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Bhutan: World Bank Group Launches New Assistance Strategy

> Alastair Mckechnie
(Bhutan Country Director)
> Print Quality
World Bank:
> PDF: Assistance Strategy
> Bhutan Website
> South Asia Website

Media Contact: Erik Nora

(202) 458-4735


WASHINGTON, November 1, 2005 — The new World Bank Group Country Strategy for Bhutan envisages a lending program of around US$15 million per year from the International Development Association (IDA) [1] to support the country’s unique development vision.   In FY06, IDA assistance will be provided as grant.


The Board of Executive Directors of the Bank discussed today the FY2006-2009 Country Assistance Strategy (CAS), a document that both describes the Bank’s strategic approach to helping Bhutan achieve its development goals and indicates the level of financial and technical assistance that will be provided. The CAS is aligned with Bhutan’s vision and priorities and goals of its Poverty Reductions Strategy (PRSP), which is underpinned by the Ninth Five Year Development Plan.


The strategy supports expanding access to better infrastructure and quality of social services, and connecting communities to markets; promoting private sector development and employment; and strengthening management of public resources, and monitoring and evaluation of development outcomes. The Bank will also provide support to the Bhutanese Government’s cross-cutting efforts to promote decentralization, good governance, and environmental management. 


While economic growth is considered important, Bhutan is deeply concerned with preserving its culture, environment, and identity. Bhutan’s development has been guided by a homegrown philosophy based on the concept of Gross National Happiness. As a result of prudent macroeconomic management, development of hydropower resources, and donor support, Bhutan has made good economic progress with GDP growth averaging around 8 percent over the past five years.


“We are working with Bhutan to help implement its unique vision of development, which goes beyond economic growth  to   promoting sustainable socioeconomic development, conservation of the environment, promotion of culture, and good governance.”says Alastair McKechnie, the Bank’s Country Director for the Bhutan. “The World Bank strongly supports helping Bhutan meet the challenges of its mountainous geography in providing access of communities to services such as education and access to markets. Geography also creates opportunities from hydropower exports and the World Bank will continue to help Bhutan develop systems to manage export revenues for the greater good of all Bhutanese.”


However, significant challenges remain. Poverty is widespread in rural areas, the private sector is small and underdeveloped, and the majority of the population is dependent on subsistence-level agricultural activities. The country’s formidable climate and topography make it difficult to provide adequate service delivery and build and maintain vital infrastructure.


“We recognize that our support is modest in relation to Bhutan’s development needs, and we aim to catalyze assistance from other donors to increase impact of available development resources,” says Enrique Pantoja, Task Team Leader and Senior Country Officer for Bhutan. “In addition to the proposed financing outlined in the CAS, the Bank will also help explore other sources of funding, such as carbon finance, guarantees, and other available instruments.”


For more information about World Bank activities in Bhutan, visit


[1] The International Development Association (IDA) is the part of the World Bank Group that provides long-term interest-free loans (credits) and grants to the poorest of the developing countries.

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