Countries and Regions

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p. 3 of 4 BACK | NEXT I. Current Development Trends and Issues II. Implementation of the Country Strategy and Program III. Portfolio Management Issues IV. Country Performance and Assistance Levels

Country Strategy and Program Update 2003-2005: Bhutan

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III. Portfolio Managemente Issues

A. Portfolio Performance

29. Since ADB started lending to Bhutan in 1983, 18 loans have been approved for a total of $101.8 million. As of end-2001, there are 7 ongoing loans amounted to $48 million (Appendix 1, Table A1.6), of which $32 million or 66.7% was undisbursed; 12 ongoing TAs—2 project preparatory, 10 advisory—support the investment portfolio and pipeline.

30. Due to the small number of loans in the portfolio, the total size of contract awards and disbursements each year tends to fluctuate considerably depending on the maturity profile of individual loans. About 83% of projected contract awards were achieved in 2001. The target of disbursements for 2001 amounted to $8.1 million, and only $6.7 million had been realized as of end-2001. Major shortfalls came from three projects: rural electrification, development finance credit, and second–tranche release of policy loans. However, the disbursement ratio of 16.9, compared to the ADB-wide average for Asian Development Fund (ADF) countries of 18.8 in 2001, needs to be interpreted in the context of the maturity profile of individual loans in the portfolio. The action plan agreed upon during the 2000 country portfolio review mission was undertaken.

31. Compliance with loan covenants and assurances on social and environmental measures have been generally satisfactory. All audited financial statements were submitted on time. The Government has provided adequate counterpart funds for all projects as agreed upon during project formulation. Adequate funds for operations and maintenance were provided after project completion. As evidence of its commitment and ownership, the Government will continue to finance more than 20% of total project cost.

B. Performance Monitoring and Evaluation

32. There has been no recent work on performance evaluation of ADB's projects. As of end-2001, 6 of the 7 ongoing loans were rated satisfactory or highly satisfactory in development objective and implementation progress; the only exception was the Financial Sector Intermediation Facility–Policy Loan,¹⁰ whose implementation progress was rated partly satisfactory. The loan's second tranche of $1.5 million was overdue for release since December 1999. In the case of the Health Care Reform Program,¹¹ the second tranche of $5 million was overdue for release since November 2001.

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