## _cr04246 ## Source details **Canonical URL:** [_cr04246](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2004/_cr04246.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2004/_cr04246.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2004/_cr04246.pdf.json) --- ### Executive Summary — key objectives and scope - RGoB initiated a Poverty Reduction Strategy Paper (PRSP) process to: - strengthen the strategic framework for poverty reduction; - improve donor coordination; - build support for new initiatives in public expenditure management and poverty monitoring and evaluation. - PRSP builds directly on the Ninth Five-Year Plan (Ninth Plan); this Cover Note together with the Ninth Plan document will comprise the PRSP. - Cover Note structure: 9 parts including PRSP introduction, country background (Bhutan 2020), Ninth Plan overview, recent economic and policy developments and outlook, MTEF, sectoral strategies, profiling the poor, poverty reduction challenges and strategies, poverty monitoring and assessment, consultative process. ### Institutional arrangements and PRSP functions - Lead agency: Department of Planning (DoP), Ministry of Finance. - PRSP complements Ninth Plan by: - updating recent economic developments; - elaborating an MTEF; - profiling the poor and causes of poverty; - enumerating poverty reduction challenges and strategies; - describing proposed Poverty Monitoring and Assessment System (PMAS); - discussing the consultative process. - DoP coordinates with National Statistical Bureau (NSB), Planning & Policy Division (PPD) in ministries, and Dzongkhag technical units. - DoP considering establishment of a Poverty Monitoring Unit (PMU) for PVI, outcome monitoring, impact assessment, communication/advocacy; PMU would submit poverty progress reports if established. ### Bhutan 2020, development philosophy, and Ninth Plan design - Overarching philosophy: Gross National Happiness. - Bhutan 2020: A twenty year perspective strategy. - Geographic and demographic facts: - land area: 38,394 square kilometers; - forest coverage: 72 percent; - estimated population: 734,340 (2003); - rural population: 79 percent; - about 42 percent of the population below the age of 15; - administrative division: 20 Dzongkhags and 201 Gewogs. - Example Bhutan 2020 targets: - providing electricity to 50 % of the rural population by 2012; - achieving a three fold increase in real income of farmers by 2012; - ensuring that 75 % of the rural population live within half a day’s walk from nearest road; - maintaining 60 % of land area under forest coverage in perpetuity. - Ninth Plan (July 2002 to June 2007) features: - inclusion of individual plans for 201 Gewogs prepared by communities and elected representatives; - Plan components: Ninth Plan Main Document; Sectoral Plans; 20 Dzongkhag Plans; 201 Gewog Plans; - Gewog plans focused on social and rural infrastructure (farm roads, out-reach clinics, community schools, irrigation, suspension bridges, mule tracks, rural water supply). ### Recent economic and policy developments and outlook - As of December 2003: - growth: about 6.5 percent; - consumer price index inflation: 1.3% (December 2003); - foreign reserves: USD 366.71 million (December 2003), up from USD 316.9 million in June 2002; - reserve coverage: sufficient to cover around 22 months of imports. - Fiscal performance: - Government expenditure in 2002/2003: estimated slightly larger than budgeted; - overall fiscal deficit rose to about 9 percent of GDP (mainly because external grants received were smaller than anticipated); - approved budget for 2003/2004 projects narrowing of overall fiscal balance to about 4 percent of GDP with an increase in grants. - Growth drivers in 2003: - Construction: growth of 16.4 percent; - Manufacturing: growth of 14.3 percent; - Transportation: growth of 11.8 percent. - Balance of payments (2002-03 & 2003 provisional): - Imports: Nu. 9,042.1 million (27% of GDP, 2003); - Exports: Nu. 5,405.9 million (17% of GDP, 2003); - Trade deficit: Nu. 3,636.2 million (2002-03); - Current account surplus (2002/03): Nu. 2,937.1 million (9% of GDP); - Gross foreign reserves: USD 366.71 million by December 2003; convertible currency reserves account for USD 288.28 million. - Debt outstanding (December 2003): - stock of external debt outstanding: USD 472.193 million or around 67 percent of GDP; - debt service ratio: 3.5 percent. - Monetary policy: - Aim: maintain Ngultrum-Rupee parity; - External trade with India accounts for 80 % of Bhutan’s external trade; - CPI inflation decreased from 2.7 percent at end of Eighth Plan to 1.3 percent in December 2003; projected to remain below 4 percent. - FDI and external engagement: - RGoB approved the FDI Policy in December 2002; - Accession/joining: WCO (February 2003), IFC (December 2003), BIMST-EC (2004), Intergovernmental Agreement on the Asian Highway Network (April 2004), SAFTA signatory. ### Medium Term Expenditure Framework (MTEF) and public spending priorities - Ninth Plan total outlay: Nu. 70,000 million. - Current expenditures: Nu. 31,682 million. - Capital investments: Nu. 34,869 million. - Debt servicing: Nu. 3,449 million. - Domestic revenue projection for Ninth Plan: Nu. 32,000 million. - External assistance projected: Nu. 28,000 million (earlier estimate Nu. 35,000 million comprising grant of Nu. 30,000 and loan of Nu. 5,000). - Of external assistance: approximately Nu. 21,000 million in grant assistance and Nu. 7,000 million in concessionary loans expected to finance capital investments. - Budgetary gap: over Nu. 5,000 million to be covered by domestic borrowing. - MTEF projections (next three years): - anticipates budget deficits between 3 and 4 percent of GDP; - overall spending between 35 and 40 percent of GDP. - Public spending focus: - poverty reduction and economic growth; - roads: 11 percent of the budget for roads (Table 3: Roads total for the Ninth Plan: 7,000.257 (10.0% of budget)); - health and education: 24 percent for health and education (Table 3: Health & Education total for the Ninth Plan: 16,627.478 (23.8% of budget)). - Key Table 3 excerpts (Ninth Plan totals preserved): - Health & Education: 16,627.478 (23.8% of budget) - Agriculture: 7,154.691 (10.2% of budget) - Human Settlements: 4,079.651 (5.8% of budget) - Communications: 1,135.496 (1.6% of budget) - Roads: 7,000.257 (10.0% of budget) - Energy: 6,359.884 (9.1% of budget) - General Public Services: 19,036.576 (27.2% of budget) - Debt Services: 3,842.286 (5.5% of budget) - Others: 4,763.681 (6.8% of budget) - Total Expenditure (Ninth Plan total): 70,000.000 (100%) - Resources (Ninth Plan total): 54,991.645 - Domestic Revenue (Ninth Plan totals): 31,522.281 (57.3% of resources) - External Grants (Ninth Plan totals): 21,346.560 (38.8% of resources) - Expenditures split (Ninth Plan totals): Current: 31,681.467 (45.3%); Capital: 38,318.533 (54.7%) - Overall Fiscal Position (Ninth Plan total): -12,266.987 - External Borrowings (Ninth Plan total): 7,135.080 - Resource Gaps (Ninth Plan total): -5,131.907 (Gap as % of Expenditure: -7%) - GDP at Current prices (factor cost), selected years: - 2002-03: 27,779.000 (100%) - 2003-04: 31,884.000 (100%) - 2004-05: 35,751.300 (100%) - 2005-06: 41,481.200 (100%) - 2006-07: 48,165.100 (100%) ### Budget revisions, fiscal balances and financing gaps - External Grants revised from around Nu. 30,273.332 m (initial) to Nu. 21,346.56 m as of June 2004 (DADM estimates). - External Borrowings scaled up to Nu. 7,135.08 m from Nu. 5,081.203 m. - Overall budget gap increased to 7% from 4% estimated earlier. - 2002-03 actual expenditure: Nu. 10,211.146 million. - Current expenditure: Nu. 4,580.908 million (45%); - Capital expenditure: Nu. 5,630.238 million (55%). - Overall fiscal deficit widened to 11 percent of GDP in 2002-03 from 6.7 percent in 2001-02. - Personal Income Tax first-year collections: Nu. 91 millions. - Revised budget for 2003-04: overall fiscal deficit narrowed to about 6 percent of GDP. - Approved budget for 2004-05: Expenditure budget Nu. 13,621.739 million. - Recurrent expenditure: Nu. 5,968.657 million (44%); - Capital expenditure: Nu. 7,158.342 million (56%). - 2004-05 resource composition: - Domestic revenues expected to finance around 42% of total expenditures; - Grants around 32%; - Concessional borrowings about 10%; - Domestic borrowings expected to finance around 7% of the budget. ### Decentralization and budget shares - From total Ninth Plan outlay of Nu. 70,000 million: - Center allocated about 75 percent; - Dzongkhag allocated 21 percent; - Gewogs allocated 4 percent. - Dzongkhag and Gewog budgets account for around 22% of total budget outlay (excluding centrally implemented rural electrification, rural telecommunication and rural feeder roads). - Gewog programs: social and rural infrastructure; agriculture sector receives the highest budgetary allocation within Gewog-implemented activities. ### Sectoral strategies and allocations — highlights - Ninth Plan emphasizes poverty reduction through enhanced access to health and education and infrastructure development (roads, electricity, rural telecommunications). - Sectoral allocation summary: - social sectors (health and education): around 24 percent of total budget; - roads, agriculture and electricity each receive about 10 percent of the total. ### Education — situation, objectives and financing - Indicators and outcomes: - Gross primary enrolment ratio rose from 55 percent in 1991 to 81 percent in 2003; - Girl’s enrolment ratio rose from 39 percent in 1990 to 47 percent in 2003; - Of 100 children enrolling in primary schools, 69 complete seven years of primary education, 54 complete Class VIII, and 39 reach class X; - Repetition rate: annual average of 14 percent; - Adult literacy increased from 48 percent in 1994 to 54 percent in 2000. - Ninth Plan objectives include: - primary enrolment 90-95 percent by 2007; - increase literacy rate from 54 percent to 80 percent; - increase promotion proportion from class X to XI from 38 percent to 56 percent by 2007; - develop National University; expand teacher training intake from 900 to 1,470. - Financing: - Education spending allocation: 15 percent of the total budget; - Education total for the Ninth Plan: 10209.4 (100%); annual and current/capital breakdowns preserved in source. ### Health — situation, objectives and financing - Indicators: - 78.2 percent of villages have access to health facilities within two hours walking distance; - 89 percent within three hours walking distance. - Infant Mortality Rate per 1000 live births: 70.7 (1994) / 60.5 (2000). - Under five Mortality Rate per 1000 live births: 96.9 / 84.0. - Maternal Mortality Rate per 1000 live births: 3.8 / 2.55. - Contraceptive Prevalence Rate %: 18.8 / 30.7. - Access to Safe Drinking Water: NA / 77.8 (2000). - Sanitation Coverage: NA / 88.0 (2000). - Ninth Plan targets by end of Plan: - 100 percent access to clean water and safe sanitation; - population growth rate: 2.3 percent; - halve infant mortality to 30 per 1000 live births; - reduce under-5 mortality to 50 per 1000; - lower maternal mortality rate to 1.5 per 1000 live births. - Financing: - Health sector budgeted to receive Nu. 6,418 million (10% of total Ninth Plan outlay); - Health total for the Ninth Plan: 6418.1 (100%); annual and current/capital breakdowns preserved in source. ### Agriculture (Renewable Natural Resources) — situation, objectives and financing - Indicators: - Grain deficit in 63 out of 201 Gewogs (Poverty Assessment Report 2000). - Average land holding per rural household (family of six): 3.4 acres. - About 79 percent of the population lives in rural areas and 75 percent of the workforce is engaged in RNR. - Challenges: poor productivity, fragmentation of land, shortages of farm labour due to rural-urban migration. - Objectives: enhance rural income, achieve national food security, conserve natural resources, generate employment. - Financing: - Ninth Plan allocates close to 10 percent of total budget to RNR; - RNR total for the Ninth Plan: 7154.7 (100%); annual and current/capital breakdowns preserved in source. ### Roads — situation, objectives and financing - Road network: 4020 kilometers, including 1,558 kilometers of national