Bhutan : Financial Market Development Program (Subprogram 1)
The proposed Financial Market Development Program will support the Government of Bhutan in adopting reforms to enhance the efficiency, stability, and inclusiveness of the finance sector. The proposed program will consist of two subprograms designed to provide continuous support for the government's finance sector reforms. The program outputs include (i) nonbank financial system developed; (ii) stability and integrity of the financial system strengthened; and (iii) financial inclusion promoted.
Project Details
-
Project Officer
Tshering, Nidup
South Asia Department
Request for information -
Country/Economy
Bhutan -
Sector
- Finance
| Project Name | Financial Market Development Program (Subprogram 1) | ||||||||
| Project Number | 51252-003 | ||||||||
| Country / Economy | Bhutan |
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| Project Status | Closed | ||||||||
| Project Type / Modality of Assistance | Loan Technical Assistance |
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| Source of Funding / Amount |
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| Operational Priorities | OP1: Addressing remaining poverty and reducing inequalities OP2: Accelerating progress in gender equality OP6: Strengthening governance and institutional capacity |
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| Sector / Subsector | Finance / Central banking systems - Housing finance - Money and capital markets |
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| Gender | Some gender elements | ||||||||
| Description | The proposed Financial Market Development Program will support the Government of Bhutan in adopting reforms to enhance the efficiency, stability, and inclusiveness of the finance sector. The proposed program will consist of two subprograms designed to provide continuous support for the government's finance sector reforms. The program outputs include (i) nonbank financial system developed; (ii) stability and integrity of the financial system strengthened; and (iii) financial inclusion promoted. | ||||||||
| Project Rationale and Linkage to Country/Regional Strategy | While Bhutan''s economy has been growing an impressive record since the late 1980s, the economic performance was mainly driven by public-led hydropower development. To promote broad-based economic growth, the program will support the government in developing a finance sector that offers strong financial intermediation that enables resource mobilization for productive investments. To do so, the program will (i) support reforms that will mobilize long-term funds through nonbank segment; (ii) strengthen the regulatory and supervisory framework to better manage risks; and (iii) support the government to implement the strategies aiming to promote better access to finance by the disadvantaged groups. | ||||||||
| Impact | The program will support the government with institutional reforms and will build the technical capacity of regulatory and financial institutions. This will help improve the efficiency of financial intermediation, which will encourage private sector investment and improve the economic welfare of Bhutanese people. |
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| Project Outcome | |
|---|---|
| Description of Outcome | Stability, efficiency, and inclusiveness of the finance sector enhanced |
| Progress Toward Outcome | The principal objective of the Program is to enhance stability, efficiency and inclusiveness of the financial sector of the Borrower and the scope includes (a) developing non financial system (b) strengthening stability and integrity of the financial system and (c) promoting financial inclusion. Within the expected completion timeline i.e November 2019. The government successfully fulfilled 9 policy conditions as per the RRP of the loan document. The loan amount of $30m was disbursed in December 2019 and financially closed on 31 May 2020. The piggy back TA of $500,000 is still under the implementation. |
| Implementation Progress | |
| Description of Project Outputs | Nonbank financial system developed Stability and integrity of the financial system strengthened Financial inclusion promoted |
| Status of Implementation Progress (Outputs, Activities, and Issues) | Ministry of finance approved a strategy for the issuance of long-term government bonds including the implementation plan. Cabinet approved a new National housing Policy which aims to expand safe and affordable housing through fiscal incentives to ease high rental burden and promote home ownership for disadvantaged groupsRMA board issued a directive requiring assessment of the solvency of issuance companies based on compliance with prudential regulations in addition to risk basked solvency margin. Parliament approved anti-money laundering and combating the financing of terrorism and RMA adopted institutional risk profile and risk assessment templates for assessing commercial banks. RMA issued a directive on loan provisioning and impairment of loans in line with the Bhutan Accounting Standards. RMA also issued directive on implementing cyber security framework for business continuity plan. RMA approved revised prudential regulations to incorporate International Financial Reporting Standards 9 on impairment of loans. RMA approved National Financial Literacy Strategy (2018-2023).As part of financial literacy program, trainings on Expert Workshop to Develop Financial Literacy Resource Pack and Training of Trainers for Capacity Development of Cooperatives |
| Geographical Location | Nation-wide |
| Safeguard Categories | |
|---|---|
| Environment | C |
| Involuntary Resettlement | C |
| Indigenous Peoples | C |
| Summary of Environmental and Social Aspects | |
|---|---|
| Environmental Aspects | |
| Involuntary Resettlement | |
| Indigenous Peoples | |
| Stakeholder Communication, Participation, and Consultation | |
| During Project Design | |
| During Project Implementation | |
| Business Opportunities | |
|---|---|
| Consulting Services | The TA will require a total of 12 person-months of international consultancy services and 14 person-months of national consultancy services. |
| Procurement | not applicable |
| Responsible ADB Officer | Tshering, Nidup |
| Responsible ADB Department | South Asia Department |
| Responsible ADB Division | BHRM |
| Executing Agencies |
Ministry of Finance |
| Timetable | |
|---|---|
| Concept Clearance | 11 Jul 2019 |
| Fact Finding | 01 Jul 2019 to 05 Jul 2019 |
| MRM | 20 Sep 2019 |
| Approval | 26 Nov 2019 |
| Last Review Mission | - |
| Last PDS Update | 13 Dec 2021 |
Loan 3863-BHU
| Milestones | |||||
|---|---|---|---|---|---|
| Approval | Signing Date | Effectivity Date | Closing | ||
| Original | Revised | Actual | |||
| 26 Nov 2019 | 28 Nov 2019 | 10 Dec 2019 | 31 May 2020 | - | 31 May 2020 |
| Financing Plan | Loan Utilization | ||||
|---|---|---|---|---|---|
| Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
| Project Cost | 30.00 | Cumulative Contract Awards | |||
| ADB | 30.00 | 09 Dec 2022 | 30.00 | 0.00 | 100% |
| Counterpart | 0.00 | Cumulative Disbursements | |||
| Cofinancing | 0.00 | 09 Dec 2022 | 30.00 | 0.00 | 100% |
TA 9872-BHU
| Milestones | |||||
|---|---|---|---|---|---|
| Approval | Signing Date | Effectivity Date | Closing | ||
| Original | Revised | Actual | |||
| 26 Nov 2019 | 05 Dec 2019 | 05 Dec 2019 | 31 Mar 2022 | 31 Dec 2022 | 24 Oct 2022 |
| Financing Plan/TA Utilization | Cumulative Disbursements | |||||||
|---|---|---|---|---|---|---|---|---|
| ADB | Cofinancing | Counterpart | Total | Date | Amount | |||
| Gov | Beneficiaries | Project Sponsor | Others | |||||
| 500,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 500,000.00 | 09 Dec 2022 | 366,462.56 |
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
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ADB Program Supports Financial Inclusion, Private Sector Development in Bhutan
ADB has approved a $30 million policy-based loan for the first subprogram of the Financial Market Development Program to support ongoing efforts by the Government of Bhutan to develop the country’s finance sector, which...
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