The World Bank has allocated $25 million to support the Royal Government of Bhutan in enhancing its policies for job creation and improving economic resilience through the First Growth and Jobs Development Policy Financing. This initiative aims to establish a robust policy and institutional framework that fosters private sector-led job creation by focusing on areas such as fiscal and debt management, worker protection systems, and the development of the private sector.
Bhutan’s target is to achieve high-income status by 2034, which involves cultivating a vibrant business environment, quality infrastructure, a skilled workforce, and a diversified economy. The program is consistent with the country’s 13th Five-Year Plan and emphasizes the creation of quality employment opportunities, particularly for youth, women, and marginalized groups. Despite notable economic growth, many Bhutanese, especially the youth, continue to work in low-productivity sectors such as agriculture or the public sector, which limits their access to better-paying jobs, resulting in increased migration for work.
To enhance the business landscape, the financing aims to broaden access to finances, revise guidelines for external commercial borrowing, elevate credit availability to businesses, and refine the framework for foreign direct investment. Tax reforms are expected to streamline the taxation system, alleviate the corporate tax burden, diminish compliance costs, promote formalization, and bolster domestic resource mobilization. Additionally, public investment and debt management will be reinforced to foster a conducive environment for growth.
Reforms in the agricultural sector will focus on supporting farmer cooperatives, improving subsidy targeting, and increasing efficiencies in state-owned enterprises to advance commercialization and value-added production. Furthermore, the program will enhance worker protections by fortifying the sustainability of pension systems, improving working conditions, and promoting inclusive growth for women, youth, and other vulnerable groups.
This funding represents the first disbursement of three planned operations, with $12.5 million provided as a grant and the remaining $12.5 million offered as concessional financing, which includes a 40-year repayment term and a 10-year grace period.