Bhutan, landlocked and with a difficult terrain and widely dispersed population, has made rapid socioeconomic progress. As a result of prudent macroeconomic management, exploitation of hydropower resources, and substantial support from donors, the country has had a good economic performance, with GDP growth averaging over 6 percent a year, and close to 8 percent over the past 5 years. Government investment in social and human development has resulted in measurable improvements in the well-being of the Bhutanese people, and good progress towards meeting several of the Millennium Development Goals (MDGs).
Bhutan is a small kingdom covering 38,394 square kilometers in the eastern Himalayas. Nestled between China and India, Bhutan started opening to the world relatively recently, especially through tourism. During this process, the country has experienced rapid social and economic development as a result of prudent macroeconomic management, beneficial exploitation of hydropower resources, and substantial support from development partners. The country’s population, officially estimated at 752,700, is mostly young, rural, and widely scattered across Bhutan’s rugged terrain.
Development Vision and Poverty Reduction Strategy:
Bhutan's development has been guided by a homegrown philosophy based on the concept of Gross National Happines. This concept recognizes that development involves more than economic progress, and establishes happiness as a legitimate policy concern and maximization o f happiness as an overarching goal.
World Bank Group in Bhutan - Building on a Strong Partnership
The new CAS reflects the findings and lessons from recent country strategy and program evaluations and discussions, and a series of consultations carried out by the CAS team in October 2004, March 2005, and June 2005 with the Royal Government, development partners, the private sector, and other stakeholders.
World Bank Group Assistance Strategy
The FY06-09 CAS will support Bhutan in (i) expanding access to better infrastructure and social services, and connecting communities to markets; (ii) promoting private sector development and employment; and (iii) strengthening management of public resources, and monitoring and evaluation of development outcomes. Pursuing these inter-related strategic objectives or CAS pillars will be facilitated through across-the-board support to decentralization, good governance, and environmental management.
Delivering the Bank Group's Program
The size of the portfolio in Bhutan has increased in recent years, and will continue to grow during the implementation of the new CAS. As of August 2005, there were six active IDA-financed operations, while in the past the average portfolio size has been about 3 to 4 operations. These operations represented US$80 million in net commitments and US$47 million in undisbursed funds.
Development prospects will also hinge on continued donor support, especially from India, which has agreed to provide program grants through the last year o f the 9FYP/PRSP, though at lower levels. Finally, the macro-framework assumes that macroeconomic management will continue to be sound in the years ahead, maintaining the fixed exchange rate, containing inflation, and managing fiscal imbalances and debt stocks. These risks are mitigated by the historically strong ties between Bhutan and India, and the GoI’s recent agreement to increase the power tariff paid on electricity sales from Chukha.
Attachments and Standard CAS Annexes
Press Release on the CAS
The CAS is aligned with Bhutan's vision and takes into account the goals of its Poverty Reduction Strategy (PRSP), underpinned by the Ninth Five Year Development Plan.
World Bank Program
Launching pad to all information on World Bank activities in Bhutan (data, projects, publications, etc.)
A wide range of social and economic measures on Bhutan, including links to the World Bank's most important online development databases.
Analysis and Research
Compilation of all the World Bank's publications on Bhutan, with 'search' options and links to analysis and research on other South Asian countries.
World Bank Program in South Asia
Launching pad to all information on World Bank activities in Afghanistan, Bhutan, Bangladesh, India, Maldives, Nepal, Pakistan, and Sri Lanka.