…green financing to meet agriculture sector development

YK Poudel

Credit risk management, high cost of fund for financial institutions, and access to public sector climate fund for agriculture are some of the key challenges in Bhutan.

To mobilise agri-finance in the country, the Royal Monetary Authority (RMA) has initiated six key strategies to be delivered by 2030 namely: sustainable macro-economic policies, market confidence, agency collaboration and co-operation, improved capital market, public infrastructure and international collaboration with access to funding.

Presenting “Innovative and climate finance for the agri-trade sector” at Bhutan Agri-Trade and Investment Forum, analyst with the department of financial regulation and supervision, RMA, Jurme Tenzin, talked about the achievements and priority sectors ahead.

“The RMA has prioritised the cottage and small industry (CSI) sector for primary production, processing, packaging, marketing and sale—thus far 404.5 million has been provided to 406 borrowers,” Jurme Tenzin said.

Under crowd funding scheme, he said, which was initiated in 2019, there are 16 registered projects that raised 36.2 million for the projects. 

According to Jurme Tenzin, Royal Securities Exchange of Bhutan Limited (RSEBL) has made commodities exchanges of 8,857 worth of Nu 67 million.

Similarly, the secretary of finance ministry, Leki Wangmo, said that despite 11 percent budget allocation and investment from each five year plan in agriculture, major outcomes have not resulted in labour productivity largely due to subsistence farming practices.

“Looking ahead, with foreign direct investment policy on agriculture being declared 100 percent equity, attractive and right investment is timely,” she said. “The 13th Plan implementation should be a collaborative effort from different agencies for its success.” 

The RMA’s document titled “Druk Nguldrel Lamtoen 2030: A Roadmap for a Progressive, Agile, and Resilient Central Bank Enabling Bhutan’s Economic Transformation”, under its third pillar—advancing green finance for sustainable and green economy states green bond, risk sharing instruments and impact assessment as three methods for agri-financing.

Through this roadmap, RMA will mobilise fund for the country’s economic growth to enhance access to finance by exploring innovative channels of finance. 

“One of the opportunities for mobilising fund is through the promotion of  green finance. Therefore, the RMA will collaborate with financial service providers to pioneer green finance to promote a sustainable and green economy,” the roadmap states.

In keeping with Bhutan’s commitment to environmental conservation, the World Bank has been supporting enhancement of the nation’s capacity to navigate carbon markets and climate finance effectively.


To develop capital markets and innovative financial instruments to promote investment in green projects and businesses, inter-agency collaboration and private sector participation is a focus.

According to Jurme Tenzin, the green bond market which is seen globally as having potential to close the green investment gap and help countries reach their sustainability targets has been put in place.

“To develop the green bond market in Bhutan, the finance ministry, the RMA, and the RSEBL will initiate development of green bond principles and guidelines supported by a set of criteria to identify and classify eligible green assets,” he said. “Accounting methods to quantify the environmental and climate benefits of green bonds, and guidance on reporting and disclosure are also being implemented.”

Moreover, he said, risk sharing instruments, and impact assessment frameworks to create an enabling environment to attract investors from outside or from within the country to invest in green projects are being prioritised.

According to Jurme Tenzin, creation of a green taxonomy, where existing loans will be reviewed and new possibilities are being explored to create a green taxonomy framework.

“To enhance avenues for mobilisation of capital for economic growth, promoting green capital market will be one of the strategies to make the stock exchange more attractive and active. The RSEBL will promote green capital market and innovative green financial instruments,” he said.