Bhutan: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bhutan
IMF Staff Country Reports, June 30, 2016
Source details
- Canonical URL
- Bhutan: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bhutan
Other formats
Bibliographic details
- Published: June 30, 2016
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781475567342.002
Recent economic developments
- Economic growth slowed in the wake of the rupee shortage but has picked up more recently.
- From an average of about 8 percent during the Ninth and Tenth Five-Year Plans spanning fiscal years (FYs) 2003/04–2012/13, real GDP growth fell below 4 percent in FY2012/13 and FY2013/14.
- Hydropower sector developments are central to recent performance and short-term dynamics.
Medium-term outlook and drivers
- Bhutan’s medium-term outlook is characterized as favorable.
- Commissioning of new hydropower generation projects will boost:
- output,
- exports,
- fiscal revenues.
Risks and vulnerabilities
- Domestic risks highlighted:
- the need to manage high debt,
- potentially volatile hydropower-related inflows, which may fuel rapid credit growth and lead to renewed external pressure.
- External vulnerability is linked to rupee shortages and fluctuations in hydropower-related inflows.
Policy implications and staff focus
- Manage high public and publicly-guaranteed external debt to reduce vulnerability to external pressure.
- Monitor and manage hydropower-related inflows to avoid rapid credit growth and associated financial stability risks.
- Preserve effective monetary policy transmission mechanisms given past disruptions from rupee shortages.
Bhutan: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bhutan