The World Bank has approved $25 million in financing to help the Royal Government of Bhutan strengthen policies aimed at creating jobs and boosting economic resilience. The First Growth and Jobs Development Policy Financing will support a stronger policy and institutional framework for private sector-led job creation by improving fiscal and debt management, enhancing worker protection systems, and fostering private sector development.
Bhutan aims to achieve high-income status by 2034 by promoting a dynamic business environment, quality infrastructure, a skilled workforce, and a diversified economy. The program aligns with the country’s 13th Five-Year Plan and focuses on creating quality jobs, particularly for youth, women, and vulnerable groups. Despite strong economic growth, many Bhutanese, especially youth, remain employed in low-productivity agriculture or public sector jobs, with limited opportunities for better-paid employment, prompting migration for work.
The financing will improve the business environment by expanding access to finance, amending external commercial borrowing guidelines, increasing credit to businesses, and improving the foreign direct investment framework. Tax reforms will simplify the system, reduce the corporate tax burden, lower compliance costs, encourage formalization, and enhance domestic resource mobilization. Public investment and debt management will also be strengthened to create a growth-friendly environment.
Agricultural sector reforms will support farmer cooperatives, improve the targeting of subsidies, and enhance efficiency in state-owned enterprises to promote commercialization and value addition. The program will also strengthen worker protections, including improving the sustainability of the pension system, enhancing working conditions, and supporting inclusive growth for women, youth, and vulnerable groups.
This financing is the first of three planned operations, with $12.5 million provided as a grant and the remaining $12.5 million as concessional financing with a 40-year repayment term and a 10-year grace period.