highway. - Objectives: improve accessibility, reduce travel time and costs. - Strategy: construct 77 kilometers of national highway, 123 kilometers of feeder roads, replace/construct about eight bridges. - Financing: - Allocation of 10 percent of the total outlay to the road sector; - Roads total for the Ninth Plan: 7000.3 (100%); annual and current/capital breakdowns preserved in source. ### Energy — situation, objectives and financing - By end of Eighth Plan (2002) harnessed 444 MW (about 1.4 percent of estimated potential over 30,000 MW). - Tala Hydroelectric project: 1020 MW under implementation. - Basochhu Hydroelectric Project (Lower Stage): 38.6 MW under implementation. - Challenges: about 65 percent of the population without electricity. - Ninth Plan objectives: - strengthen economic self-reliance by realizing electricity generation capacity; - provide adequate, safe and reliable electricity; - 100 percent rural electrification by 2020. - Strategies: feasibility studies for micro-hydro, expand rural electrification targeting 15,000 households, construct transmission grids, study 2,000 MW harnessing, implement Mangdechhu and Punatsangchhu projects (project capacities noted in source). - Financing note: - Allocation does not include provision for mega hydro projects such as 360 MW Mangdechhu and 870 MW Punatsangchhu; - Energy total for the Ninth Plan: 6,359.9 (100% as per Table 10/10 summary); Centre/Dzongkhag splits and current/capital shares preserved in source. ### Poverty profiling, HIES 2000 and PAA 2000 — key findings - HIES 2000 (one round Apr–Jun 2000) potential seasonal bias noted. - Average monthly per capita expenditure: - Urban: Nu 1,945; - Rural: Nu 928; - Nation: Nu 1,075. - Poverty lines: - Lower (food poverty line): Nu 612.10 per capita per month; - Upper (income/absolute poverty line): Nu 748.10 per capita per month. - Poverty incidence (2000) from HIES 2000: - Population Poor (%) — Lower Poverty Line: - Urban: 2.9; - Rural: 29.0; - Total: 25.3. - Population Poor (%) — Upper Poverty Line: - Urban: 6.4; - Rural: 41.3; - Total: 36.3. - Poverty gap measures: - food poverty line gap: 6.6%; - income poverty line gap: 11.1%. - Gini coefficient for expenditure: - Nation: 0.36; - Urban: about 0.36 to 0.42; - Rural: about 0.35. - PAA 2000 (nationwide, 201 Gewogs and 22 townships) findings: - Priority needs for Dzongkhags: education, economic activities, household income, health, communication, physical facilities, transport, environment, women’s position, non-material needs; - Most vulnerable Dzongkhags (composite indices): Gasa 1, Pemagatshel 2, Lhuentse 3, Zhemgang 4, Trongsa 5/6, Samdrup Jongkhar 6/5; - PAA 2000 ranked 50 vulnerable Gewogs (~20% of households); about 28 Gewogs (~10% of households) ranked most vulnerable; - Geographic concentration of poorest Gewogs: Pemagatshel, Zhemgang, Mongar, Trashigang, Samdrup Jongkhar; - 63 of 201 Gewogs and 22 townships report food insecurity; - 65% of Gewogs have no access to electricity; - One-third of Gewogs not connected to feeder roads; - 45 Gewogs below national average primary enrolment rate of 72%. ### Who are the poor — characteristics and spatial concentration - Poverty is predominantly rural: Rural poverty incidence 41.3%; Urban 6.4%. - Extrapolation from HIES 2000: about 96% of the Bhutanese poor live in rural areas. - Rural poor characteristics: subsistence farmers, larger families (high dependency), few livestock, limited off-farm income, limited schooling. - Urban poor characteristics: migrant households in hutments/shanties, petty traders, casual/day labourers, larger families. ### Causes of poverty — summarized factors - Remote location and difficult terrain; lack of roads, transport, electricity and communications. - Limited ownership or access to productive assets including land: - 1988 National Agronomic Survey: 9% of farm households owned less than half a hectare, 27% less than one hectare, 58% less than two hectares. - Lack of remunerative employment and off-farm opportunities. - Large families and rapid population growth: - rural households: 49% had an average of six or more members (HIES 2000). - population growth: 3.1% in 1994; 2.5% in 2000. - Low adult literacy in rural areas: 41.5% (urban: 75.9%). - Natural calamities and health shocks; limited access to services and markets. ### Poverty reduction challenges and Ninth Plan strategies - Main challenges: limited income-raising opportunities, limited access to basic services and markets, vulnerability to shocks, lack of coordinated poverty indicators and monitoring. - Development approach: - focus on comprehensive rural development supported by infrastructure (roads, electricity, communications) and social services; - private sector-led income and employment generation; - good governance and pro-poor public expenditure patterns. - Operational constraints: small landholdings, lack of irrigation, limited access to technology and markets, inadequate farm and feeder roads. ### Sectoral interventions (selected salient strategies) - Agriculture: - land reforms, modern farming/animal husbandry, irrigation expansion, diversification into high-value low-volume products, access to credit, promotion of cooperatives, farm and feeder roads, market infrastructure, R&D. - Off-farm enterprises: - training, technical assistance, improved access to credit and markets; rely on road access and rural electrification. - Private sector environment: - transparent industrial/investment policies, industrial estates, service centers, improved infrastructure to encourage private investment and employment. - Workforce skills: - technical and vocational training in partnership with employers; curriculum adjustments for life skills and entrepreneurship. - Infrastructure targets: - construct more than 500 kms of new farm roads; 123 kms of feeder roads; complete 46 kms of feeder roads; expand electricity and communications to underserved areas. ### Food security — findings and strategy - Food insecurity examples: - about 39% of households in Pemagatshel District suffered chronic food insecurity; - 19% in Lhuentse district. - Country self-sufficiency in rice: 60% of requirements. - Food security strategy: - (i) increase cereal production to at least 70% self-sufficiency; - (ii) expand agricultural production including cash crops for export to finance additional food imports. - School feeding projects supported by WFP partly alleviate child nutrition effects. ### Poverty monitoring and assessment — coordination challenges - Problems identified: - No national statistics plan to sequence major surveys; surveys ad hoc and donor-dependent; - Lack of coordination between M&E systems across ministries; proposal to standardize indicator categories; - Multiple reporting frameworks at Dzongkhag level; proposal for standardized reporting; - Monitoring data not systematically influencing budget allocations; need for communication/advocacy and institutional framework; - Lack of systematic impact assessment; DoP initiated pilot impact assessment (rural roads on rural poverty, 2003). - DoP identified as focal agency for poverty monitoring; proposed PMAS to be integrated within Planning Information Network (PIN). ### Proposed Poverty Monitoring and Assessment System (PMAS) — objectives, principles, components - Primary objective: coordinate, consolidate and harmonize data from existing poverty monitoring systems to produce timely useful information and analysis for decision-makers and to communicate results for policy feedback. - PMAS principles: - National Ownership/Appropriation; - Participation; - Harmonization/Consolidation; - Collaborative Engagement. - PMAS components: - Component I - Poverty, Vulnerability and Inequality (PVI) outcome monitoring; - Component II - PRS implementation monitoring; - Component III - Impact Assessment and Policy Analysis; - Component IV - Poverty Information Management; - Component V - Communication/Dissemination. ### PMAS indicators (selected from Table 12) - Economic indicators (examples): - Population (%) with more than half a day walk to the nearest road — disaggregation: By Gewog; Frequency: Yearly. - Households (%) connected to electricity — disaggregation: By Gewog; Frequency: Yearly. - Population (%) below food-poverty line — disaggregation: rural/urban; Frequency: 5-yearly?. - Gini coefficient of income / consumption — disaggregation: rural/urban; Frequency: 5-yearly?. - Unemployment rate — disaggregation: rural/urban male/female; Frequency: Yearly. - Education indicators (examples): - Illiteracy rate (above 15 years) — disaggregation: male/female, by Dzongkhag; Frequency: every 5 years (?). - Net enrolment rates in primary levels — disaggregation: male/female, by Dzongkhag; Frequency: yearly. - Pupil/teacher ratio — disaggregation: by Dzongkhag; Frequency: yearly. - Health indicators (examples): - Births (%) not attended by skilled health personnel — disaggregation: by Dzongkhag; Frequency: every five years (?). - One-year olds (%) fully immunized — disaggregation: By Gewog; Frequency: annually. - Number of doctors per 1000 population — disaggregation: by Dzongkhag; Frequency: annually. - Infant, under-5, maternal mortality rates — Frequency: every five years (?). - Agriculture indicators (examples): - % of farming households without any kind of farming machinery — disaggregation: by Gewog; Frequency: 5 years (with Census). - % of households w/o any arable land — disaggregation: by Gewog; Frequency: 5 years (with Census). - Growth rate of rice production — disaggregation: by Gewog; Frequency: 3-5 years (with Census). - Gender, ICT, Environment, Non-material dimensions indicators listed with responsibilities and frequencies as in Table 12. ### PRS implementation monitoring and consultative process - PRS Implementation Monitoring (Component II): track inputs and outputs using routine administrative monitoring data; harmonize existing M&E systems across line ministries. - Ninth Plan consultative process: - Brainstorming session August 2000, sectoral consultations, Dzongkhag visits, guidelines issued early 2001, DYT/GYT participation, Planning Commission review, Cabinet endorsement, National Assembly approval. - PRSP process builds on Ninth Plan consultations; main agencies: Planning Commission Secretariat (focal), Ministry of Finance (MTEF), sectoral ministries. - PRSP not based on a separate consultation process of similar extent due to Ninth Plan's extensive consultations. *Source: _cr04246 (extracts from the provided IMF PDF chapter/section).* ### EXECUTIVE SUMMARY .............................................................................................. 3 ### _cr04246 - EXECUTIVE SUMMARY .............................................................................................. 