Assistance: The European Union (EU) will provide Euro 20 million (M) for capacity development of the local government and fiscal decentralisation in the next five years.

The EU ambassador to Bhutan, Tomasz Kozlowski signed and handed over the agreement to the Gross National Happiness Commission secretary Thinley Namgyal in presence of the home minister yesterday.

This funding is part of the Euro 42M that ambassador Kozlowski announced as new EU funding for Bhutan. The EU will also release Euro 21.5M for rural development and climate change, and Euro 2.5M for civil society organisations in the country.

The first tranche of the EU support to capacity development for LG and fiscal decentralisation fund is expected to be released within two months.

Ambassador Tomasz Kozlowski said EU and Bhutan relations are excellent.

He said that the EU is ready and will continue its support for Bhutan’s economic and social development.

“We’re very happy that the assistance that has been so far provided has been used properly for the benefit of the Bhutanese people,” the ambassador said.

He added that some projects are under consideration, and if approved, the total support would be expanded to Euro 48M.

EU support has moved from project-based support to budget support. This, he said, was a confirmation of the EU’s trust and confidence that EU resources are being used for the benefit of the people.

Home minister Dawa Gyaltshen said that the fund support will help develop the capacity of the local government officials.

Thinley Namgyal said that local government officials are both happy and anxious of more funds arriving in the 12th Plan. “They are worried about their capacity to handle the budget,” he said.

He thanked the Austrian representative for the continued support as more traditional donors such as Denmark and Switzerland have phased out funding support to the country.

Bhutan started decentralising power to the dzongkhags in the 1980s and in 1991 to the gewogs.

Lyonpo Dawa Gyaltshen said that the government, considering the importance of local governments, has been allotting more budget.

“The government is allotting Nu 2M as the gewog development grant since the beginning of the 11th Plan, Nu 7M as dzongkhag development grant, and another Nu 5M on average to the dzongkhags as human resource development grant outside the annual budget since this fiscal year,” Lyonpo said.

The EU and Bhutan established diplomatic relations with Bhutan in 1982. Since then the EU has supported Bhutan in reducing poverty, enhancing food security, strengthening decentralisation, and democratisation.

The ambassadors from Lithuania, Czech Republic, Greece, Estonia, and representatives from Malta, Spain, and Austria accompanied the EU ambassador. The delegation is on a five-day visit to the country that ends tomorrow.

Tshering Palden