The last remaining Himalayan Buddhist Kingdom, Bhutan is concerned with preserving its culture, environment and identity. While economic growth is considered important, the government’s vision is that of Gross National Happiness which aims for sustainable socioeconomic development, conservation and sustainable use of the environment, promotion of culture and good governance. While a stable political kingdom, a process of political change, including a new constitution and democratically elected Parliament, and decentralization is underway in Bhutan, fully supported by the King that has ruled the country since 1972.
As a result of prudent macroeconomic management, the exploitation of hydropower resources and substantial support from donors, Bhutan has recorded a strong economic performance, averaging 8% over the past 8 years, while investments in social and human development have resulted in substantial progress in terms of meeting the Millennium Development Goals.
The private sector in Bhutan is hampered by the small size of the market, the lack of supportive infrastructure and the comparatively high costs of doing business.
Bhutan became IFC's 176th member in December 2003. IFC currently has $9.4 million of senio debt outstanding in one tourism project in Bhutan. IFC is close to exposure limits for Bhutan, so a maximum of $10-15m of additional investment is envisaged over the next 3 years.
A new CAS, covering the period FY06-09, was prepared following the completion of the country’s Poverty Reduction Strategy Paper which was based on the Ninth Five-Year Plan.
The World Bank Group’s Country Assistance Strategy focuses on (i) promoting private sector development through improvements to the investment climate and (ii) improving opportunities for the poor. As part of this, IFC focuses on investments in niche markets (tourism, agribusiness exports) and IFC-SEDF/FIAS TA for SME development (access to finance) and investment climate.
For more details, see the World Bank Group Country Assistance Evaluation.
