Yangyel Lhaden

The Asian Development Bank (ADB) announced a new Country Partnership Strategy (CPS) for Bhutan covering the period from 2024 to 2028, which aims to foster inclusive, sustainable, and resilient growth while creating jobs through a series of strategic priorities.

Key initiatives of the strategy include enhancing public sector management, facilitating private sector development, constructing climate-adaptive infrastructure, and investing in human capital to improve youth employability. The strategy also incorporates thematic considerations across all these priorities.

Since its establishment in 1966 and operational launch in Bhutan in 1982, ADB has been a major development partner of Bhutan, focusing on critical areas such as infrastructure, agriculture, and social services.

Initially, the bank concentrated on rural development and infrastructure, which were essential for addressing Bhutan’s isolated geography.

Over the years, ADB has significantly expanded its portfolio, committing USD 1.2 billion by 2023 through 207 public sector loans, grants, and technical assistance. This makes ADB one of Bhutan’s largest development partners, alongside India.

For the next five years, one of the strategic priorities is strengthening public sector management (PSM) and enabling private sector development (PSD).

This will involve policy-based loans, technical assistance, and knowledge work to reform economic policies and unlock private sector opportunities. 

A key goal is to address fiscal deficits, digitise tax systems, and improve governance in financial management.

ADB will also assist in rolling out the goods and services tax (GST) and modernising tax administration, collaborating with global financial institutions like the World Bank and International Monetary Fund.

In terms of  private sector engagement, ADB plans to enhance country’s capacity for public-private partnerships (PPP), particularly in sectors like health, solar power, and urban waste management.

To boost trade, the bank will also focus on improving financial markets, developing non-collateral-based lending options for businesses, and simplifying trade protocols, particularly along the country’s southern border with India.

Climate change remains a critical focus for ADB and has prioritised the development of climate-adaptive infrastructure.

To address energy shortages during the winter months, the ADB will support Bhutan in expanding its solar power capacity and building climate-resilient infrastructure, such as the planned 92-kilometre highway connecting Lhamoizingkha to Sarpang.

The ADB will invest in disaster risk management and capacity building for early warning systems to mitigate climate-related hazards like floods and landslides.

ADB will also assist Bhutan in accessing carbon credits and mobilising resources for climate adaptation projects.

In addition, the ADB will contribute to human capital development by supporting reforms in technical and vocational education and training (TVET) to address high youth unemployment.

ADB will also provide assistance to strengthen the country’s health system, providing advisory support for digitalising health services and exploring PPP opportunities in healthcare diagnostics and tele-medicine.

The ADB’s overarching strategy integrates gender equality and social inclusion, ensuring that its projects benefit disadvantaged groups, including rural communities and unemployed youth. This support will promote gender mainstreaming in education, health, and employment services.