• The Asian Development Bank (ADB) has announced a comprehensive strategy to aid Bhutan's economic growth from 2024 to 2028.
• The strategy aims to enhance public sector management, foster private sector development, build climate adaptive infrastructure, and support human capital development.
• This comes as Bhutan has made significant strides in reducing poverty and improving education and health indicators.

The Asian Development Bank (ADB) has announced a comprehensive country partnership strategy for Bhutan, aimed at helping the South Asian nation navigate its economic challenges and foster sustainable and inclusive growth.

The strategy, which will be in effect from 2024 to 2028, is designed to bolster Bhutan's development programs. It focuses on enhancing public sector management, fostering private sector development, building climate adaptive and resilient infrastructure, and supporting human capital development.

Bhutan, being a small landlocked country in the Eastern Himalayas, has been facing a myriad of economic challenges with a slowing economy. Its macro-fiscal position has been worsening, and its economic base remains narrow.

Furthermore, the absence of an enabling environment for the private sector, vulnerability to climate change and disasters, and high levels of youth unemployment and out-migration have been posing significant hurdles to its development.

ADB's Strategy: A Multi-pronged Approach

The ADB's new strategy aims to address these challenges head-on. By strengthening public sector management, the strategy seeks to enhance the efficiency and effectiveness of government operations, thereby creating a conducive environment for economic growth.

The focus on private sector development is intended to diversify the economy and create jobs, particularly for the youth. The strategy also underscores the importance of building climate adaptive and resilient infrastructure to mitigate the impacts of climate change and natural disasters.

In addition to these, the strategy places a strong emphasis on human capital development. Recognizing that the youth are the future of the nation, the ADB aims to equip them with the necessary skills and knowledge to contribute effectively to the nation's development. This is particularly crucial given the high levels of youth unemployment and out-migration in the country.

Bhutan's Progress and Historical Similarities

The launch of this strategy comes at a time when Bhutan has been making significant strides in its development journey. Over the past two decades, the country has made commendable progress in reducing poverty and improving its education and health indicators. In December 2023, Bhutan graduated out of the least-developed country status, a testament to its development efforts.

The ADB's new strategy for Bhutan is reminiscent of similar initiatives undertaken in the past. For instance, in 2017, the World Bank launched a country partnership framework for Nepal, another South Asian nation facing similar development challenges. The framework aimed to support Nepal's transition to federalism, foster private sector-led growth, and enhance resilience to climate change and disasters.

The ADB's strategy for Bhutan echoes these objectives, highlighting the common development challenges faced by countries in the region and the need for tailored solutions to address them.

By addressing the key challenges facing the country and leveraging its strengths, the strategy aims to foster inclusive, sustainable, and resilient growth.