lending for the program period will be classified as poverty interventions. This exceeds the 40 percent requirement as indicated in the implementation of ADB's poverty reduction strategy. In terms of sectoral distribution, there are two projects in social infrastructure and one in transport, the road subsector (see Appendix 5).

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