Bhutan Second Green and Resilient Growth Development Policy Credit

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The Bhutan Second Green and Resilient Growth Development Policy Credit aims to (i) strengthen resilient and private sector-led growth through fiscal sustainability and enhanced access to finance and markets, and (ii) foster green growth focused on renewable natural resources. This operation supports reforms for a more resilient economy with a green and diverse production base, to enhance resilience to future shocks and support future development. Reforms to strengthen public debt management and fiscal oversight of SOEs and related fiscal risks are crucial to address short-term macroeconomic vulnerabilities and risks to private investment. Increased access to international finance for firms can support private sector development and firm growth, and free up funds from lending to larger borrowers to smaller companies, thereby enhancing access to credit for smaller companies. Developing a vibrant private sector to generate jobs and diversify the economy, while sustaining Bhutan’s natural environment, will be crucial to build resilience and ensure green and inclusive development. In doing so, Bhutan can seize new opportunities, such as the acceleration of digital development and e-trade in goods and services, which can reduce the cost of distance and remoteness. Finally, Bhutan can leverage its renewable natural resources and carbon-negative status for job creation and additional financing for climate adaptation and mitigation.