The Asian Development Bank (ADB) has approved a $15 million financing package to strengthen Bhutan’s banking and capital markets while promoting financial inclusion. The support includes a $10 million policy-based loan and a $5 million grant through the Asian Development Fund, aiming to enhance the stability and resilience of Bhutan’s financial system.
The Strengthening the Banking and Capital Markets Reforms Program focuses on supporting economic diversification and private sector development, while advancing green finance, digitalization, and financial literacy for underserved communities. By addressing structural weaknesses in the financial sector, the program seeks to unlock new opportunities for inclusive growth and bolster Bhutan’s long-term goal of achieving high-income status by 2034.
Bhutan’s financial sector faces challenges such as limited economic diversification, dependence on imports, high nonperforming loans, constrained fiscal space, and low foreign direct investment. These issues are compounded by rural poverty, which stands at 17.5%, and insufficient social safety nets to cope with extreme weather events like floods and landslides.
The program supports reforms to stabilize the banking system, deepen capital markets, and promote green and inclusive finance. Planned measures include improving asset quality and regulatory frameworks, establishing credit rating agencies, and creating a national framework for green and social bonds to attract sustainable investment.
Building on ADB’s earlier engagement in Bhutan, including the Financial Market Development Program (2019–2021), this initiative aligns with Bhutan’s Thirteenth Five-Year Plan and ADB’s Strategy 2030, emphasizing climate action, private sector development, and digital transformation.
ADB continues to play a pivotal role in promoting inclusive, resilient, and sustainable growth across Asia and the Pacific, leveraging innovative financial instruments and strategic partnerships to support economic development, quality infrastructure, and environmental sustainability.
