YK Poudel

To support economic recovery and growth, Bhutan has sought 6,550 million yen (Nu 3.8 billion) loan, which is one of the largest concessional lending from the Government of Japan, for the Economic Recovery and Resilience Enhancement programme.      

Japan International Cooperation Agency (JICA) and the Ministry of Finance signed an Official Development Assistance (ODA) Loan agreement yesterday.             

The loan is expected to strengthen fiscal policy, promote green growth with a focus on renewable natural resources, enhance self-reliance and stabilise the macroeconomic situation in the country. 

Finance Minister Namgay Tshering during the agreement-signing said that the assistance is one of the components of the long-standing relationship between the two countries. “JICA, for years has been an instrumental partner in the country’s socioeconomic development with its technical as well as financial assistance.”

“Moving forward, this ODA loan will help Bhutan’s economy in its recovery after the pandemic. Over the years, Bhutan has the potential to leverage its economic growth and be a trading partner with Japan,” he said. 

Chief Representative, JICA Bhutan Office, Tomoyuki Yamada said that this was the fourth concessional loan to Bhutan. “JICA and the government had a prior discussion on the plans and policies where the loan will be utilised – and the projects will be monitored after the term period.”

“The loan assistance will be in Yen which will help in preserving the Japanese Yen currency for Bhutan. After this signing, certain procedures will be followed to go through the areas in which the loan will be utilised and its effectiveness,” he said. 

The loan, he said, is a one-time assistance for a grace period of 10 years at an interest rate of 1.6 percent. However, there won’t be technical and human resource intervention in its implementation. 

According to an official from the finance ministry, the Department of Macro-fiscal and Development Finance will be the executing agency. 

As per a press release from the ministry, the loan will contribute to the achievement of the SDGs 8, 10 and 13.