Bhutan

How does Bhutan’s Economy Look?

How does Bhutan’s Economy Look?

Bhutan has maintained solid economic performance to date in 2017 but delays in hydropower construction may affect its economic outlook with growth expected to slow to just under 7 percent in 2018. 

Bhutan is one of the smallest, but fastest-growing economies in the world. Its annual economic growth of 7.5 percent on average between 2006 and 2015, placed the country 13th of 118 countries, compared to the average global growth rate of 4.4 percent.

This growth has been shared by a majority of Bhutanese, with extreme poverty dropping from 25 percent in 2003 to 2 percent in 2012, based on the international poverty line of $1.90 a day (at purchasing power parity). This is among the rate in South Asia and compares favourably to the regional poverty rate of 19 percent. Equally impressive improvements were made in access to basic services such as health, education and asset ownership.

The recent developments on strong lending growth, inflation, exchange rates and international reserves show that Bhutan maintains a solid and stable growth in the first half of 2017. Gross international reserves have been increasing since 2012, when the country experienced an Indian rupee shortage. Reserves exceed $1 billion, equivalent to 10 months of imports of goods and services in mid-2017 which makes the country more resilient to potential shocks. This is also very much in line with the requirement spelled in the 2008 Constitution which outlines minimum reserve requirements. The Bhutanese ngultrum, pegged to the Indian rupee, have been stable or slightly appreciating against the U.S. dollar.

Despite recent solid growth and macroeconomic stability, we need to carefully monitor its Development. According to the latest Bhutan Economic Update, the hydropower construction and the implementation of the 2016 Economic Development Policy are expected to support this solid growth during the next few years. However, with confirmed delays in the completion of two hydropower projects, the contribution of the hydropower sector to growth will be lower than the originally projected. Therefore, the World Bank revised down its growth forecasts in 2019/20 by a few percentage points to 7.6 percent, still among the fastest in the world.

by · Thursday, 14 September 2017 · Bhutan, India
How does Bhutan’s Economy Look?

How does Bhutan’s Economy Look?

Bhutan has maintained solid economic performance to date in 2017 but delays in hydropower construction may affect its economic outlook with growth expected to slow to just under 7 percent in 2018. 

Bhutan is one of the smallest, but fastest-growing economies in the world. Its annual economic growth of 7.5 percent on average between 2006 and 2015, placed the country 13th of 118 countries, compared to the average global growth rate of 4.4 percent.

This growth has been shared by a majority of Bhutanese, with extreme poverty dropping from 25 percent in 2003 to 2 percent in 2012, based on the international poverty line of $1.90 a day (at purchasing power parity). This is among the rate in South Asia and compares favourably to the regional poverty rate of 19 percent. Equally impressive improvements were made in access to basic services such as health, education and asset ownership.

The recent developments on strong lending growth, inflation, exchange rates and international reserves show that Bhutan maintains a solid and stable growth in the first half of 2017. Gross international reserves have been increasing since 2012, when the country experienced an Indian rupee shortage. Reserves exceed $1 billion, equivalent to 10 months of imports of goods and services in mid-2017 which makes the country more resilient to potential shocks. This is also very much in line with the requirement spelled in the 2008 Constitution which outlines minimum reserve requirements. The Bhutanese ngultrum, pegged to the Indian rupee, have been stable or slightly appreciating against the U.S. dollar.

Despite recent solid growth and macroeconomic stability, we need to carefully monitor its Development. According to the latest Bhutan Economic Update, the hydropower construction and the implementation of the 2016 Economic Development Policy are expected to support this solid growth during the next few years. However, with confirmed delays in the completion of two hydropower projects, the contribution of the hydropower sector to growth will be lower than the originally projected. Therefore, the World Bank revised down its growth forecasts in 2019/20 by a few percentage points to 7.6 percent, still among the fastest in the world.

by · Thursday, 14 September 2017 · Bhutan, India
How can digital technology transform lives and improve opportunities in Bhutan?

How can digital technology transform lives and improve opportunities in Bhutan?

The recently opened Thimphu tech park – Bhutan’s first IT park –

The Kingdom of Bhutan is a landlocked country located high in the eastern Himalayan mountain range with its population 760,000. Up until about 20 years ago, the country was isolated from the world; Bhutan’s first ever television broadcast occurred in 1999. Since then, information communications technology (ICT) has made rapid advancement. Mobile subscriptions increased from 0.4 per 100 people in 2003 to 87 in 2015. The proportion of people using the internet have increased from 0.1% in 1999 to 40% in 2015. Today, all 20 districts and 201 (out of 205) sub-districts are connected through fiber optic cables.

The World Bank’s 2016 World Development Report on “Digital Dividends” argues that digital technologies have boosted growth, expanded opportunities, and improved service delivery. Use of ICT for development is especially applicable to small states with populations of less than 1.5 million. Another report, “World Bank Group Engagement with Small States” finds that ICT investments can help reduce economic isolation, lessen barriers to trade, promote tourism, and improve mobility. These messages are highly relevant to Bhutan today.

