Financial Sector Development Implementation Plan in Bhutan

Project Development Objective (PDO)

The purpose of this project is to facilitate financial sector reforms by helping national authorities adopt a coherent vision and strategy for financial sector development in Bhutan, including a well-sequenced, time-bound, and prioritized roadmap for implementing reforms.


The proposed Financial Sector Development Implementation Plan (FSDIP) project will provide a coherent framework for the government of Bhutan. The project will deliver a detailed, prioritized action plan for medium- and long-term financial sector development. It will provide cost estimates, identify responsibilities, and propose a time frame for implementation. 

A comprehensive FSDIP will help the Royal Monetary Authority (RMA) achieve its intended goals of a deeper financial sector and improved financial inclusion. The technical assistance will result in a more efficient, diversified, and inclusive financial sector, which will better serve the needs of the real economy. The government anticipates that the plan would also encompass a strengthened framework for monetary policy in which (a) banking system liquidity is actively managed by the RMA and (b) a benchmark yield curve is developed in accordance with a public debt management strategy. 


The main output of the project is an FSDIP. By building on recent and relevant work in the sector and additional analysis as necessary, the FSDIP will propose a coherent and sequenced implementation strategy to broaden and deepen Bhutan’s financial sector. This strategy will identify priority areas of intervention, accounting for the constraints inherent in Bhutan’s small size and geographical specificities, with a view to contributing to economic growth. The coordination and supervision of the implementation plan will be assigned to a high-level steering committee supported by a strong technical secretariat with a very specific mandate.

The expected project outputs include the following:

1. Provide a comprehensive FSDIP, including a prioritized, time-bound sequence of actions and roadmaps for interventions that also list cost estimates and responsible authorities.

2. Conduct internal workshops and seminars. The FSDIP will be disseminated to relevant stakeholders and presented to donors and potential technical assistance providers (in addition to the World Bank), with a view to seeking their support in FSDIP implementation.

3. Set up a mechanism to aid in and monitor the implementation of the FSDIP. 

Expected Outcomes

The expected outcomes of this project include the following:

1.    Improved coordination among authorities

2.    Mobilization of resources for implementation

3.    Tracking and communication of FSDIP’s progress to ensure timely actions

4.    Implementation of financial sector reforms

5.    Increased financial depth, efficiency, stability, and inclusiveness