All implications of graduation would be incorporated in the 12th Plan, according to the GNHC
Workshop: Irrespective of the LDC graduation criteria, achieving the sustainable development goals (SDG) or the millennium development goals, for Bhutan, all targets are encompassed in the GNH framework.
Whether the country graduates or not, it is the wellbeing of the people and the country that is important, Gross National Happiness Commission (GNHC) secretary Sonam Wangchuk said.
One of the highlights of the second day of the LDC graduation workshop yesterday was that Bhutan’s five-year Plans have been aligned with priorities of globally agreed goals, with graduation from LDC, being a milestone for the current Plan.
However, once the country graduates, he said it’s the question of sustainability and resilience. “We have to ensure that the country doesn’t fall back into the LDC category at later point of time,” he said.
Having met the LDC graduation criteria on income per capita and human asset index, he said there is no choice for Bhutan but to move forward.
If the country can make progress in economic development, he said the economic vulnerability index, the criteria that Bhutan has not yet met, would improve. This, he said, would consequently lead to augmenting per capital income and human asset index.
Currently, official development assistance (ODA) and grant finances about 34 percent of the country’s development programs. Graduating from the LDC status would impact the country’s ODA, LDC funds and trade related technical assistance.
The discussions also highlighted that concessional borrowings would be critical for social and economic projects. It is projected that in 2018, more than 10 percent of the expenditure would have to be financed through concessional borrowings.
But the period during which Bhutan will be assessed for graduation eligibility will also be the time when its debt is expected to surpass the GDP size by 120 percent.
Loss of support from global environmental fund and world meteorological organization that provides special assistance to LDC may also be of concern to Bhutan.
However, Sonam Wangchuk said that all implications on ODA and other aspects of graduation would be in-built in the 12th Plan and considered during the planning process.
UN Resident coordinator, Christina Carlson said Bhutan’s effort to seek support from multilateral development partners is now crucial.
The discussion also highlighted on the possibility of joining Asian Infrastructure Investment Bank (AIIB) and New Development Bank established last year to explore multilateral financing.
However, a UNCTAD official said that in the course of post graduation development, it is important to mobilize resource on non-debt making plans.
Increasing the revenue base by raising the tax to GDP ratio was one of the areas for policy reforms for smooth transition. Strengthening the banking sector, promotion of FDI, public-private partnership and creating pool of resources to address consequences of climate change are other common areas that LDCs need to pay attention to.