The Bhutan Development Bank Limited (BDBL) has disbursed Nu 198.36 million to applicants under the government’s ambitious Economic Stimulus Plan (ESP), according to an update shared by Finance Minister Lekey Dorji.
Launched on May 18, 2023, the Nu 15 billion ESP aims to drive Bhutan’s economic recovery in the wake of the pandemic-induced downturn. The initiative has been structured around two key funding mechanisms, known as Window I and Window II, catering to different economic priorities.
Progress under Window I
Window I, which primarily focuses on concessional loans for agriculture, livestock, and small to medium-scale industries, has been instrumental in supporting entrepreneurial projects across the country.
Out of 1,473 applications received under Window I—including submissions through other financial institutions—262 projects have been approved, with a total commitment of Nu 398.22 million. However, 126 applications were declined, indicating the rigorous scrutiny of proposals to ensure only viable and impactful projects receive funding.
The Finance Minister emphasized that the government has taken decisive measures to expedite the disbursement of funds. “The entire Nu 3.3 billion concessional loan is now being implemented through the Bhutan Development Bank Limited to streamline the process,” Lyonpo Lekey Dorji said.
Updates on Window II
Window II, known as the Reinvigoration Fund, focuses on broader economic revitalization and is implemented in collaboration with seven financial institutions. As of December 3, 2024, 87 applications have been submitted under this window.
Of these, 13 applications have been approved, while six have been declined, leaving 66 still under review. Subsidies amounting to Nu 87.73 million have been provided to support projects under this funding window.
Simplifying the Loan Disbursement Process
In response to feedback from stakeholders and applicants, the government has introduced structural changes to make the disbursement of ESP loans more efficient. A dedicated unit is being established within BDBL to handle the assessment, disbursement, and monitoring of loans.
This streamlining effort, which consolidates concessional loan disbursement through BDBL’s extensive branch network across all 20 dzongkhags, is expected to significantly improve accessibility for applicants in rural areas.
Tandy Wangchuk, the President of the Bhutan Chamber of Commerce and Industry (BCCI), acknowledged the progress made. Speaking during the Private Sector Press Conference, he highlighted the importance of the ESP in supporting Bhutan’s private sector, especially small and medium enterprises (SMEs).
“Since BDBL has taken up the role of disbursing the concessional loans, the process has become more streamlined,” he said. However, he added that the BCCI plans to propose an extension of the application deadline, currently set for December 31, 2024, to ensure that unutilized funds can still benefit potential applicants.
Challenges Faced by the Private Sector
Despite the improvements, private sector stakeholders have expressed concerns about persistent challenges in accessing ESP loans. Gyam Dhendup, President of the Bhutan Concrete Bricks Association, raised issues related to the lengthy and costly requirements imposed by financial institutions.
“An individual has to invest over Nu 300,000 and spend more than a month fulfilling the requirements, yet the certainty of approval is not guaranteed,” he said.
Previously, a principal approval system offered applicants greater assurance of receiving loans. However, under the ESP framework, applicants face more stringent evaluation criteria, which Gyam Dhendup believes discourage potential borrowers.
“For a three-year loan period, we appeal to the government to simplify the application process so that interested individuals can apply within the given timeframe,” he said.
Government’s Commitment
The government remains committed to ensuring the ESP achieves its objective of driving economic recovery and fostering entrepreneurship. The Finance Minister underscored the importance of balancing accessibility with due diligence to ensure the effective use of public funds.
“The ESP is not just about disbursing funds. It is about ensuring that every ngultrum contributes to strengthening Bhutan’s economy and creating long-term opportunities,” Lyonpo Lekey Dorji said.
Stakeholders Push for Flexibility
The BCCI, along with other private sector representatives, continues to advocate for greater flexibility in the implementation of the ESP. Proposals include simplifying documentation requirements, revisiting loan tenure, and increasing clarity on evaluation criteria.
These recommendations are particularly relevant for rural entrepreneurs who often face logistical and financial challenges in meeting the requirements.
Impact on Rural Entrepreneurs
The decision to centralize concessional loan disbursement through BDBL is expected to benefit rural entrepreneurs, given the bank’s strong presence in remote areas. Projects in agriculture and livestock sectors, which are predominantly based in rural Bhutan, stand to gain from this improved access to funding.
By addressing bottlenecks in the application and disbursement processes, the government aims to empower more Bhutanese entrepreneurs to launch and sustain viable businesses.
Future Prospects
As the December 31 application deadline approaches, the focus will be on ensuring the remaining funds under the ESP are utilized effectively. The success of this initiative will likely be measured not just in terms of the funds disbursed, but also in the long-term impact on Bhutan’s economic resilience and diversification.
For applicants, the streamlined process through BDBL offers new opportunities, but the challenges outlined by stakeholders highlight the need for ongoing dialogue between the government, financial institutions, and the private sector.
The government’s efforts to simplify processes and its willingness to adapt policies based on stakeholder feedback reflect a commitment to inclusivity and efficiency in economic policymaking.
As Bhutan continues its journey toward post-pandemic recovery, the Economic Stimulus Plan represents a critical tool in fostering a resilient and diversified economy. While challenges remain, the progress made thus far signals a positive trajectory for the future.
