Projects

Project Information

Health Care Reform Program

Borrower

Kingdom of Bhutan

Date of Approval

21 September 2000

Objectives and Scope

The principal objective of the Program is to provide support for the Government's comprehensive reform agenda for strengthening the health sector. Its scope includes five policy priority areas: (i) develop sustainable financing for the health sector; (ii) strengthen capacity in health sector management; (iii) strengthen quality assurance and public health regulatory functions; (iv) adjust imbalances in human resources for health; and (v) strengthen PHC through selective PHC interventions and expansion of priority services.

Project Description

The Program encompasses major policy measures that will collectively promote a more enabling environment for the Government to pursue its ongoing and future health programs. The Program was designed in consultation with other major aid agencies and its implementation is expected to enhance the effectiveness of their various health programs. Sustainability of health sector financing is a key feature of the Program as other sectors are bound to claim an increasing share of the Government budget as the economy expands and the population continues to grow at a rapid pace. It is inevitable that the Government must explore innovative and sustainable ways of financing a potential resource gap in the health sector and help reduce its dependence on external assistance. In addition, the Government must protect and strengthen its core health program, which specifically addresses PHC needs of vulnerable groups, particularly women and children. A key feature of the Program is the establishment of the Bhutan Health Trust Fund (BHTF) to help ensure long-term sustainable financing of vaccines and essential drugs. Thus, by incorporating policy initiatives to ensure a more focused approach in addressing equity aspects and targeting specific vulnerable groups, the Program will put into practice the forthcoming partnership agreement for poverty reduction between the Government and the Asian Development Bank (ADB).

Loan Amount and Terms

A loan of $10.0 million is proposed from ADB's Special Funds resources. The loan will have a repayment period of 24 years, including a grace period of 8 years. An interest rate of 1 percent will be charged per annum during the grace period and 1.5 percent per annum thereafter, and other terms and conditions in accordance with the Loan Agreement.

Program Period and Tranching

The Program will cover five years (FY2001-FY2005). The proposed loan is to be disbursed in two tranches. The first tranche of $5.0 million will be made available upon loan effectiveness, while the second tranche, also for $5.0 million, will be made available following the Government's compliance with the conditions set for its release. The Program will be completed by June 2005.

Executing Agency

Ministry of Health and Education (MOHE)

Procurement

The loan will finance the full foreign exchange costs (excluding local duties and taxes) of imports procured in and from ADB's member countries, other than those specified in the list of ineligible items and those items financed by other multilateral and bilateral official sources. Procurement of eligible items under the loan will be based on normal commercial practices for procurement by the private sector, or standard Government procurement procedures acceptable to ADB for procurement by the public sector. In the case of goods commonly traded on international commodity markets, procurement will be undertaken in accordance with procedures appropriate to the trade and acceptable to ADB.

Counterpart Funds

The proceeds of the proposed loan will help the Government meet the capital funding requirements of the BHTF. Any local currency proceeds generated by the loan will be used to support the implementation of specific policy initiatives of the Program and to meet other expenditures in the health sector.