Boyreau, GenevieveRama, Martin2016-06-222016-06-222015-11https://hdl.handle.net/10986/24581Bhutan’s hydropower generation potential raises the prospect of tremendous development opportunities for the country: fast increasing export revenue, sustained economic growth, and rapid poverty reduction. Driven by developments in the hydropower sector, the country has grown at an average rate of 7 percent per year over the last decade, while poverty has declined remarkably fast. But hydropower development also creates significant challenges as follows: (i) macroeconomic instability; (ii) lack of self-reliance; and (iii) few private sector jobs. This policy note assesses the opportunities and challenges associated with hydropower development. It informs a possible strategy supportive of macroeconomic stability, fiscal self-reliance and private sector development. And it argues that fundamental changes in public finance, amounting to a paradigm shift, are central to the implementation of such strategy.en-USCC BY 3.0 IGODEFICITMONETARY POLICYHOLDINGBORROWEREQUIPMENTECONOMIC GROWTHPRIVATE SECTOR PARTICIPATIONACCOUNTINGDEMAND FOR CREDITPUBLIC PROCUREMENTFOREIGN INVESTORSOLD-AGE PENSIONINTERESTPUBLIC INVESTMENTSPUBLIC SECTORGOVERNMENT SPENDINGINTEREST RATEOPTIONEXCHANGESPENDINGPUBLIC SECTOR WORKFORCESERVICESDEVELOPING COUNTRIESTAX COLLECTIONREAL INTERESTHOUSINGREVENUESFISCAL POLICYFINANCIAL STATEMENTSLOANREPAYMENT PERIODPRICINGTAXINCOME TAXBUDGETINGINFORMATION SYSTEMSINFLATIONPENSIONDEBT BURDENINSTRUMENTSDEBT INTERESTBUDGETPUBLIC SECTOR COMPENSATIONMACROECONOMIC STABILITYFISCAL POLICIESCONTRACTSPERSONAL INCOMETAX REGIMETRADINGTAX EXEMPTIONSRECURRENT EXPENDITURESOPTIONSINVESTMENT FUNDSDEBTMARKETSFORECASTINGHOUSEHOLD INCOMERETURNPUBLIC PROPERTYPUBLIC FINANCEBUSINESS CYCLEMACROECONOMIC FLUCTUATIONSLABORLOANSREAL INTEREST RATEPERASSET CLASSESCAPITAL INVESTMENTSDEBT SERVICEPENSION FUNDSSUBSIDIESMONETARY AUTHORITYFINANCEGRANTSPUBLICPUBLIC INVESTMENTINFRASTRUCTURETAXESFIXED EXCHANGE RATEFISCAL DEFICITHEALTH SPENDINGINVESTMENT DECISIONSEXPENDITURETRANSACTIONSEQUITYCREDIT EXPANSIONINVESTORSMACROECONOMIC INSTABILITYGOODTAX RATETRANSPARENCYPUBLIC EXPENDITUREBUDGET SURPLUSFUTUREELECTRICITYRETURNSBUDGETSINVESTMENT PROJECTSPUBLIC EXPENDITURESBUDGET IMPLICATIONSREPAYMENTGOVERNMENT REVENUEEXPENDITURESPUBLIC TRANSPORTECONOMIC EFFICIENCYAMORTIZATIONPROPERTYBIDSCURRENT ACCOUNT DEFICITTAX RATESHOUSING PRICESPRIVATE SECTORPUBLIC SECTOR DEFICITREAL EXCHANGE RATEDEFAULTMARKETFOREIGN EXCHANGETAX REVENUEMANAGEMENTROADSINFRASTRUCTURE INVESTMENTSTAXATIONPUBLIC SECTOR EMPLOYMENTGOODSLANDLOCAL ECONOMIESSECURITYINVESTMENTCOMMERCIAL BANKSSHAREIMMOVABLE PROPERTYINVESTMENT CLIMATETAX SYSTEMPOVERTYINTERNATIONAL STANDARDFISCAL BALANCECAPITAL INFLOWSREVENUEEXTERNAL DEBTINVESTMENTSDEGREES OF RISKLEGAL OBLIGATIONSDEBT REPAYMENTIMPLICIT TAXAMOUNT OF DEBTFISCAL DISCIPLINEEXCHANGE RATEPUBLIC SPENDINGPUBLIC SERVICEPAYMENT SYSTEMSSMALL BUSINESSESDEVELOPMENT BANKINCOME LEVELBUDGET SURPLUSESReportWorld Bankhttps://doi.org/10.1596/24581