World Bank2013-03-122013-03-122007-09-22https://hdl.handle.net/10986/12654This report was prepared to help the Royal Government of Bhutan (RGoB) meet its felt need for more economic analysis and policy advice. It also seeks to provide information to a wider audience of development partners and interested parties. Over the past 25 years, Bhutan has been developing rapidly, pursuing sound economic policies, exploiting hydropower, and enjoying strong support from external development partners. Solid growth continues to raise per capita income and support improvements in social indicators. Through the prism of these four elements, this report seeks to contribute to the policy discussion by providing an integrative analysis and update of the Bhutanese economy, as well as developing a set of key recommendations and issues that warrant consideration or further study. Section two describes ongoing governance reforms, outlines the objectives articulated in Bhutan's Vision 2020 document and the Ninth Five-Year Plan (Ninth Plan), discusses the poverty reduction strategy, and notes progress towards meeting the millennium development goals. Section three examines recent economic developments, including growth, the balance of payments, and external debt. Section four analyzes macroeconomic policy, highlighting the challenge of fiscal volatility and the need to manage expectations surrounding the coming on-stream of the giant hydropower project Tala. Section five discusses several structural aspects of public resource management, including ongoing fiscal and financial management reforms, the importance of avoiding the 'natural resource curse,' and the treatment of state owned enterprises. Section six investigates the role of strengthening the investment climate for facilitating private sector development. Section seven comments on the prospects for accelerating growth, looking at the development of additional hydropower resources, construction, tourism, and agribusiness, emphasizing that while hydropower will continue to drive economic growth, tourism and value added activities in agriculture will be central to boosting growth and generating broad-based employment. Section eight concludes with medium term development prospects and challenges.en-USCC BY 3.0 IGOACCESS TO SAFE WATERACCOUNTABILITY MECHANISMSACCOUNTINGANNUAL BUDGETANNUAL BUDGETSARTICLEAUDITOR GENERALBALANCE OF PAYMENTSBALANCE SHEETSBANK LENDINGBANKING SYSTEMBARRIERS TO ENTRYBASIC SERVICESBOND ISSUESBONDSBUDGET CONSTRAINTSBUDGET DEFICITBUDGET DEFICITSBUDGET PREPARATIONBUDGET PROCESSBUDGET SYSTEMSBUDGETINGCAPACITY CONSTRAINTSCAPITAL EXPENDITURECAPITAL EXPENDITURESCASH RESERVECASH RESERVE RATIOCENTRAL BANKCENTRAL BANK BILLSCENTRAL GOVERNMENTCENTRAL GOVERNMENT EXPENDITURECIVIL SERVICECIVIL SOCIETY ORGANIZATIONSCOMMERCIAL TERMSCONSUMER PRICE INDEXCONTRACT