| Project Name |
Fiscal Sustainability and Green Recovery Program (Subprogram 1) |
| Project Number |
56010-001 |
| Country / Economy |
Bhutan
|
| Project Status |
Active |
| Project Type / Modality of Assistance |
Loan
Technical Assistance
|
| Source of Funding / Amount |
| Loan 4229-BHU: Fiscal Sustainability and Green Recovery Program (Subprogram 1) |
|---|
| Concessional ordinary capital resources lending |
US$ 37.35
million
|
| TA 6971-BHU: Fiscal Sustainability and Green Recovery Program (Subprogram 1) |
|---|
| Technical Assistance Special Fund |
US$ 1.00
million
|
|
| Operational Priorities |
OP1: Addressing remaining poverty and reducing inequalities
OP2: Accelerating progress in gender equality
OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
OP5: Promoting rural development and food security
OP6: Strengthening governance and institutional capacity
|
| Sector / Subsector |
Public sector management /
Public expenditure and fiscal management |
| Gender |
Effective gender mainstreaming |
| Description |
The coronavirus disease (COVID-19) severely impacted economic activities and fiscal balance in Bhutan. Economic growth was decelerating even before the onset of the pandemic. In response to the crippling effects on lives, livelihoods, and healthcare, the government announced a series of fiscal and monetary relief measures to mitigate the impact on economy and households. The government has outlined its medium-term post-pandemic strategy for a sustained, inclusive, and green economic recovery in the upcoming 13th Five-Year Plan. The proposed program aims to support the government's post-pandemic economic vision by strengthening domestic resource mobilization (DRM), promoting private sector development, and supporting foundation for green economic recovery over the medium term. |
| Project Rationale and Linkage to Country/Regional Strategy |
Bhutan's gross domestic product (GDP) growth averaged 5.5% between FY2011 and FY2019. National poverty rate decreased from 23.0% in 2007 to 8.2% in 2017. Large state-led investment in hydropower sector sustained high-growth rate and impressive poverty reduction over the last 2 decades. The overall macroeconomic framework remains sound with high GDP growth rate, modest inflation rate, low fiscal deficit, macroprudential-focused monetary policy, and adequate foreign exchange reserves. The country's risk of debt distress is assessed as moderate. Bhutan is expected to graduate from United Nation's least developed country category in 2023 and it aspires to become a high-income country by 2030 with targeted per capita income of $12,375. It implies a $10 billion economy with an annual real GDP growth rate of 10.0% over the next 10 years, much higher than $2.5 billion economy in FY2021 and an average 5.4% growth rate between FY2011-FY2019. |
| Impact |
|