3 ### Executive Summary — key objectives and scope - The Royal Government of Bhutan (RGoB) has initiated a Poverty Reduction Strategy Paper (PRSP) process to: - strengthen the strategic framework for poverty reduction; - improve donor coordination; - build support for new initiatives in public expenditure management and poverty monitoring and evaluation. - The PRSP process builds directly on the Ninth Five-Year Plan (Ninth Plan); this Cover Note together with the Ninth Plan document will comprise the PRSP. - This Cover Note has 9 parts: introduction to PRSP; country background (Bhutan 2020) and Ninth Plan overview; recent economic and policy developments and outlook; medium term expenditure framework (MTEF); sectoral strategies; profiling the poor; poverty reduction challenges and strategies; poverty monitoring and assessment; and the consultative process. ### Introduction — PRSP institutional arrangements and functions - Lead agency: Department of Planning (DoP), Ministry of Finance. - PRSP complements Ninth Plan by: - presenting an update on recent economic developments; - elaborating an MTEF; - highlighting profiling of the poor and causes of poverty; - enumerating poverty reduction challenges and strategies; - describing the proposed Poverty Monitoring and Assessment System (PMAS); - discussing the consultative process. - DoP coordinates with National Statistical Bureau (NSB), Planning & Policy Division (PPD) in ministries, and Dzongkhag technical units. - DoP is considering establishment of a Poverty Monitoring Unit (PMU) to assess Poverty Vulnerability Indicators (PVI), outcome monitoring, impact assessment, and communication/advocacy on poverty. If established, PMU would submit poverty progress reports to authorities. ### Bhutan 2020, development philosophy, and Ninth Plan design - Overarching philosophy: Gross National Happiness balancing material well-being with spiritual, emotional and cultural well-being. - Bhutan 2020: A Vision for Peace, Prosperity and Happiness is a twenty year perspective strategy. - Bhutan geographic and demographic facts: - land area: 38,394 square kilometers; - forest coverage: 72 percent; - estimated population: 734,340 (2003); - rural population: 79 percent; - about 42 percent of the population below the age of 15; - administrative division: 20 Dzongkhags and 201 Gewogs. - Bhutan 2020 targets (examples): - providing electricity to 50 % of the rural population by 2012; - achieving a three fold increase in real income of farmers by 2012; - ensuring that 75 % of the rural population live within half a day’s walk from nearest road; - maintaining 60 % of land area under forest coverage in perpetuity. - Ninth Plan (July 2002 to June 2007) features: - first-time inclusion of individual plans for 201 Gewogs prepared by communities and elected representatives; - plan components: Ninth Plan Main Document; Sectoral Plans; 20 Dzongkhag Plans; 201 Gewog Plans; - Gewog plans focus on social and rural infrastructure (farm roads, out-reach clinics, community schools, irrigation, suspension bridges, mule tracks, rural water supply). ### Recent economic and policy developments and outlook - As of December 2003: - growth: about 6.5 percent; - consumer price index inflation: historical low of 1.3% (December 2003); - foreign reserves: USD 366.71 million (December 2003), an increase of around 16 percent over USD 316.9 million in June 2002; - reserve coverage: sufficient to cover around 22 months of imports. - Fiscal performance: - Government expenditure in 2002/2003: estimated slightly larger than budgeted; - overall fiscal deficit rose to about 9 percent of GDP (mainly because external grants received were smaller than anticipated); - approved budget for 2003/2004 projects narrowing of overall fiscal balance to about 4 percent of GDP with an increase in grants. - Growth drivers: construction, manufacturing and transportation sectors. - External financing: inflows of foreign aid, concessional loans, and some foreign investment offset persistent trade deficit. ### Medium Term Expenditure Framework (MTEF) and public spending priorities - RGoB has initiated a two-year rolling budget mechanism; key MTEF features are developed in this Cover Note. - MTEF projections (next three years): - anticipates budget deficits between 3 and 4 percent of GDP; - overall spending between 35 and 40 percent of GDP. - Public spending focus: - poverty reduction and economic growth; - infrastructure emphasis: 11 percent of the budget for roads; - social services emphasis: about 24 percent for health and education. ### Poverty profiling, surveys, and analytical work - Past pilot studies: - Household Income and Expenditure Survey 2000 (HIES 2000) — household-level findings; - Poverty Assessment and Analysis 2000 (PAA 2000) — block (Gewog) and district (Dzongkhag) level results. - Complementarity: HIES 2000 and PAA 2000 complement each other, but results should be treated as indicative until confirmed through more systematic surveys. - Purpose of profiling: identify who are poor, where they are located, and causes of poverty to inform policy focus. ### Poverty monitoring and evaluation - Monitoring and evaluation are high priority; streamlining and institutionalization efforts are underway. - A draft Poverty Monitoring and Assessment System (PMAS) is being worked out internally; finalization is expected once the list of poverty indicators is finalized. ### Consultative process - The Ninth Plan consultative process: - involved central ministries and agencies, Dzongkhag and Gewogs, and donors; - took place over a 2 year period; - underpins the PRSP process. - Several key sectoral ministries were involved in drafting this Cover Note, with technical assistance from the World Bank. ### Selected social indicators (Table 1) — baseline and targets - Population growth rate (percent): 1994: 3.1; 2000: 2.5; Target for 2007: 2.3 - Primary school gross enrolment rate (percent) — Total/Boys/Girls: - 1994: 67 (in 90); - 2000: 82 (in 99) / 72 / 62 (in 99) [table format preserved as presented] - Adult literacy rate (percent): 1994: 48; 2000: 54; Target for 2007: ... - Life expectancy at birth (years) — Total/Men/Women: 1994 and 2000: 66.1 / 66.0 / 66.2 - Infant mortality (per 1,000 live births): 1994: 70.7; 2000: 60.5; Target for 2007: 30 - Under 5 mortality (per 1,000 live births): 1994: 96.9; 2000: 84.0; Target for 2007: 50 - Maternal mortality (per 1,000 live births): 1994: 3.80; 2000: 2.55; Target for 2007: 1.50 - Low birth weight (less than 2.5 kg)(percent): 1994: 36.0; 2000: 24.0; Target for 2007: 12.0 - Access to clean water (percent): 1994: 57; 2000: 77.8; Target for 2007: 100 - Access to safe sanitation (percent): 1994: ....; 2000: 88.0; Target for 2007: 100 - Doctors per 10,1000 population: 1994: 1.5; 2000: 1.7; Target for 2007: ... - Trained nurses per 10,000 (percent): 1994: 1.4; 2000: 2.3; Target for 2007: .... - Births attended by trained personnel (percent): 1994: 10.9; 2000: 23.7; Target for 2007: ... - Contraceptive prevalence rate (percent): 1994: 18.8; 2000: 30.7; Target for 2007: ... *Source: _cr04246 - EXECUTIVE SUMMARY* ### 2.10 The Ninth Plan has five overall objectives namely a) Improving the quality of life ### _cr04246 - 2.10 The Ninth Plan has five overall objectives namely a) Improving the quality of life ### Overall objectives - The Ninth Plan has five overall objectives: - a) Improving the quality of life and income, especially of the poor; - b) Ensuring good governance; - c) Promoting private sector growth and employment generation; - d) Preserving and promoting cultural heritage and environment conservations; - e) Achieving rapid economic growth and transformation. - The objectives are consistent with making progress towards realizing the Millennium Development Goals (MDGs) by 2015, or even earlier. ### Key strategies to achieve objectives - The strategies include: - a) infrastructure expansion; - b) sound macro-economic policy; - c) ensuring good governance; - d) improving access and enhancing social services. #### Strategy I: Infrastructure expansion - High priority on expansion of road network, particularly feeder roads to improve rural access. - Provision of electricity to at least 15,000 rural households. - Provision of rural telecommunications and urban infrastructure. #### Strategy II: Sound Macro-economic policy - Macroeconomic and fiscal policies to ensure stable economic growth of 7-9 percent and private sector participation. - Continued efforts to increase domestic resources through improved tax administration and the introduction of new taxes to broaden the revenue base. #### Strategy III: Ensuring Good Governance - Continue administrative and political reforms and creation of new structures and processes. - Most significant will be the adoption of a written national constitution. #### Strategy IV: Improving Access and Enhancing Social Services - Improving access through infrastructure expansion is a key strategy for poverty reduction, enhancing the quality of social services and increasing economic opportunities. - Observation: communities closer to roads are better off in terms of economic and social well being than those further away. ### Financial Framework (Ninth Plan totals and funding) - Total outlay for the Ninth Plan: Nu. 70,000 million. - Current expenditures: Nu. 31,682 million. - Capital investments: Nu. 34,869 million. - Debt servicing: Nu. 3,449 million. - Current expenditure to be covered by domestic revenue of Nu. 32,000 million. - External assistance expected to amount to over Nu. 28,000 (earlier estimate was Nu. 35,000 million comprising grant of Nu. 30,000 and loan of Nu. 5,000). - Of external assistance, approximately Nu. 21,000 million in grant assistance and Nu. 7,000 million in concessionary loans expected to finance capital investments. - A budgetary gap of over Nu. 5,000 million is to be covered by domestic borrowing. ### Recent Economic & Policy Developments and the Outlook #### Growth - Real GDP grew by 6.5% in 2003 (provisional national accounts), slightly lower than the Eighth Plan average of 6.7 percent. - Major contributors to growth in 2003: - Construction: growth of 16.4 percent. - Manufacturing: growth of 14.3 percent. - Transportation: growth of 11.8 percent. - Agriculture continues to be the largest sector, contributing 30 percent of GDP in the first year of the Ninth Plan. - Construction growth driven by Kurichhu, Basochhu and Tala hydropower projects. - Growth projection for 2004-05 to 2006-07: expected to average around 8 percent per annum. - Key sectors expected to spur growth: construction, manufacturing, transportation, electricity. #### Balance of Payments - Provisional data up to June 2003 indicate favorable balance of payments with continued inflow of foreign aid, concessional loans and some foreign investment offsetting the persistent trade deficit. - Gross foreign reserves amounted to the equivalent of USD 366.71 million by December 2003, sufficient to cover around 22 months of imports. - Convertible currency reserves account for USD 288.28 million and balance in Indian rupees. - Imports valued at Nu. 9,042.1 million (27% of GDP, 2003). - Exports valued at Nu. 5,405.9 million (17% of GDP, 2003). - Trade deficit narrowed slightly to Nu. 3,636.2 million in 2002-03. - Current account surplus estimated for 2002/03: Nu. 2,937.1 million (9% of GDP). - Trade deficits expected to continue during the Ninth Plan, financed by external assistance and FDI growth. - Commissioning of Tala in 2005/06 expected to boost electricity exports to India and help narrow the trade deficit. - Foreign reserves projected to grow in coming years. #### Debt Outstanding - As of December 2003, stock of external debt outstanding: USD 472.193 million or around 67 percent of GDP. - Convertible currency debt stock accounted for around 41 percent of external debt. - Entire convertible currency debt stock is concessional in nature with the most favorable terms and conditions. - Debt service ratio for the same period: 3.5 percent. - External borrowings in the coming year expected to fund 15% of total government capital outlay. - Concessional loans to be availed for priority investment projects with high economic returns where grant financing is not forthcoming. #### Monetary policy and Inflation - Monetary policy aimed at maintaining the Ngultrum-Rupee parity. - This limits scope for an independent monetary policy but contributes to macroeconomic stability and facilitates trade with India, which accounts for 80 % of Bhutan’s external trade. - Royal Monetary Authority plans to foster competition in the financial sector. - Excess liquidity problem reduced considerably over the last year. - Consumer price index inflation decreased from 2.7 percent at the end of the Eighth Plan to 1.3 percent in December 2003. - Inflation in Bhutan closely tracks inflation in India; Bhutan’s rate of inflation projected to remain below 4 percent in the coming years. #### Fiscal Policy - RGoB policy: finance recurrent expenditures from domestic revenue and capital investments through external assistance, largely in the form of grant financing. - Overall fiscal deficit in 2002-03 reached 11 percent of GDP. - RGoB seeks to limit overall budgetary deficit to about 4-5 percent of GDP in the coming years, dependent on external funding availability. #### Other Developments - Foreign Direct Investment (FDI): - FDI seen as a driving force for rapid growth, providing access to capital, markets, new technologies and managerial skills. - RGoB approved the FDI Policy in December 2002. - Accession to international organizations and agreements: - Bhutan acceded to the World Customs Organization (WCO) in February 