The Bhutanese delegation at the High-level Thematic Round

Bhutan’s fears and hopes as it graduates

At a special High-Level Thematic discussion called ‘Supporting Sustainable and Irreversible Graduation from the Least Developed Country Category,’ the Bhutanese delegation to the Least Developed Countries conference represented by Foreign Ministry Chief of the Social and Development Division in the Multilateral Department, Ugyen Dorji, expressed Bhutan’s fears and expectations over graduation in 2023 December.

He said Bhutan considers that graduation from the LDC category is a normal progression that an LDC makes in its development journey.

“We deeply appreciate the support and cooperation that we have received from the international community for the last five decades and would like to express our gratitude to all development partners and the UN system for your support in realizing significant progress in our socio-economic and sustainable development goals. Our imminent graduation reflects the collective progress made by Bhutan, our development partners and the UN systems,” said Ugyen.

He said while this is an accomplishment that Bhutan is happy about, Bhutan is also concerned that the path ahead is fraught with numerous challenges and that Bhutan will require continued support and cooperation in ensuring sustainable and irreversible graduation.

Ugyen pointed out that with inadequate domestic resources, Bhutan remains reliant on grant aid for capital developmental activities. However, donor funding is increasingly becoming scarce which could constrain development spending and hinder future growth and development. Thus, Bhutan requires assistance to identify alternative sources of finance including innovative sources of financing.

“Bhutan also remains highly vulnerable to the impacts of climate change and natural disasters. We continuously experience landslides, floods, windstorms, forest fires and earthquakes which have adverse impacts on our water, energy and food security,” said Ugyen.

 He said the economy is also constrained by weak productive capacities and limited export diversification. These have resulted in high import volume and persistent current account deficits leading to a significant accumulation of foreign debt.

As a landlocked country, efficient trade facilitation is vital for Bhutan to ensure a seamless movement of goods and services.

He said Bhutan will need assistance from its trading partners in implementing necessary trade facilitation measures.

“We will need to enhance the competitiveness of Bhutan’s export sectors which will be affected by the withdrawal of preferential market access.”

 He said going forward, Bhutan has started large scale reforms of the public sector with a view to bring about efficiency and effectiveness in governance and service delivery.

It was pointed out that with increasing emphasis on leveraging technology, Bhutan has started developing regional and international partnerships for skills development, digital infrastructures, boosting technological innovation, and strengthening frameworks for attracting FDI.

“However, as of now, the lack of skills, expertise, and infrastructures in new technologies restrain meaningful leveraging of the digital economy.”

He said for Bhutan, as an LDC nearing graduation, the greatest concerns lie on the loss of LDC-specific support measures, at a time when we are recovering from the economic impacts of COVID-19, facing the implications of the geopolitical conflict on food and fuel supplies in a not very encouraging global economic outlook.

“Despite these multi-dimensional challenges, we are hopeful that the continued support and goodwill from our development partners will give us the necessary impetus to graduate sustainably and without major implications.”

 He expressed sincere gratitude and also solicited continued assistance from Bhutan’s bilateral and multilateral development partners including the UN system saying the assistance will always be invaluable.

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