The lending program was secured on unprecedented terms of 0.01 percent interest rate over 15-year repayment with a 4-year grace period
To boost economic recovery from the Covid-19 pandemic and fully return to a path of high and inclusive growth, the government secured a 3.3-billion (US 30-million) loan from Japan.
The official development assistance (ODA) lending program for “Covid-19 crisis response emergency support loan” was secured on unprecedented terms of 0.01 percent interest rate over 15-year repayment with a 4-year grace period.
This budgetary support is the first program loan from the Government of Japan through the Japan International Cooperation Agency (JICA) to Bhutan.
During the signing of the loan agreement at Trashichhoe Dzong on 23 May, finance minister Namgay Tshering said that the budgetary support will improve the socio-economic condition, livelihood of people, and the country’s state.
And Lyonpo underscored that the loan will be put to good use in productive sectors that stimulate and promote economic activities.
“We are also investing in the agriculture sector. The agriculture contribution to GDP has gone up from 15 percent to 18.5 percent in the last two years,” he said. “For the last two years, we have significantly spent in water and road sectors, and ICT.”
“We are looking into how best we can use that money, be it domestic resources, borrowed, or grants that we get from multilateral and bilateral partners,” he continued, adding that the government is observing the budget with the highest level of prudence.
He added that the support will not only meet the fiscal deficits but also enhance, encourage, and strengthen the bilateral relationship between the two nations.
Lyonpo says this landmark achievement signifies a strong vote of confidence from the Japanese government in the Royal Government of Bhutan. “This is just the start and we ensure that whatever the Government of Japan has contributed as grants and loans, we will ensure to keep up to the expectations,” he said.
In addition, Lyonpo also commended the Japanese people and government for their continued strong support for Bhutan’s socio-economic development projects for many years and pandemic response efforts.
Apart from recovery and development of the economy and society, the budget can be used to strengthening the health care system in the country.
JICA’s Chief Representative Kozo Watanabe, says, he is confident that the emergency loan will provide a meaningful basis for a stronger recovery and revitalization of the Bhutanese economy, besides further strengthening friendship between the Government and the people of Japan and Bhutan.
“I believe our multilayered cooperation including, yen loan, grant aid, technical cooperation and volunteers will support the sustainable development of Bhutan and drive the economy even after graduation from the group of Least Developed Countries in 2023,” he added.
This cooperation is the second Yen loan after the rural electrification project signed in 2007 and 2011 that achieved 97 percent of rural electrification in the country.
Meanwhile, Kozo Watanabe informed that JICA is now preparing the project of the construction of the Royal Centre for Infectious Diseases (RCID) at Gidakom in Thimphu for building further resilient health systems in infectious diseases.