2003. - Royal Government acceded to the International Finance Corporation (IFC) in December 2003. - Bhutan joined BIMST-EC in 2004 and became a signatory to the BIMST-EC Free Trade Area. - Bhutan signed the Intergovernmental Agreement on the Asian Highway Network at UNESCAP in April 2004. - Bhutan signed the Framework Agreement on South Asia Free Trade Area (SAFTA) at the XII SAARC Summit. ### Medium Term Expenditure Framework (MTEF) — key figures and projections - Total Ninth Plan outlay reiterated: Nu. 70,000 million. - Current expenditures: Nu. 31,682 million. - Capital investments: Nu. 34,869 million. - Debt servicing: Nu. 3,449 million. - Domestic revenue projected for Ninth Plan: Nu. 32,000 million. - External resources projected: Nu. 28,000 million (earlier estimate Nu. 35,000 million comprising grant of Nu. 30,000 and loan of Nu. 5,000). - Of external resources: approximately Nu. 21,000 million grant assistance and over Nu. 7,000 million concessionary loans. - RGoB may need to meet a budgetary gap of over Nu. 5,000 million by domestic borrowings. - Public spending focus: poverty reduction and economic growth, emphasizing infrastructure development and social services. Key lines from Table 3 (selected sectoral and fiscal aggregates, amounts preserved exactly as in source): - Health & Education total for the Ninth Plan: 16,627.478 (23.8% of budget). - Agriculture total for the Ninth Plan: 7,154.691 (10.2% of budget). - Human Settlements total for the Ninth Plan: 4,079.651 (5.8% of budget). - Communications total for the Ninth Plan: 1,135.496 (1.6% of budget). - Roads total for the Ninth Plan: 7,000.257 (10.0% of budget). - Energy total for the Ninth Plan: 6,359.884 (9.1% of budget). - General Public Services total for the Ninth Plan: 19,036.576 (27.2% of budget). - Debt Services total for the Ninth Plan: 3,842.286 (5.5% of budget). - Others total for the Ninth Plan: 4,763.681 (6.8% of budget). - Total Expenditure (by year rows): - 2002-03: 10,211.146 (37% of GDP). - 2003-04: 12,479.638 (39% of GDP). - 2004-05: 13,621.739 (38% of GDP). - 2005-06: 15,912.375 (38% of GDP). - 2006-07: 15,033.734 (31% of GDP). - Total for the Ninth Plan: 70,000.000 (100%). - Resources (by year rows): - 2002-03: 7,054.346 (25% of GDP). - 2003-04: 10,618.505 (33% of GDP). - 2004-05: 11,351.981 (32% of GDP). - 2005-06: 12,586.765 (30% of GDP). - 2006-07: 13,380.048 (28% of GDP). - Total for the Ninth Plan: 54,991.645. - Domestic Revenue (Ninth Plan totals): 31,522.281 (57.3% of resources). - External Grants (Ninth Plan totals): 21,346.560 (38.8% of resources). - Expenditures split (Ninth Plan totals): - Current: 31,681.467 (45.3% of total). - Capital: 38,318.533 (54.7% of total). - Overall Fiscal Position (Ninth Plan total): -12,266.987. - External Borrowings (Ninth Plan total): 7,135.080. - Resource Gaps (Ninth Plan total): -5,131.907 (Gap as % of Expenditure: -7%). - GDP at Current prices (factor cost) by year: - 2002-03: 27,779.000 (100%) - 2003-04: 31,884.000 (100%) - 2004-05: 35,751.300 (100%) - 2005-06: 41,481.200 (100%) - 2006-07: 48,165.100 (100%) - Explanatory notes in the source describe column bases and data provenance (annual accounts, National Accounts Statistics Report). *Source: _cr04246 - 2.10 The Ninth Plan has five overall objectives namely a) Improving the quality of life (extracted from the provided IMF PDF content).* ### 5. Column 5: Approved budget as per the National Budget report 2004-05; 6. Column 6: Approved budget as percentage of ### _cr04246 - 5. Column 5: Approved budget as per the National Budget report 2004-05; 6. Column 6: Approved budget as percentage of ### Budget revisions and financing gap - External Grants initially estimated at around Nu. 30,273.332 m at the initial stage of the 9th Plan revised to Nu. 21,346.56 m as of June 2004 (DADM estimates). - External Borrowings scaled up to Nu. 7,135.08 m from Nu. 5,081.203 m. - Overall budget gap estimated to increase to 7% from 4% estimated earlier. ### Review of actual expenditure for 2002-03 - 2002 was a preparatory/experimental year for Gewog-based plans; election of all 2001 Gups nationwide in 2002 constrained implementation. - Total expenditure for 2002-03: Nu. 10,211.146 million. - Current expenditure: Nu. 4,580.908 million (45%). - Capital expenditure: Nu. 5,630.238 million (55%). - Sectoral shares: social sectors accounted for 22%; RNR sector 12%. - Current expenditures in 2002-03 were lower than 2001-02 by about 2%. - Overall fiscal deficit widened to 11 percent of GDP in 2002-03 from 6.7 percent in 2001-02. - Personal Income Tax first-year collections: Nu. 91 millions. - Grants from donors other than India increased by over 13 percent; grants from Government of India were significantly lower than projected. - Resource gap increased to around 14 percent of the actual expenditure. ### Review of revised budget for 2003-04 - Overall fiscal deficit narrowed to about 6 percent of GDP in 2003-04. - Creation of three new ministries: Ministry of Labour and Human Resources; bifurcations of the Ministry of Health & Education; and the Ministry of Communications. - Revised budget exceeded prior-year actual expenditure by about 22 percent or Nu. 2,268.492 million. - Capital and current expenditures increased by around 23 percent and 22 percent respectively over the past financial year. - Revised budget increased by around 8% from original estimates of Nu. 11,537.737 million. - Current expenditure coverage by domestic revenues estimated around 94%. - Shortfall in program grants of around Nu. 176 million contributed to an additional deficit of around Nu. 352 million over projections. - Decentralization advances: Gewog-based budgeting; additional finance personnel trained and posted to Dzongkhags. - Gewogs allowed to retain rural taxes per GYT Chathrim 2002. - Central coordination for construction of Gups’ offices and Integrated Gewog Development Centres. ### Review of approved budget for 2004-05 - Expenditure budget for 2004-05: Nu. 13,621.739 million. - Recurrent expenditure: Nu. 5,968.657 million (44%). - Capital expenditure: Nu. 7,158.342 million (56%). - Capital outlays emphasize rural electrification, feeder and farm roads, health and education infrastructure; infrastructure (buildings and roads) accounted for around 64% of capital expenditure. - Human resource development allocated about 8% of capital expenditure outlay. - Current expenditure 7% higher than revised budget estimates of 2003-04. - Wage bill accounts for around 38% of current expenditure. - Interest payments constitute around 6% of current expenditure. - Subsidies to corporations around 4% of current expenditure. - Maintenance of infrastructure about 8% of current expenditure. - Resources for 2004-05: - Domestic revenues expected to finance around 42% of total expenditures. - Grants around 32%. - Concessional borrowings about 10%. - Domestic borrowings expected to finance around 7% of the budget (vs about 6% in revised 2003-04). - Total revenue projected to increase by about 11% over the past year; most growth projected from Non-tax revenue. - External assistance expected to fund around 80% of capital expenditure or around 42% of total budget outlay. - Budget for Gewog activities: Nu. 452 million, representing 62% increase over revised estimates for the past year. - Total budget provision for Dzongkhags and Gewogs is 31% higher than the previous year’s revised budget. - Dzongkhag and Gewog budgets account for around 22% of total budget outlay (excluding centrally implemented rural electrification, rural telecommunication and rural feeder roads). - Sectoral allocation: social sectors (including health and education) around 28%; RNR and road sectors around 11% each. ### Outlook for 2005-06 to 2006-07 (provisional MTEF) - Implementation pace must accelerate sharply in the remaining two years to meet Ninth Plan goals. - Overall fiscal deficit target: remain at or below 4-5 percent of GDP, contingent on substantial increase in external grants. - Expenditures expected to increase in nominal terms but remain below 40 percent of GDP; capital expenditure to account for approximately 55 percent of total budget. - Domestic revenue expected to continue covering current expenditure with domestic revenue remaining at around 17-18 percent of GDP. - Projected resource gap of about 4-5 percent of GDP to be covered by: - Concessionary loans of about 3-4 percent of GDP. - Balance through domestic borrowings of about 2-3 percent of GDP. ### Special considerations: decentralization and budget shares - Introduction of Gewog (Block) Plans with budget divided into central, Dzongkhag and Gewog budgets. - From total budgetary outlay of Nu. 70,000 million: - Center allocated about 75 percent. - Dzongkhag allocated 21 percent. - Gewogs allocated 4 percent. - Central programs include rural electrification, rural access roads, rural telecommunications, purchase of farm machineries and equipment, and human resource development for Dzongkhag and Gewogs. - Dzongkhags responsible for inter-Gewog coordination, institutional strengthening, capacity development, and education infrastructure at lower/middle/higher secondary levels devolved to Dzongkhag. - Gewog programs consist mainly of social and rural infrastructure: farm roads, outreach clinics, primary and community schools, irrigation facilities, suspension bridges, mule tracks, rural water supply schemes. - Agriculture sector receives the highest budgetary allocation within Gewog-implemented activities. ### Sectoral strategies and priorities - Ninth Plan emphasizes poverty reduction through enhanced access to health and education and infrastructure development (roads, electricity, rural telecommunications). - Table 4 summary (as described): 24 percent of total budget allocated to social sectors (health and education); roads, agriculture and electricity each receive 10 percent of the total. *Source: excerpt from the National Budget report and Ninth Plan material in the provided content unit.* ### 5.2 Current situation: The high priority given to the education sector has resulted in ### _cr04246 - 5.2 Current situation: The high priority given to the education sector has resulted in ### Education — Current situation and indicators - Gross primary enrolment ratio rose from 55 percent in 1991 to 81 percent in 2003; an annual increase of about 6-7 percent. - Girl’s enrolment ratio rose from 39 percent in 1990 to 47 percent in 2003. - Share of school children completing seven years of primary school doubled in the 1990s to reach 69 percent in 2001. - Adult literacy increased from 48 percent in 1994 to 54 percent in 2000. - Completion and retention: Of 100 children enrolling in primary schools, only 69 complete seven years of primary education, 54 complete Class VIII, and 39 reach class X. - Repetition rate: annual average of 14 percent. ### Education — Challenges - Difficult terrain and widely scattered population make provision of educational services very costly and do not allow economies of scale. - Critical shortage of educational facilities and an inadequate number of qualified and competent teachers. - Retention rate remains high despite improvements. ### Education — Objectives (Ninth Plan) - Providing support mechanisms for early childhood care and development for children between 0-6 years on a pilot basis. - Enhancing enrolment of children between 6-12 years of age in primary schools to 90-95 percent by 2007. - Enhancing the quality of education comparable to international standards. - Improving and expanding youth guidance and career counseling and value education for wholesome development of the youth. - Increasing the basic level from class VIII to X. - Increasing promotion proportion from class X to XI from 38 percent to 56 percent by 2007. - Developing a higher education system under the umbrella of a National University. - Enhancing the literacy rate from 54 percent to 80 percent and establish a system of continuing and life long education opportunities. - Establishing a program of inclusive education for children who are physically and mentally challenged. - Strengthening and improving the education management system with particular emphasis on the school level management. - Developing a more