New ADB-Bhutan Partnership to Support Inclusive, Green Growth

MANILA, PHILIPPINES - A new country partnership strategy with Bhutan for 2014-2018 will seek to promote inclusive and environmentally sustainable growth in the landlocked South Asian kingdom and to boost cooperation with its neighbors.

“Bhutan has made enormous strides in reducing poverty and boosting economic growth and our goal is to work alongside the government to broaden the economy and ensure equal opportunities for everyone,” said Hun Kim, Director General of ADB’s South Asia Department.

Poverty in Bhutan has dropped from 23.2% in 2007 to 12.0% in 2012 but inequality remains high. Economic growth is expected to rebound to 6.0% in the fiscal year to end June 2014 but growth has been driven largely by the capital intensive hydropower sector. Youth unemployment is a growing concern for the country.

ADB’s priority sectors will be energy, finance, transport, and water and other urban infrastructure and services in support of the Bhutan government’s 11th five-year plan for 2013-2018 that targets self-reliance for all national development needs by 2020, inclusive social development, including cutting poverty to 5% or less, and growth that is carbon-neutral.

ADB’s energy projects will build on past successes and include mobilizing hydropower development through public-private partnerships, promoting other renewable energy sources, and expanding the transmission and distribution networks.

Transport projects will strengthen the road network especially in the remote southern east-west highway, improve connectivity with neighboring countries to promote cross-border trade, and strengthen other aspects of trade facilitation

ADB will continue to support the development of key urban infrastructure such as water and sewage services in regional growth centers to help meet municipal service requirements of their rapidly growing populations.

ADB will also strengthen macro-financial stability and further development of the financial sector to foster a business enabling environment.

Private sector development, improved governance, gender equity and links with other development partners will also be key.

Bhutan joined ADB in 1982 and as of the end of 2013, had received $337.46 million through 29 loans, $135.39 million for 9 grants, and $54.89 million for 129 technical assistance projects. Bhutan is eligible for concessional loans and grants from ADB’s concessional lending window and is estimated to receive $179.73 million from 2014 through 2017.