LAWCREDIT GROWTHCREDITORCURRENCYCURRENCY BOARDCURRENCY BOARD ARRANGEMENTCURRENT ACCOUNT DEFICITDEBTDEBT MANAGEMENTDEBT SERVICEDEBT SERVICE PAYMENTSDEBT STOCKSDEBT SUSTAINABILITYDECENTRALIZATIONDEFICITSDEPOSITDEPOSIT LIABILITIESDEPOSITSDEVELOPMENT BANKDISBURSEMENTSDOMESTIC BONDDOMESTIC BORROWINGDOMESTIC CAPITALDOMESTIC CAPITAL MARKETSDOMESTIC CREDITDOMESTIC DEBTDOMESTIC REVENUEDONOR ASSISTANCEDONOR FUNDINGDONOR FUNDSECONOMIC CLASSIFICATIONECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTSECONOMIC GROWTHECONOMIC POLICIESECONOMIES OF SCALEEDUCATIONAL ATTAINMENTENABLING ENVIRONMENTEQUIPMENTEXCESS LIQUIDITYEXCHANGE RATEEXPENDITUREEXPENDITURESEXPORTERSEXTERNAL DEBTEXTERNAL FINANCINGEXTERNAL GRANTSEXTERNAL IMBALANCESEXTERNAL INVESTORSFINANCESFINANCIAL ACCOUNTABILITYFINANCIAL INSTRUMENTSFINANCIAL MANAGEMENTFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL SYSTEMFISCAL ACCOUNTSFISCAL DEFICITFISCAL DISCIPLINEFISCAL MANAGEMENTFISCAL POLICYFISCAL SUSTAINABILITYFIXED EXCHANGE RATEFOREIGN EXCHANGEGOVERNMENT EXPENDITUREGOVERNMENT FINANCEGOVERNMENT INVESTMENTGOVERNMENT REVENUEGOVERNMENT SPENDINGGROSS DOMESTIC PRODUCTHARD BUDGET CONSTRAINTSHARD CURRENCYHEALTH CAREHOLDINGHOLDINGSHOUSEHOLD INCOMEHUMAN CAPITALHUMAN DEVELOPMENTHUMAN RESOURCESIMMUNIZATIONINCOME TAXINDEBTEDNESSINFLATIONINFORMATION TECHNOLOGIESINFRASTRUCTURE INVESTMENTINTEREST PAYMENTSINTEREST RATEINTEREST RATE SPREADINTEREST RATESINTERNATIONAL DEVELOPMENTINTERNATIONAL STANDARDSINVESTMENT CLIMATEISSUANCEISSUANCE OF TREASURY BILLSLABOR MARKETLABOR MARKETSLIABILITYLIQUIDITYLIVING STANDARDLIVING STANDARDSLOANLOCAL GOVERNMENTLOCAL GOVERNMENTSMACROECONOMIC FRAMEWORKMACROECONOMIC MANAGEMENTMACROECONOMIC POLICYMARGINAL COSTMARKET REFORMSMEDIUM TERM EXPENDITUREMEDIUM TERM EXPENDITURE FRAMEWORKMEDIUM-TERM FISCAL FRAMEWORKMEDIUM-TERM OUTLOOKMINISTRY OF FINANCEMONETARY AUTHORITYMONETARY FUNDMONETARY POLICYNATIONAL BANKOPEN ECONOMIESOPPORTUNITY COSTOVERDRAFT FACILITIESOVERDRAFT FACILITYPENSIONPERPETUITYPERSONAL INCOMEPOVERTY PROFILEPOVERTY REDUCTIONPOVERTY REDUCTION STRATEGYPRICE MOVEMENTSPRIVATE CREDITPRIVATE INVESTMENTPRIVATE SECTORPRIVATE SECTOR CREDITPRIVATE SECTOR GROWTHPRODUCTIVE INVESTMENTSPROGRAMSPUBLIC ACCOUNTSPUBLIC DEBTPUBLIC EXPENDITUREPUBLIC EXPENDITURE MANAGEMENTPUBLIC FINANCEPUBLIC INVESTMENTPUBLIC OWNERSHIPPUBLIC RESOURCESPUBLIC SECTORPUBLIC SERVICEPUBLIC SERVICE DELIVERYPUBLIC SERVICESPUBLIC SPENDINGRECURRENT EXPENDITURERECURRENT EXPENDITURESREFERENDUMRESERVESRESOURCE ALLOCATIONRESOURCE AVAILABILITYRESOURCE FLOWSRESOURCE MANAGEMENTRETURNREVENUE SOURCESRULE OF LAWSALES TAXSANITATIONSECTORAL ALLOCATIONSSECTORAL PLANSSECTORAL POLICIESSEPARATION OF POWERSSHORT-TERM BILLSSOCIAL INDICATORSSOCIAL SERVICESSTRUCTURAL REFORMSTAXTAXPAYERSTELECOMMUNICATIONSTOTAL SPENDINGTRADINGTRANSACTIONS COSTSTRANSPARENCYTREASURYTREATYWorld Bank10.1596/12654