sustainable education system through the introduction of private participation and cost sharing measures. ### Education — Strategies (Ninth Plan major programs) - Constructing 120 community schools, 26 lower secondary and 23 middle and higher secondary schools. - Expanding facilities at Sherubtse College to increase enrollment from 600 to 1000 students. - Increasing facilities at the two in-country teachers training institutes to increase the intake of trainee teachers from 900 to 1,470. - Providing special education for the disabled. - Continuing adult literacy programs. - Establishing the national university of Bhutan. ### Education — Financing and allocations - Continued high priority translated into a spending allocation of 15 percent of the total budget. - Projected Annual Expenditure & Allocations (Education) - Total for the Ninth Plan: 10209.4 100% - Annual totals: 2002-03 Total 1322.5 100%; 2003-04 Total 1480.2 100%; 2004-05 Total 2238.5 100%; 2005-06 Total 2629.4 100%; 2006-07 Total 2538.8 100%. - Current vs Capital (Total columns): 2002-03 Current 988.0 75% / Capital 334.5 25%; 2003-04 Current 1046.7 71% / Capital 433.5 29%; 2004-05 Current 1221.1 55% / Capital 1017.4 45%; 2005-06 Current 1089.4 41% / Capital 1540.0 59%; 2006-07 Current 1006.2 40% / Capital 1532.6 60%. - Centre/Dzongkhag/Geog shares (Totals): Centre 2596.925; Dzongkhag 7264.271; Geog 348.33. ### Health — Current situation and indicators - National Health Survey (2000) results: - About 78.2 percent of Bhutanese villages have access to health facilities within two hours walking distance. - About 89 percent have such services within three hours walking distance. - Table 6: Health Indicators (1994 / 2000) - Infant Mortality Rate per 1000 live births: 70.7 / 60.5 - Under five Mortality Rate per 1000 live births: 96.9 / 84.0 - Maternal Mortality Rate per 1000 live births: 3.8 / 2.55 - Crude Birth Rate per 1000 population: 39.9 / 34.09 - Crude Death Rate per 1000 population: 9.0 / 8.64 - Contraceptive Prevalence Rate %: 18.8 / 30.7 - Access to Safe Drinking Water %: NA / 77.8 - Sanitation Coverage %: NA / 88.0 - Average Life Expectancy at Birth: 66 / NA - Population Growth Rate %: 3.1 / 2.5 ### Health — Challenges - Rugged terrain and sparse population pose major obstacles to delivery of health services. - Efficient and effective delivery to remotest areas will depend in part on modern technologies such as telemedicine and alternative methods. ### Health — Objectives (Ninth Plan targets) - Improve quality of health services and expand access to reach the un-reached. - Enhance sustainability of health services; strengthen health management information system and research. - Intensify reproductive health services and family planning. - Address and control existing and emerging health problems. - Strengthen the traditional medicine system and integrate it with general health services. - Specific targets by end of Ninth Plan: - Facilitate 100 percent access to clean water and safe sanitation. - Slow the population growth rate to 2.3 percent. - Halve infant mortality per 1000 live births to 30. - Reduce the under-5 mortality rate per 1000 live births from 84 to 50. - Lower the maternal mortality rate from 2.6 to 1.5. ### Health — Strategies - Improve doctor-patient ratio through human resource development. - Monitor and prevent STD/HIV/AIDS through information, education and communication programs. - Enhance financial sustainability of health services, particularly for ensuring availability of essential drugs and vaccines. ### Health — Financing and allocations - Health sector budgeted to receive Nu. 6,418 million or about 10% of the total Ninth Plan outlay. - Projected Annual Expenditure & Allocations (Health) - Total for the Ninth Plan: 6418.1 100% - Annual totals: 2002-03 Total 848.7 100%; 2003-04 Total 972.7 100%; 2004-05 Total 1550.2 100%; 2005-06 Total 1527.5 100%; 2006-07 Total 1518.9 100%. - Current vs Capital (Total columns): 2002-03 Current 561.7 66% / Capital 287.0 34%; 2003-04 Current 650.1 67% / Capital 322.7 33%; 2004-05 Current 704.5 45% / Capital 845.7 55%; 2005-06 Current 1007.5 66% / Capital 520.0 34%; 2006-07 Current 1010.0 66% / Capital 508.9 34%. - Centre/Dzongkhag/Geog shares (Totals): Centre 4505.8 70%; Dzongkhag 1682.4 26%; Geog 229.8 4%. ### Agricultural Sector (Renewable Natural Resources) — Current situation and indicators - Poverty Assessment Report (2000) shows a grain deficit in 63 out of 201 Gewogs. - Average land holding per rural household (family of six members): 3.4 acres. - About 79 percent of the population lives in rural areas and 75 percent of the workforce is engaged in RNR. ### Agricultural Sector — Challenges - Poor productivity and shortage of cultivable land leading to grain deficits. - Fragmentation of land is a major concern. - Balancing environmental conservation policies with emerging socio-economic needs. - Shortages of farm labour due to increasing rural-urban migration. ### Agricultural Sector — Objectives (Ninth Plan) - Enhancing rural income. - Achieving national food security. - Conserving and managing natural resources. - Generating employment opportunities. ### Agricultural Sector — Strategies - Creation of enabling policy and legal framework. - Farm mechanization and use of appropriate technology. - Increasing access through creation of new infrastructure. - Diversification and encouraging “high value and low volume” products. - Research and development. ### Agricultural Sector — Financing and allocations - Ninth Plan allocates close to 10 percent of the total budget to fund improvements in the sector. - Projected Annual Expenditure & Allocations (RNR) - Total for the Ninth Plan: 7154.7 100% - Annual totals: 2002-03 Total 1273.7 100%; 2003-04 Total 1417.1 100%; 2004-05 Total 1488.9 100%; 2005-06 Total 1574.0 100%; 2006-07 Total 1400.9 100%. - Current vs Capital (Total columns): 2002-03 Current 574.8 45% / Capital 698.9 55%; 2003-04 Current 711.6 50% / Capital 705.5 50%; 2004-05 Current 741.2 50% / Capital 747.7 50%; 2005-06 Current 740.0 47% / Capital 834.0 53%; 2006-07 Current 741.3 53% / Capital 659.6 47%. - Centre/Dzongkhag/Geog shares (Totals): Centre 4548.464; Dzongkhag 1561.422; Geog 1044.915. ### Road Sector — Current situation and indicators - Bhutan road network: 4020 kilometers, including 1,558 kilometers of national highway. - Communities further from road network are worse off in poverty surveys. ### Road Sector — Challenges - Fragile terrain, scattered population and strong environmental policy make development and maintenance of road network a major challenge. ### Road Sector — Objectives (Ninth Plan) - Improving accessibility to social and economic activities by building more roads. - Enhancing existing network to reduce travel time, road user costs and transportation cost for goods and services. ### Road Sector — Strategy - Promote private sector participation. - Automation of road works. - Adoption of environmentally friendly road construction techniques. - Construct 77 kilometers of national highway, 123 kilometers of feeder roads connecting farm roads to main road networks, and replace/construct about eight bridges. ### Road Sector — Financing and allocations - Allocation of 10 percent of the total outlay to the road sector. - Projected Annual Expenditure & Allocations (Roads) - Total for the Ninth Plan: 7000.3 100% - Annual totals: 2002-03 Total 868.3 100%; 2003-04 Total 1382.2 100%; 2004-05 Total 1441.8 100%; 2005-06 Total 1680.1 100%; 2006-07 Total 1627.9 100%. - Current vs Capital (Total columns): 2002-03 Current 194.4 22% / Capital 673.8 78%; 2003-04 Current 206.7 15% / Capital 1175.4 85%; 2004-05 Current 192.9 13% / Capital 1248.9 87%; 2005-06 Current 335.4 20% / Capital 1344.8 80%; 2006-07 Current 339.4 21% / Capital 1288.6 79%. - Centre/Dzongkhag/Geog shares (Totals): Centre 6660.395; Dzongkhag 135.72; Geog 204.33. ### Energy Sector — Current situation and indicators - By end of the Eighth Plan (2002) Bhutan had harnessed a total of 444 MW, equivalent to about 1.4 percent of the total estimated potential of over 30,000 MW. - Annual domestic consumption grew at an average rate of 9.53 percent in the last five years from about 70 MW in 1995 to about 90 MW in 2000. - Electricity exports to India increased from 1,354 million units in 1997 to 1,495 millions unit in 2000. - Contribution to the national exchequer was 45 percent of the total revenue generated. - Tala Hydroelectric project: 1020 MW under implementation. - Basochhu Hydroelectric Project (Lower Stage): 38.6 MW under implementation. ### Energy Sector — Challenges - About 65 percent of the population without electricity. - Difficulties in bringing electricity to communities due to topography and low economies of scale for grid extension to scattered settlements. ### Energy Sector — Objectives (Ninth Plan) - Strengthen economic self-reliance by realizing electricity generation capacity. - Provide adequate, safe and reliable electricity through sustainable and environmentally friendly development of hydroelectric potential. - 100 percent rural electrification by 2020. ### Energy Sector — Strategies and major activities - Conduct feasibility studies for micro-hydroelectricity sites where extension of grid supply is not possible. - Expand rural electrification programs; target 15,000 households (three-fold increase over the Eighth Plan target of 5,000 households). - Construct transmission grid from Tingtibi to Trongsa/Bumthang and Wangdue to Tsirang/Dagana and to Gelephu. - Prepare energy and water resource master plan including feasibility studies of new hydroelectricity projects. - Study feasibility of harnessing 2,000 MW of hydroelectric power. - Implement two new hydroelectric power projects during the Ninth Plan: 360 MW Mangdechhu Hydroelectric Power Plant and 870 MW Punatsangchhu Hydroelectric Power Plan. - Institutional strengthening and capacity building of energy sector. *Source: _cr04246 - 5.2 Current situation: The high priority given to the education sector has resulted in (PDF chapter/section).* ### 5.26 Financing: The allocation of the energy sector does not include provision for ### _cr04246 - 5.26 Financing: The allocation of the energy sector does not include provision for ### Financing — energy sector allocation - The allocation of the energy sector does not include provision for mega hydroelectric projects such as the 360 MW Mangdechhu Hydroelectric Power Plant and the 870 MW Punatsangchhu Hydroelectric Power. - Note: As the activities are being implemented by the Bhutan Power Corporation, it is assumed that only some parts of the 9FYP outlay earmarked for the Energy sector will be expended. ### Table 10: Projected Annual Expenditure & Allocations — key figures - Actual Expt. 2002-03; Revised Budget 2003-04; Approved Budget 2004-05; Annual Projections 2005-06, 2006-07; Total for the Ninth Plan. - Current expenditures: - 2002-03: 23.2 Amt. 2% Sector Budget - 2003-04: 27.8 Amt. 3% Sector Budget - 2004-05: 32.96% Sector Budget - 2005-06: 40.07% Sector Budget - 2006-07: 43.07% Sector Budget - Total for the Ninth Plan: 1857.4 Amt. 29% Sector Budget - Capital expenditures: - 2002-03: 992.4 Amt. 98% Sector Budget - 2003-04: 816.6 Amt. 97% Sector Budget - 2004-05: 542.694% Sector Budget - 2005-06: 550.093% Sector Budget - 2006-07: 550.093% Sector Budget - Total for the Ninth Plan: 4502.5 Amt. 71% Sector Budget - Totals: - 2002-03 Total: 1015.6 100% - 2003-04 Total: 844.4 100% - 2004-05 Total: 575.6 100% - 2005-06 Total: 590.0 100% - 2006-07 Total: 593.0 100% - Total for the Ninth Plan: 6359.9 100% - Centre vs Dzongkhag: - Centre totals: 1015.6 100% (2002-03), 844.4 100% (2003-04), 575.6 100% (2004-05), 590.0 100% (2005-06), 593.0 100% (2006-07), Total for the Ninth Plan: 6217.9 98% - Dzongkhag totals: 0.0 0% (2002-03), 0.0 0% (2003-04), 0.00% (2004-05), 0.00% (2005-06), 0.00% (2006-07), Total for the Ninth Plan: 141.9 2% - Combined Total repeats: 1015.6 100%, 844.4 100%, 575.6 100%, 590.0 100%, 593.0 100%, 6359.9 100% ### Profiling the poor — surveys and scope - Surveys referenced: HIES 2000 (Household Income and Expenditure Survey 2000, pilot) and PAA 2000 (Bhutan Poverty Assessment and Analysis, pilot). - HIES 2000: fieldwork conducted in one