The Asian Development Bank (ADB) approved a $15 million package to strengthen Bhutan’s banking and capital markets and expand financial access, the bank said. The money includes a $10 million policy-based loan and a $5 million grant from the Asian Development Fund, which ADB runs.
The program aims to stabilize Bhutan’s financial sector by supporting economic diversification and private sector growth. It will also expand green finance and digital tools while spreading financial literacy to communities that have been left out. ADB Country Director for Bhutan Sonomi Tanaka said the program backs Bhutan’s goals to build strong, inclusive financial systems and reach high-income status by 2034. “The initiative will unlock new opportunities for private sector growth, diversify the economy, and enhance resilience against extreme weather shocks,” Tanaka said.
Bhutan’s financial sector has some tough challenges. The economy isn’t diversified enough, the country relies heavily on imports, nonperforming loans are high, fiscal space is tight, and foreign direct investment is weak. These problems hit rural areas hardest—poverty there stands at 17.5 percent, and social safety nets can’t handle extreme weather like floods and landslides.
The program will back reforms to steady the banking system, deepen capital markets, and push green and inclusive finance. That means improving asset quality and regulations, setting up credit rating agencies, and creating a national framework for green and social bonds to attract sustainable investment. The work builds on ADB’s earlier support through the Financial Market Development Program from 2019 to 2021 and lines up with Bhutan’s Thirteenth Five-Year Plan and ADB’s Strategy 2030, which focus on climate action, private sector development, and digital transformation.
