World Bank Supports Bhutan’s Reform Efforts to Create Jobs

WASHINGTON, April 01, 2026 -The World Bank today approved $25 million in financing to help the Royal Government of Bhutan strengthen policies to create jobs and boost economic resilience.

The First Growth and Jobs Development Policy Financing will help develop a stronger policy and institutional framework for private sector-led job creation by strengthening fiscal and debt management, enhancing systems to protect workers, and fostering private sector development.

"The Royal Government of Bhutan aims to reach high-income status by 2034 by ensuring a dynamic business environment, quality infrastructure, skilled labor force, and diversified economy," said H.E. Lyonpo Lekey Dorji, Finance Minister of Bhutan. "This program aligns with the 13^th Five-Year Plan and will support policies for creating quality jobs for our people, particularly the youth, women, and vulnerable groups."

Bhutan's strong economic growth has not translated into better-paid jobs for its population, particularly youth. More than 40 percent of workers are employed in the low-productivity agriculture sector and quality jobs are mostly concentrated in the public sector. The youth unemployment rate is about five times higher than the overall unemployment rate, and many educated and skilled young people have no choice but to migrate in search of better opportunities.

"Bhutan has had remarkable success in maintaining robust growth and in reducing poverty, but the Kingdom needs to create more better-paid jobs to achieve its ambitious development objectives," said Xavier Furtado, World Bank Group Country Manager for Bhutan. "This program supports the reforms needed to stimulate private sector investment and improved the quality of jobs."

To improve the business environment, the financing will support wider access to finance through amendments to the external commercial borrowing guidelines that allow Bhutanese market participants to access external funding, expand credit to businesses and support firm entry and expansion, as well as improve the foreign direct investment framework.

"The program will also support reforms to modernize the tax system, strengthen debt management, and improve public investment management, fostering a more growth-friendly environment," said Yumeka Hirano, World Bank Senior Economist. "Tax reforms will simplify the system, lower the corporate tax burden, reduce compliance costs, and encourage formalization - helping firms while enhancing domestic resource mobilization."

In addition, the agriculture sector reforms supported by the program will strengthen farmer cooperatives, improve targeting of agricultural subsidies, and enhance the efficiency of agricultural state-owned enterprises to promote commercialization and value addition in the sector.

To protect workers, the program will support improving the sustainability of the pension system. It will also encourage increased private sector participation. Further, it will help improve working conditions for women, youth, and vulnerable groups to facilitate inclusive growth and create better-paid jobs.

This financing is the first in a series of three operations. $12.5 million or half of the total $25 million financing will be provided as a grant. The remaining $12.5 million is concessional, with a 40-year repayment term and a 10-year grace period.