round during April – June 2000; partly overlapped with lean months May, June and July — potential seasonal bias. - PAA 2000: nationwide survey covering all 201 Gewogs and 22 townships; questionnaires completed by 20 Dzongdags using existing information and perceptions. ### HIES 2000 — expenditure and poverty lines - Average monthly per capita expenditure: - Urban: Nu 1,945 - Rural: Nu 928 - Nation: Nu 1,075 - Poverty lines: - Lower (food poverty line): Nu 612.10 per capita per month - Upper (income/absolute poverty line): Nu 748.10 per capita per month - Poverty incidence (2000) using HIES 2000: - Population Poor (%) — Lower Poverty Line (Food Poverty Line): - Urban: 2.9 - Rural: 29.0 - Total: 25.3 - Population Poor (%) — Upper Poverty Line (Income Poverty Line): - Urban: 6.4 - Rural: 41.3 - Total: 36.3 - Poverty gap measures: - Using food poverty line: 6.6% - Using income poverty line: 11.1% - Gini coefficient for expenditure distribution: - Nation: 0.36 - Urban: about 0.36 to 0.42 - Rural: about 0.35 ### PAA 2000 — findings on vulnerability and priorities - Ten living standard aspects covered: household income, education, health, economic activities, non-material needs, physical facilities, environment, transport, communication and position of women. - Priority needs for Dzongkhags in descending order: education, economic activities, household income, health, communication, physical facilities, transport, environment, women’s position, non-material needs. - Most vulnerable Dzongkhags (composite indices ranking; ranks range from 1 lowest to 20 highest): - Overall Vulnerability: Gasa 1, Pemagatshel 2, Lhuentse 3, Zhemgang 4, Trongsa 5/6, Samdrup Jongkhar 6/5 - PAA 2000 ranked 50 vulnerable Gewogs (about 20% of total households); about 28 Gewogs (about 10% of households) ranked most vulnerable. - Geographic concentrations of poorest Gewogs: about 75% of households of the poorest Gewogs found in Pemagatshel, Zhemgang, Mongar, Trashigang and Samdrup Jongkhar Dzongkhags. - Additional PAA 2000 indicators: - 63 of the 201 Gewogs and 22 townships report food insecurity. - 65% of the Gewogs have no access to electricity. - One-third of the Gewogs are not connected to feeder roads. - 45 Gewogs are below the national average for primary enrolment rate of 72%. - Two Dzongkhags account for the lowest level of modern sector economic activities. ### Who are the poor — characteristics - General: Majority engaged in subsistence production (farming, animal husbandry), petty trading, day labour; some combine multiple low-income activities; small minority unemployed or unable to work due to age or disability; poor more likely rural and in remote areas. - Rural poor characteristics: - Subsistence farmers relying largely on crops - Larger families with higher proportion of children and older people (high dependency ratio) - No or very few livestock - No or very little off-farm income including remittances - Limited schooling - Urban poor characteristics: - Migrant households, living in hutments or shanties - Larger families with higher proportion of children and older people (high dependency ratio) - Petty traders - Casual or day labourers ### Where are they located - About 79% of the population is located in rural areas. - Incidence of poverty: - Rural: 41.3% - Urban: 6.4% - Extrapolation from HIES 2000: about 96% of the Bhutanese poor live in rural areas — poverty is essentially a rural phenomenon. - Spatial concentration: poor concentrated in most vulnerable Gewogs spread across the country. ### Inequality, gender and poverty - Inequality: - Gini coefficient (expenditure distribution): 0.36 nationally — considered moderate by regional and global standards. - Inequality higher in urban areas (Gini about 0.36 to 0.42) than in rural areas (about 0.35). - Gender: - No significant differences between women and men in incidence of poverty. - Dzongkhag rankings on the position of women broadly similar to overall vulnerability rankings, with some exceptions: - Trashiyangtse (rank 3 from the bottom), Trashigang (5), Wangdue Phodrang (6) have lower rankings on position of women relative to overall. - Lhuentse (10) has significantly higher ranking on position of women relative to overall. ### Causes of poverty — enumerated factors - Remote location and difficult terrain; lack of roads and transport networks, electricity and communications; some poor communities must walk for 3 hours to a few days to reach nearest highway. - Limited ownership or access to productive assets including land: - 1988 National Agronomic Survey: 9% of farm households owned less than half a hectare, 27% less than one hectare, 58% less than two hectares. - Lack of remunerative employment; few off-farm employment opportunities. - Large families and rapid population growth: - In rural areas almost half (49%) the households had an average of six or more members (HIES 2000). - Population growth rate estimated to be about 3.1% in 1994 and projected to have declined to 2.5% in 2000; the population growth rate seemed to have moderated to 2.5% by 2001. - Lack of productive skills: - Adult literacy rate in rural areas: 41.5% - Adult literacy rate in urban areas: 75.9% - Shortage of labour in some rural households due to migration of youth and working adults to urban centers. - Lack of or limited access to social and economic services (including credit); students may walk two to three hours each way to reach nearest primary school in some communities. - Natural calamities: floods, hailstorms, landslides, fires and wild animals. - Social breakdown (marriage, family and social support systems). - Increases in prices of basic goods and services. - Illnesses including Malaria, TB, and other ailments and deaths. ### Poverty reduction challenges and strategies — summary - Main challenges for poverty reduction: - Lack of or limited opportunities to increase incomes, limited access to basic services like marketing, vulnerability to natural and man-made shocks including food insecurity, limited access to information and civic education, lack of well defined poverty indicators and monitoring mechanisms. - Development philosophy and approach: - Development plans recognize need to address poor and vulnerable groups. - Gross National Happiness provides framework for poverty reduction. - Given poverty is predominantly rural, strategy emphasizes comprehensive rural development supported by adequate infrastructure (including social infrastructure), private sector-led income and employment generation, and good governance. - Government visualizes sustainable poverty reduction through rapid and equitable economic growth with balanced regional development. - Macroeconomic management including the pattern of public expenditures will continue with a clear pro-poor orientation. - Constraints to increasing incomes in rural areas: - Small size of land holding and few livestock per household - Lack of irrigation - Limited or lack of access to modern technologies and inputs - Lack of or limited off-farm employment opportunities - Limited access to markets and high transport costs - Specific operational challenge: - Extension of irrigation requires substantial investments and new skills; small holdings make mechanization difficult. - Lack of adequate farm and feeder roads is a major impediment to access to technologies, inputs and markets, increasing production and marketing costs and reducing the effectiveness of off-farm enterprise initiatives. *Source: _cr04246 - 5.26 Financing: The allocation of the energy sector does not include provision for (extract).* ### 7.5 Some of the salient strategies and interventions proposed under the Ninth Plan ### 7.5 Some of the salient strategies and interventions proposed under the Ninth Plan ### Sector strategies and interventions - Agriculture sector strategy focuses on improving productivity through: - land reforms; - introduction and adoption of modern farming and animal husbandry practices; - expansion of irrigation; - facilitating diversification into high value, low-bulk crops and products; - increasing access to credit; - promotion of cooperatives; - constructing and improving farm and feeder roads and market infrastructure; - enhancing the flow of information and communications; - promoting sound and sustainable management of the natural resources; - providing an enabling policy and legal framework. - Promotion of off-farm enterprises to reduce pressure on limited arable land and generate employment and sustainable livelihoods in the rural areas through: - access to training, technical assistance, productivity enhancing technologies, credit, and markets for inputs supply and sale of outputs; - relying critically on easy physical (road) access and rural electrification. - Creating an enabling environment for the private sector by: - more transparent industrial and investment policies and supporting laws; - development of industrial estates and service centers; - private sector expected to be the engine of economic growth and employment generation in the medium and long-term to cater to the burgeoning labour force including the youth; - improvements in infrastructure including roads and transport, electricity and communications to encourage private investments, enhance competitiveness of Bhutanese products in regional and global markets, and create remunerative jobs. - Enhancing workforce skills including the youth through: - technical and vocational training in partnership with potential employers; - adjusting school curricula to impart more life skills for graduates to be entrepreneurs. - Improvements in and expansion of infrastructure, including: - construction of more than 500 kms of new farm roads; - 123 kms of feeder roads and completion of 46 kms of feeder roads; - electricity including rural electrification; - communications including telecommunications, radio and television services, especially to hitherto un-served and underserved areas; - these infrastructure measures are critical for encouraging private entrepreneurship and investments, and promoting equity and balanced regional development. ### Access to Basic Social Services — Challenges and indicators - Health and education access improved considerably during the past 15 years. - Immunization coverage of children has reached above 90%. - Trained health personnel attended less than one-in-four births. - Low birth weight continues to be a problem in about one-in-four newborns. - Access to hospitals remains difficult in some Dzongkhags lacking adequate road and transport infrastructure. - Primary schooling access: - primary gross enrolment rate exceeding 81% in 2003; - net enrolment rate is lower and there remains considerable room for improvement; - some children walk between two to three hours each way to the nearest school, often through rugged terrain; - parents often defer enrolment from age 6 to ages 7, 8 or 9 due to the arduous commute. - Barriers for poor families include inability to afford costs of school uniforms, supplies and transport. - Water and sanitation coverage: - about 78% of the population having safe drinking water close to their communities; - coverage of basic latrines or sanitation facilities is about 88% of the total population. - Most urban poor are in hutments in informal settlements or squatter areas with difficult access to basic services (e.g. water and sanitation). - Efficient delivery of basic social services to unreached and underserved areas depends critically on road and transport networks, rural electrification and communications. ### Vulnerability including food insecurity — Challenges and findings - Vulnerability arises from unforeseen calamities including diseases/illnesses, death, floods, landslides, hailstorms, fires and droughts. - Seasonal shortages of food or food insecurity affect a significant proportion of Bhutanese families. - Food Security Survey results: about 39% of households in Pemagatshel District suffered chronic food insecurity; - 19% in Lhuentse district. - Results from the 1999 Nutrition Survey indicate children from some pockets of Eastern Bhutan were nutritionally worse off than those from other regions. - Causes of food insecurity: - low land holdings, low productivity; - localized