TIL BDR GHALLEY | Thimphu
The Royal Monetary Authority (RMA) issued a policy signal aimed squarely at one of the country’s most strained industries.
After years of subdued tourist arrivals and mounting loan obligations, Bhutan’s hotel sector is set to receive targeted financial relief through a newly announced interest subsidy scheme.
The central bank confirmed that “the implementation of the 4% interest subsidy on hotel loans” will come into effect from May 1 this year.
The initiative is financed through the Economic Stimulus Programme (ESP) of the Royal Government of Bhutan, marking a continuation of state-backed efforts to stabilize businesses affected by the prolonged downturn in tourism.
For many hotel operators, the announcement arrives after years of uncertainty. The pandemic-era collapse in international travel left rooms empty and revenues sharply reduced, even as loan repayments remained due.
The RMA noted that “the interest subsidy is expected to ease the financial burden on hoteliers carrying loan obligations following years of severely disrupted tourism,” particularly for those still servicing debts accumulated during the industry’s most difficult period.
The decision follows government approval granted on April 15, after which the RMA moved to finalize implementation guidelines.
These have now been distributed to financial institutions across the country, which will be responsible for administering the scheme.
The subsidy is narrowly targeted. It applies to loan accounts held by hotels classified as four-star and below, provided they are licensed by the Department of Tourism Bhutan (DoT) and registered under the Tourist Registration System.
This focus reflects the structure of Bhutan’s hospitality sector, where smaller and mid-range establishments form the backbone of accommodation services.
To access the relief, hotel owners must navigate a defined application process. Submissions are to be made through their respective financial institutions by July 31, 2026, accompanied by valid tourism certification and registration records.
For those yet to complete certification, a separate deadline—May 31—has been set to secure approval from the Department of Tourism.
At the core of the scheme is a one-year relief window. Eligible borrowers will receive a total interest reduction of 5 percent, combining the 4 percent subsidy from the ESP with an additional 1 percent rate cut extended by financial institutions.
As stated by the RMA, “eligible borrowers will receive a total interest relief of 5% for one year.”
Yet the support comes with conditions. The RMA has made clear that “the interest subsidy will only be applied to loan accounts where repayment has commenced.”
This requirement, the central bank stated, is intended to ensure that public financial support is directed toward borrowers actively meeting their obligations.
The relief, officials emphasized, is not indefinite. It will run for a maximum of 12 months from the point of application, with the RMA noting that “the subsidy will be available for a maximum period of 12 months from the date it is first applied to an eligible loan account,” underscoring its role as a short-term intervention rather than a long-term adjustment to lending conditions.
The announcement also arrives alongside a broader policy shift. Earlier in April, the RMA revoked the Payment Moratorium facility that had allowed borrowers to defer loan repayments under the Regulations on Non-Performing Loans Management 2025.
The central bank confirmed that “the Payment Moratorium facility stands revoked,” and financial institutions have now been directed to restructure loans that remain under deferment using existing facilities or new measures approved at the institutional level.
Taken together, the changes signal a transition in Bhutan’s financial response from emergency-era deferments toward more targeted and conditional support mechanisms.
The interest subsidy, in this context, represents a bridge between crisis management and recovery.
For the hotel sector, the stakes remain closely tied to the trajectory of tourism. As international travel gradually resumes and visitor numbers begin to recover, operators are balancing cautious optimism with lingering financial strain.
The subsidy offers a measure of relief during this transition, easing interest costs at a time when revenues are still stabilizing.
Implementation now rests with financial institutions, which have been instructed to apply the scheme in line with the RMA’s guidelines.
The central bank has framed the initiative as both support and responsibility an effort to assist borrowers while reinforcing the expectation of continued repayment discipline.
