IFC, a member of the World Bank Group, has announced a US$20 million investment in Bank of Bhutan (BoB), the country’s oldest and largest bank, marking a significant milestone for Bhutan’s financial sector. This five-year fixed-rate financing, supported by the International Development Association’s Private Sector Window, will enable BoB to expand lending to micro and small enterprises (MSEs), which constitute 95 percent of Bhutan’s registered businesses and employ around 12 percent of the population. At least 80 percent of the funds will be directed to MSEs, while the remainder will support individuals seeking to generate income and assets.
The partnership is Bhutan’s first major international investment under the External Commercial Borrowing guidelines, signaling a step toward opening the Bhutanese economy to global investors. BoB plans to leverage its extensive branch network to ensure that financing reaches entrepreneurs across the country, with a focus on women-led businesses and cottage industries. IFC will also assist BoB in enhancing governance, risk management, compliance, and environmental and social standards, aligning with IFC Performance Standards, which is expected to attract additional financing from other development institutions.
The investment aims to empower Bhutan’s private sector by providing long-term local currency financing to MSEs, promoting job creation, and demonstrating the viability of foreign investment in the country’s financial sector. It builds on collaborative efforts between the World Bank, IFC, the Royal Government of Bhutan, and the Royal Monetary Authority to revise ECB guidelines, strengthening the regulatory framework and enabling Bhutanese financial institutions to access foreign capital.
By offering an alternative source of finance, this initiative supports the World Bank Group’s Country Partnership Framework FY2025–29, which prioritizes private investment in job-rich sectors. The funding is expected to provide last-mile financing to micro and small enterprises, reinforce Bhutan’s entrepreneurial base, and foster inclusive and sustainable economic growth.
IFC, as the largest global development institution focused on the private sector in emerging markets, operates in over 100 countries, leveraging capital, expertise, and influence to create opportunities in developing nations. In fiscal year 2025, IFC committed a record $71.7 billion to private companies and financial institutions, demonstrating its role in mobilizing private capital for sustainable development.
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