disasters such as hailstorms, strong winds, fungal diseases; - damage by wild animals including mammalian pests and birds; - food grain deficits are usually seasonal (mainly from May to July) and often coincide with periods of intensive agricultural operations when food needs of workers are higher. - Mitigation: school feeding projects supported by the World Food Programme partly alleviate effects on children. ### Food security strategy - Traditional social support systems based on Buddhism help families and communities cope with vulnerabilities. - Food insecurity largely related to deficits in rice and edible oils and fats. - Country is self sufficient in rice to the tune of 60% of its requirements. - National policy objective to attain food security through a two-pronged strategy: - (i) increase production of cereals to achieve at least 70% self-sufficiency; - (ii) promote expansion of agricultural production including cash crops for export to finance the additional food imports. - Self-reliance is stated as the ultimate goal. ### Poverty monitoring and assessment — Challenges - Poverty monitoring and assessment currently carried out by a range of actors at different administrative levels using different systems on an ad hoc basis, creating problems of coordination, systematic use of data and impact assessment. - Department of Planning (DoP) identified as focal agency responsible for poverty monitoring and assessment; proposed PMAS will be integrated within the Planning and Information Network (PIN) system being developed in the DoP. - Identified coordination failures: - Lack of Coordination of Surveys and Censuses: - No national statistics plan to identify and sequence major surveys over the medium term; - Most household surveys are ad hoc and donor-dependent; - Example: in 2000 approximately four significant surveys were conducted; - The Bhutan Living Standards Survey was conducted in 2003 prior to a proposed population census (noted as suboptimal sequencing). - Lack of Coordination between M&E Systems across Ministries: - Line Ministries have established or are establishing M&E systems (examples: M&E framework for the RNR sector; Health Sector Management Information System); - Proposal to standardize categories of indicators across sectors (e.g., input/output/outcome schema) to facilitate performance monitoring and incorporation into a 'poverty program' monitoring database; - DoP working on a national level Monitoring and Evaluation System with links to line ministry M&E systems. - Lack of Coordination of Reporting Frameworks at Dzongkhag Level: - Multiple reporting frameworks required by different agencies produce reporting fatigue; - Proposal to agree on a standardized reporting framework for Dzongkhag level completion; DoP's proposed M&E system expected to address the problem. - Lack of Systematic Use: - Monitoring data on outputs or outcomes does not appear to influence budgetary allocations, which depend mainly on ability to implement (i.e. to disburse committed funds); - Decentralized planning makes it critical to have systems whereby resource allocation decisions reflect plan objectives and systematic assessment of program performance; - Communication/advocacy component and appropriate institutional framework needed to ensure information reaches policy makers, planners and implementers. - Lack of Impact Assessment: - No systematic process of impact assessment linking outcomes to program outputs appears in place; - DoP has initiated impact assessment processes and conducted an impact assessment of rural roads on rural poverty on a pilot basis in 2003; process to continue on a regular basis for selective development programmes. ### Proposed Poverty Monitoring and Assessment System (PMAS) — objectives and principles - Primary objective: coordinate, consolidate and harmonize data from existing poverty monitoring systems to produce concrete, timely and useful information and analysis for decision-makers, and to communicate results in ways which feedback into the policy process. - PMAS proposed to be set up within the DoP and built within the Planning Information Network (PIN) system. - Principles of PMAS: - National Ownership/Appropriation: - System must secure 'buy-in' from data users within and outside government; - Process of data collection, analysis and use is as or more important than physical outputs; - Active involvement of stakeholders in data collection, analysis, dissemination and review; institutionalization within national structures to ensure appropriation and usefulness. - Participation: - Widespread participation builds and strengthens capacities for analysis, discussion, and linking data generation to analysis and policy formulation, policy outcome monitoring and evaluation; - Allows genuine monitoring of development policies, strategies and programs based on views of people affected; - Helps build broad-based national ownership, key for sustainable poverty eradication and human development strategies. - Harmonization/Consolidation: - Significant existing data on poverty and many policies/programs to reduce it; - Core function: synthesize existing studies on poverty and store/consolidate many types of data bearing on it; - Rationale for developing poverty-related databases linked to PIN; coordinate and harmonize different systems relevant to poverty monitoring. - Collaborative Engagement: - PMAS to form partnerships with persons and organizations engaged in poverty monitoring or analytical work related to poverty, including governmental agencies, civil society organizations and the international community; - Policy framework document intended to provide a mechanism to build partnerships and improve coordination in poverty monitoring. ### PMAS components - Component I - Poverty, Vulnerability and Inequality (PVI) outcome monitoring; - Component II - Poverty Reduction Strategy (PRS) implementation monitoring; - Component III - Impact Assessment and Policy Analysis; - Component IV - Poverty Information Management; - Component V - Communication/Dissemination. *Source: _cr04246 - 7.5 Some of the salient strategies and interventions proposed under the Ninth Plan* ### 8.9 An important element of the Poverty Monitoring System is a comprehensive set ### _cr04246 - 8.9 An important element of the Poverty Monitoring System is a comprehensive set ### Poverty Monitoring System — overview - The DoP is finalizing a list of PVI indicators attached as Table 12; the list was prepared in consultation with concerned sectors and Dzongkhags in national workshops and "will be reviewed periodically and revise, if necessary, with change in situation and requirement." - The first Bhutan Living Standards Survey (BLSS) 2003 has been recently completed; it is an integrated household survey and complements the Participatory Poverty Assessment (PPA) conducted in 2000 and falls within component I. - Components of the Poverty Monitoring System: - Component I: Outcome-level poverty indicators (PVI list in Table 12). - Component II: Poverty Reduction Strategy (PRS) Implementation Monitoring — tracks inputs and outputs of poverty reduction programs and draws on routine administrative monitoring data; efforts to harmonize existing monitoring and evaluation systems. - Component III: Poverty Impact Assessment & Policy Analysis — links outcomes/impacts in the PVI Monitoring System with programs in the PRS Implementation Monitoring System; a pilot Policy Impact Analysis of rural roads on rural poverty was conducted in 2003 by the Department of Planning using qualitative rapid assessment methods. - Component IV: Poverty Management Information System — IT-backbone, to be built within the overall PIN system tailored for key decision-makers at central and local levels in Bhutan. - Component V: Communication/Advocacy — dissemination of poverty-related information through means such as National Poverty Profile Report, workshops, seminars, etc. - Looking ahead: - "The strengthening of the poverty monitoring and assessment system is a long-term process but is central to the effective implementation of poverty reducing programs." - "The improvements of statistical capacity in the years ahead will provide a sound underpinning for future PRSP activities." ### Table 12: Poverty Indicators — Economic Indicators - 1 Population (%) with more than half a day walk to the nearest road (all weather road) — Indicator Sector: Economic Indicator; Sub-sector: Access; Responsibility: DPO; Disaggregation: By Gewog; Frequency: Yearly - 2 Households (%) connected to electricity — Indicator Sector: Economic Indicator; Sub-sector: Access; Responsibility: DSO; Disaggregation: By Gewog; Frequency: Yearly - 3 Percentage with access to credit from BDFC ('small loans' - below NU 50.000 - BDFC definition) — Indicator Sector: Economic Indicator; Sub-sector: Asset ownership; Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: Yearly - 4 Social Allocation Ratio (Spending on Health and Education to overall Government spending) — Indicator Sector: Economic Indicator; Sub-sector: Development Spending; Responsibility: 0; Disaggregation: None; Frequency: Yearly - 5 Social Priority Ratio (Spending on primary education and primary health care to overall Government spending) — Indicator Sector: Economic Indicator; Sub-sector: Development Spending; Responsibility: 0; Disaggregation: None; Frequency: Yearly - 6 Households (%) with thatched roofs — Indicator Sector: Economic Indicator; Sub-sector: Housing; Responsibility: Planning Officer; Disaggregation: By Gewog; Frequency: Yearly - 7 Real growth rate of GDP per capita — Indicator Sector: Economic Indicator; Sub-sector: Income; Responsibility: 0; Disaggregation: None; Frequency: Yearly - 8 Real growth rate of primary sector — Indicator Sector: Economic Indicator; Sub-sector: Income; Responsibility: 0; Disaggregation: None; Frequency: Yearly - 9 Population (%) below food-poverty line — Indicator Sector: Economic Indicator; Sub-sector: Income; Responsibility: 0; Disaggregation: rural/urban; Frequency: 5-yearly? - 10 Poverty depth (food poverty line) — Indicator Sector: Economic Indicator; Sub-sector: Income; Responsibility: 0; Disaggregation: rural/urban; Frequency: 5-yearly? - 11 Poverty Severity (food poverty) — Indicator Sector: Economic Indicator; Sub-sector: Income; Responsibility: 0; Disaggregation: rural/urban; Frequency: 5-yearly? - 12 Population (%) below abosulute poverty line — Indicator Sector: Economic Indicator; Sub-sector: Income; Responsibility: 0; Disaggregation: rural/urban; Frequency: 5-yearly? - 13 Poverty depth (absolute poverty line) — Indicator Sector: Economic Indicator; Sub-sector: Income; Responsibility: 0; Disaggregation: rural/urban; Frequency: 5-yearly? - 14 Poverty Severity (absolute poverty line) — Indicator Sector: Economic Indicator; Sub-sector: Income; Responsibility: 0; Disaggregation: rural/urban; Frequency: 5-yearly? - 15 Population (%) below US $1/day — Indicator Sector: Economic Indicator; Sub-sector: Income; Responsibility: 0; Disaggregation: rural/urban; Frequency: 5-yearly? - 16 Gini coefficient of income / consumption — Indicator Sector: Economic Indicator; Sub-sector: Income; Responsibility: 0; Disaggregation: rural/urban; Frequency: 5-yearly? - 17 Share of poorest quintile in national income/consumption — Indicator Sector: Economic Indicator; Sub-sector: Income; Responsibility: 0; Disaggregation: rural/urban; Frequency: 5-yearly? - 18 Percentage of women in wage employment in the non-agricultural sector — Indicator Sector: Economic Indicator; Sub-sector: Income; Responsibility: 0; Disaggregation: none; Frequency: 5-yearly? - 19 Unemployment rate — Indicator Sector: Economic Indicator; Sub-sector: Income; Responsibility: Planning Officer; Disaggregation: rural/urban male/female; Frequency: Yearly - 20 Dependency Ratio (under 15 and over 65 to 15-65 year old population) — Indicator Sector: Economic Indicator; Sub-sector: 0; Responsibility: 0; Disaggregation: By Gewog; Frequency: Yearly ### Table 12: Poverty Indicators — Education - 1 Illiteracy rate (above 15 years of age) — Education; Sub-sector: Literacy; Responsibility: 0; Disaggregation: male/female, by Dzongkhag; Frequency: every 5 years (?) - 2 Net (age-specific) enrolment