The Government has enthusiastically adopted the use ICT to improve its services to its citizens as described in Bhutan ICT Roadmap and Bhutan E-Government Masterplan. The Government to Citizen (G2C) program, launched in 2005, provides a one-stop-shop for more than 100 services such as procuring a passport. The national ePayment Gateway Infrastructure, established by the Royal Monetary Authority (RMA), the central bank, has enabled citizens to pay for some public services online. Recently, the National Land Commission (NLC) launched eCitizen Portal – an online one-stop shop for transferring property titles online. This has reduced the number of days to transfer ownership of a property from 90 days to 62 days in the capital, Thimphu. More importantly, the NLC is reaching out to the private sector to seek feedback on how to improve its usability by piloting a feedback survey using an Interactive Voice Response (IVR) tool for the first time in Bhutan. The government has also introduced an electronic government procurement system (e-GP) to make optimal use of resources. Given the size of the budget (exceeding 30 percent of GDP), the adoption of e-GP will contribute to effective use of public resources. The World Bank Group has been supporting these efforts through various instruments such as the second Development Policy Credit: Fiscal Sustainability and Investment Climate, which helped get the eCitizen Portal off the ground.

by · Tuesday, 15 August 2017 · Bhutan
How much should Bhutan worry about debt?

How much should Bhutan worry about debt?

Construction of the Dagachhu Hydropower Plant in Bhutan. Photo Credit: Asian Development Bank

In many respects, Bhutan has been a development success story. Its people have benefitted from decades of sharp reductions in poverty combined with impressive improvements in health and education. The country is a global model in environmental conservation. It is the first carbon negative country; Bhutan’s forests, which cover over 70% of the country, absorb more carbon dioxide than is produced by its emissions.

The Kingdom of Happiness also must grapple with the reality of managing budgets, creating infrastructure, and preparing its citizens to be able to create and take advantage of jobs of the future. To do that, we are working with closely with Bhutan to build the foundations for a more prosperous future through the cultivation of a vibrant private sector economy and supporting green development.

At the same time, Bhutan has invested generously in hydropower energy production to create a reliable and lasting source of green energy for its people. It also benefits from exporting excess electricity to neighboring India, whose energy needs continue to increase at a rapid pace with their growing economy.

In large part due to the hydropower investments, Bhutan’s public debt was 107 percent of the Gross Domestic Product (GDP) as of March 2017. Hydropower external debt was at 77 percent of GDP with non-hydropower external debt accounting for 22 percent of GDP. Questions have arisen on whether this level of debt is sustainable and what should be done to address it.

by · Monday, 24 July 2017 · Bhutan, India
How much should Bhutan worry about debt?

How much should Bhutan worry about debt?

Construction of the Dagachhu Hydropower Plant in Bhutan. Photo Credit: Asian Development Bank

In many respects, Bhutan has been a development success story. Its people have benefitted from decades of sharp reductions in poverty combined with impressive improvements in health and education. The country is a global model in environmental conservation. It is the first carbon negative country; Bhutan’s forests, which cover over 70% of the country, absorb more carbon dioxide than is produced by its emissions.

The Kingdom of Happiness also must grapple with the reality of managing budgets, creating infrastructure, and preparing its citizens to be able to create and take advantage of jobs of the future. To do that, we are working with closely with Bhutan to build the foundations for a more prosperous future through the cultivation of a vibrant private sector economy and supporting green development.

At the same time, Bhutan has invested generously in hydropower energy production to create a reliable and lasting source of green energy for its people. It also benefits from exporting excess electricity to neighboring India, whose energy needs continue to increase at a rapid pace with their growing economy.

In large part due to the hydropower investments, Bhutan’s public debt was 107 percent of the Gross Domestic Product (GDP) as of March 2017. Hydropower external debt was at 77 percent of GDP with non-hydropower external debt accounting for 22 percent of GDP. Questions have arisen on whether this level of debt is sustainable and what should be done to address it.

by · Monday, 24 July 2017 · Bhutan, India
New roads to better lives in rural Bhutan

New roads to better lives in rural Bhutan

Men from the Pokri Dangra community working on the power tiller track. (Credit: RRCDP project) 

For remote rural communities in mountainous Bhutan, survival hinges upon access to roads and markets.

Since 2003, the Royal Government has built over 1,500 kilometers of farm roads and narrower, lower-cost “power tiller tracks” to help communities, which subsist mostly on agriculture, connect to the larger population, and improve their incomes and standards of living.

For farmers in the Pokri Dangra village in Samste Dzongkhag, a new track has brought more benefits than expected and significantly improved access to markets and services and reduced the cost of trading goods with other local communities.

by · Thursday, 19 January 2017 · Bhutan