Regions and Countries

	Table of Contents
p. 20 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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IX. Local Cost Financing

93. Although the Government has been able to meet almost all the recurrent expenditures from its domestic resources since the 1990s, the scope for further expansion of domestic revenues remains very limited due to the largely rural and scattered population, and the small industrial and commercial base. Given the expansion of basic services particularly health and education in the past few years, the requirement to sustain these services will impose additional burdens on local resources. Continued efforts are being undertaken to improve tax administration and collection as well as to broaden the tax base through promotion of private sector activities. Preparation for the introduction of a personal income tax is a good example. The Government is also gradually introducing user charges and fees for basic services including water and sewage as well as education. Nevertheless, donor funding of a substantial portion of local currency cost will still be necessary over the medium term. The local cost financing of Bank loans in Bhutan varies from less than 5 percent in the energy sector to more than 30 percent in the social infrastructure sector.

Back VIII. Economic and Sector Work Program	Country Assistance Plans - Bhutan