rates in primary levels — Education; Sub-sector: Enrolment; Responsibility: Education; Disaggregation: male/female, by Dzongkhag; Frequency: yearly - 3 Gross enrolment rates in primary levels — Education; Sub-sector: Enrolment; Responsibility: Education; Disaggregation: male/female, by Dzongkhag; Frequency: yearly - 4 Dropout rates in primary schools ( upto class 6) — Education; Sub-sector: Enrolment; Responsibility: Education; Disaggregation: male/female, by Dzongkhag; Frequency: yearly - 5 Pupil/classroom ratio — Education; Sub-sector: Quality of education; Responsibility: Education; Disaggregation: by Dzongkhag; Frequency: yearly - 6 ratio of pupil/teacher — Education; Sub-sector: Quality of education; Responsibility: Education; Disaggregation: by Dzongkhag; Frequency: yearly - 7 % of schools with adequate water supply — Education; Sub-sector: Quality of education; Responsibility: Education; Disaggregation: By schools; Frequency: yearly - 8 Number of usable toilets per 50 students — Education; Sub-sector: Quality of education; Responsibility: Public Health Engineering Division (PHED); Disaggregation: By schools; Frequency: yearly - 9 Completion rates in primary levels — Education; Sub-sector: Enrolment; Responsibility: Education; Disaggregation: Male/female; Frequency: yearly - 10 Repetition rates in primary levels — Education; Sub-sector: Enrolment; Responsibility: Education; Disaggregation: Male/Female; Frequency: yearly - 11 Proportion of secondary schools without usable toilets — Education; Sub-sector: Quality of education; Responsibility: Education; Disaggregation: By Gewog; Frequency: yearly ### Table 12: Poverty Indicators — Health, Nutrition, Sanitation - 1 Births (%) not attended by skilled health personnel — Health, Nutrition, Sanitation; Sub-sector: Births; Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: every five years (?) - 2 Proportion of pregnant women with an Hb less than 11.5 — Health, Nutrition, Sanitation; Sub-sector: Births; Responsibility: Health; Disaggregation: By Gewog; Frequency: annually - 3 One-year olds (%) fully immunized against target diseases — Health, Nutrition, Sanitation; Sub-sector: Child health; Responsibility: Health; Disaggregation: By Gewog; Frequency: annually - 4 Contraceptive Prevalence Rate (Modern) — Health, Nutrition, Sanitation; Sub-sector: Fertility; Responsibility: 0; Disaggregation: none; Frequency: every five years (?) - 5 Total Fertility Rate — Health, Nutrition, Sanitation; Sub-sector: Fertility; Responsibility: 0; Disaggregation: none; Frequency: every five years (?) - 6 % of population that is more than 3 hours walking distance from Basic Health Centers — Health, Nutrition, Sanitation; Sub-sector: Health facilities; Responsibility: Health; Disaggregation: by Dzongkhag; Frequency: annually - 7 Hospital beds per 1000 patients/population — Health, Nutrition, Sanitation; Sub-sector: Health facilities; Responsibility: Health; Disaggregation: by Dzongkhag; Frequency: annually - 8 Number of doctors per 1000 population — Health, Nutrition, Sanitation; Sub-sector: Health facilities; Responsibility: Health; Disaggregation: by Dzongkhag; Frequency: annually - 9 Number of village health workers (formal staff) per 1000 population — Health, Nutrition, Sanitation; Sub-sector: Health facilities; Responsibility: Health; Disaggregation: by Gewog; Frequency: annually - 10 Population (%) without access to essential drugs (as defined in the Health Survey) — Health, Nutrition, Sanitation; Sub-sector: Health facilities; Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: every five years (?) - 11 Life expectancy at birth — Health, Nutrition, Sanitation; Sub-sector: Life expectancy; Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: every five years (?) - 12 Infant Mortality rates — Health, Nutrition, Sanitation; Sub-sector: Life expectancy; Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: every five years (?) - 13 Under-5 Mortality rates — Health, Nutrition, Sanitation; Sub-sector: Life expectancy; Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: every five years (?) - 14 Maternal Mortality rates — Health, Nutrition, Sanitation; Sub-sector: Life expectancy; Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: every five years (?) - 15 Malnutrition (under 5 underweight children) — Health, Nutrition, Sanitation; Sub-sector: Nutrition; Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: every five years (?) - 16 % of population without access to latrine — Health, Nutrition, Sanitation; Sub-sector: Sanitation; Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: every five years (?) - 17 Access to safe drinking water (as defined in health survey) — Health, Nutrition, Sanitation; Sub-sector: Water; Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: every five years (?) - 18 Incidence of diarrhea in under-5 population — Health, Nutrition, Sanitation; Sub-sector: Water; Responsibility: Health; Disaggregation: by Gewog; Frequency: annually ### Table 12: Poverty Indicators — Agriculture and Animal Husbandry - 1 % of farming households without any kind of farming machinery (not including hybrid seeds or fertilizer) — Agriculture; Sub-sector: Access; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 5 years (with Census) - 2 % of landless rural households (any land) — Agriculture; Sub-sector: Asset ownership; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 5 years (with Census) - 3 % of households w/o any arable land — Agriculture; Sub-sector: Asset ownership; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 5 years (with Census) - 4 % of households w/o any irrigated land — Agriculture; Sub-sector: Asset ownership; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 5 years (with Census) - 5 Households (%) with landholding less than 1.5 hectares of arable land — Agriculture; Sub-sector: Asset ownership; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 5 years (with Census) - 6 Households (%) with landholding less than 5 hectares of arable land — Agriculture; Sub-sector: Asset ownership; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 5 years (with Census) - 7 Gini coefficient of landholdings (utilised land only!) — Agriculture; Sub-sector: Asset ownership; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 3-5 years (with Census) - 8 Gini coefficiant of Cow holdings (inludes only those households who own cows) — Agriculture; Sub-sector: Asset ownership; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 3-5 years (with Census) - 9 % of lifestock owning households w/o mules — Agriculture; Sub-sector: Asset ownership; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 3-5 years (with Census) - 10 % of lifestoch owning households w/o Jatsum cattle ( Mithun) — Agriculture; Sub-sector: Asset ownership; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 3-5 years (with Census) - 11 Growth rate of cash crop area — Agriculture; Sub-sector: Production; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 3-5 years (with Census) - 12 Growth rate of rice production — Agriculture; Sub-sector: Production; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 3-5 years (with Census) - 13 Growth rate of maize production — Agriculture; Sub-sector: Production; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 3-5 years (with Census) - 14 Rate of inflation of food items (refer to the food part of the CPI basket) — Agriculture; Sub-sector: Prices / Values; Responsibility: CPI; Disaggregation: by Dzongkhag; Frequency: quarterly - 15 % of major crops lost through post harves damage — Agriculture; Sub-sector: Production; Responsibility: Agriculture; Disaggregation: by Gewog; Frequency: 3-5 years (with Census) ### Table 12: Poverty Indicators — Gender, ICT, Environment, Non-material Dimensions - Gender - 1 Girls for 100 boys in primary levels. — Responsibility: Education; Disaggregation: By Gewog; Frequency: yearly - 2 Girls for 100 boys in secondary levels. — Responsibility: Education; Disaggregation: by Dzongkhag; Frequency: yearly - 3 % of women in GYT — Responsibility: 0; Disaggregation: By Gewog; Frequency: yearly - 4 % of women in DYT — Responsibility: 0; Disaggregation: By Dzongkhag; Frequency: yearly - 5 % of women in National Assembly — Responsibility: 0; Disaggregation: none (overall percentage); Frequency: yearly - 6 % of women in public service — Responsibility: 0; Disaggregation: none (overall percentage); Frequency: yearly - ICT - 1 % of population not having radio/ TV — Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: every 5 years (?) - 2 % of population not having telephone — Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: yearly - 3 Readership coverage of Kuensel — Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: yearly - Environment - 1 % of land under forest coverage — Responsibility: Agriculture; Disaggregation: By Gewog; Frequency: annually - 2 No. of vehicles — Responsibility: DSO; Disaggregation: by Dzongkhag; Frequency: annually - 3 Budget share allocated to RNR — Responsibility: 0; Disaggregation: none; Frequency: annually - 4 % of area under environmental protection — Responsibility: 0; Disaggregation: by Dzongkhag; Frequency: annually - 5 Carbon emissions — Responsibility: 0; Disaggregation: none; Frequency: annually - Non-material Dimensions - 1 Crime rate (robbery, rape, forgery, etc.) — Sub-sector: Security; Responsibility: 0; Disaggregation: none; Frequency: annually - 2 Number of institutions for social rehabilitation — Sub-sector: Social matters; Responsibility: 0; Disaggregation: none; Frequency: annually - 3 Rate of divorce — Sub-sector: Social matters; Responsibility: DSO; Disaggregation: by Dzongkhag; Frequency: annually - 4 Number of people moving into the Gewog — Sub-sector: Social matters; Responsibility: DSO; Disaggregation: by Gewog; Frequency: annually - 5 Number of tourists per annum — Sub-sector: Social matters; Responsibility: National; Disaggregation: none; Frequency: annually - 6 Number of people moving out of the Gewog — Sub-sector: Social matters; Responsibility: DSO; Disaggregation: by Gewog; Frequency: annually ### PRS Implementation and Consultative Process (Sections 8.10–9.8) - PRS Implementation Monitoring (Component II): - Will track inputs and outputs of poverty reduction programs using routine administrative monitoring data. - Efforts to harmonize existing monitoring and evaluation systems, including those in other line ministries. - Consultative process for planning (Ninth Plan and PRSP): - Ninth Plan preparation: - Brainstorming session in August 2000 with participants from sectoral ministries, Dzongkhag, Planning Commission and the Core Group. - Followed by visits to Dzongkhag by officials from the then Planning Commission Secretariat and the Core Group. - Guidelines for the Ninth Plan issued in early 2001 based on feedback from the mid-term review of the Eighth Plan, brainstorming, and Dzongkhag visits. - Dzongkhag and Gewog plans prepared after detailed discussion in the DYTs and GYTs; DYT/GYT comprises elected representatives, National Assembly members representing the Dzongkhag and a member from each municipality in that Dzongkhag. - Draft plans were reviewed by the Planning Commission for resource availability, national aims and objectives, and implementing capacity; sectoral and Dzongkhag plans were reprioritized as needed. - Final plans were endorsed by the Cabinet and approved by the National Assembly. - PRSP process: - Because the Ninth Plan involved extensive consultations (including donor agencies during the 7th and 8th Round Table Meetings in November 2000 in Thimphu and February 2003 in Geneva), "the PRSP process will not be based on a separate consultation process of a similar extent." - Main agencies involved in PRSP preparation: the then Planning Commission Secretariat (focal agency), Ministry of Finance, and key sectoral ministries. - Roles: Planning Commission Secretariat focused on overall coordination and crosscutting issues; Ministry of Finance was involved in the Medium Term Expenditure Framework; sectors provided inputs on sectoral strategies. *Source: _cr04246 - sections 8.9–9.8 (Table 12 and accompanying text).* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2004/_cr04246.pdf_