## IMF Executive Board Concludes 2025 Article IV Consultation with Bhutan

_IMF News, January 27, 2026_

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## Bibliographic details
- Published: January 27, 2026

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### Social development and environmental stance
- Extreme poverty was eliminated by 2022.
- Inequality has declined.
- Bhutan graduated from the UN’s Least Developed Country category in December 2023, implying a gradual reduction in official development assistance.
- Bhutan maintains more than 60 percent of forest cover and pledges to remain carbon neutral.

### Recent economic developments (2024–first half of 2025)
- Economic recovery gained momentum in 2024 and early 2025 with broad-based growth and easing inflation.
- Real GDP growth accelerated to 9.1 percent in Q4 2024 and remained strong in the first half of 2025.
- Key growth drivers: rebound in industry, resilience in services, commissioning of major hydropower projects.
- Inflation trends:
  - Declined steadily through most of 2024 and stabilized below 2 percent toward mid-2024.
  - Rebounded towards 4 percent in 2025, driven by food inflation.
- Tourism:
  - Strategy: “high value, low volume”.
  - Tourist arrivals rose by 41 percent.
  - Tourism receipts expanded by 35 percent, aided by a growing share of higher-spending non-Indian visitors.
- Vulnerabilities noted: elevated youth unemployment, slower-than-planned capital spending execution, significant structural current account deficit despite improvements.
- Reserves strengthened markedly owing to lower crypto-mining related imports, rising remittances, higher tourism and hydropower earnings.

### Medium-term outlook and risks
- Growth is projected at 7.4 percent in FY2025/26 and to remain strong in FY2026/27, reflecting increases in tourism, hydropower exports and capital spending.
- Inflation is projected to converge towards 4 percent.
- Medium-term drivers: rising hydropower generation and continued capital investment.
- Structural challenge: need to expand beyond hydropower and low-productivity activities to create private-sector jobs and reduce youth emigration pressures.
- Key downside risks:
  - Delays in hydropower projects.
  - Global slowdown weakening tourism and non-hydro exports.
  - Declines in value of crypto asset holdings.
  - Fuel-price increases.
  - Climate-related shocks, including glacial lake outburst floods.
  - GMC (Gelephu Mindfulness City) project risks: fiscal and financial risks, potential erosion of national tax base, crowding out of pro-growth public investment, contingent liabilities.

### Gelephu Mindfulness City (GMC) — opportunities and risks
- Potential: spearhead economic diversification and spur FDI.
- Risks and concerns:
  - Legal framework on labor, goods, and capital mobility is at an early stage and needs further clarity.
  - Independent tax regime could erode the national tax base.
  - Financial risks from differences between RMA regulations and GMC regulations (regulatory and licensing arbitrage, passporting risks).
  - GMC adoption of Abu-Dhabi Global Market regulations helps address AML/CFT vulnerabilities, but complementary laws and strong implementation remain critical.
  - Crypto-asset activities permitted in the GMC heighten the need for strong enforcement and supervision.
  - Fiscal risks require careful management to protect Bhutan’s revenue base and limit spending pressures.

### Policy recommendations and priorities
- Fiscal policy
  - Gradual but sustained fiscal consolidation to achieve the authorities’ medium-term deficit target and put public debt on a downward trajectory.
  - Maintain commitment to a fiscal deficit of 3 percent over the FYP.
  - Strengthen revenue mobilization: higher GST rates and other tax policy measures such as the introduction of fuel taxes.
  - Exercise tighter expenditure discipline while preserving space for pro-growth capital spending.
  - Properly manage the new financing model for hydropower projects to mitigate fiscal risks.
- Monetary policy and reserves
  - Gradually normalize monetary policy to support reserve accumulation.
  - Absorb excess liquidity to moderate credit growth and reinforce monetary transmission.
  - Implement the domestic liquidity management framework and move toward establishing an interest rate corridor.
  - Strengthen monetary policy framework to support reserve accumulation and external adjustment.
- Financial sector resilience
  - Adopted Bhutanese accounting standards introducing expected-credit-loss approach requiring higher provisioning, particularly for restructured loans.
  - Focus on timely recognition of credit risk, enforcement of prudential norms, and mitigation of concentration risks in tourism and housing.
  - Strengthen risk-based supervision, enhance stress testing, and take prompt corrective actions to preserve system soundness.
  - Continue efforts to strengthen the AML/CFT framework, including improvements on prosecution and conviction.
- GMC-specific measures
  - Clarify legal frameworks governing GMC status and mobility of labor, goods, and capital.
  - Close regulatory gaps between RMA and GMC to avoid arbitrage and passporting risks.
  - Ensure complementary laws and strong implementation to address AML/CFT vulnerabilities.

### Executive Board assessment (high-level)
- Growth expected to remain robust over the medium term supported by hydropower commissioning and continued capital spending, with Punatsangchhu II fully operational and investment under the 13th FYP progressing.
- Inflation projected to stabilize around 4 percent, anchored by the currency peg and high import content of investment.
- Strengthening fiscal and monetary stance is key to reducing external imbalances and building up reserves.
- RMA has taken steps to enhance transparency and governance in reserve management, including a comprehensive internal control assessment of foreign exchange and reserve management systems and working toward implementing Fund capacity development recommendations on reserve management.

### Bhutan: Selected Economic Indicators (highlights and exact values)
- National Accounts
  - Nominal GDP (in millions of ngultrum) 1/: 2023/24 Act. 260,310; 2024/25 Est. 288,054; 2025/26 Proj. 320,294; 2026/27 Proj. 352,058
  - Real GDP growth (percent change) 1/: 2023/24 Act. 4.2; 2024/25 Est. 6.8; 2025/26 Proj. 7.4; 2026/27 Proj. 6.0
- Prices
  - Consumer prices (EoP; percent change): 2023/24 1.7; 2024/25 3.3; 2025/26 3.7; 2026/27 4.0
  - Consumer prices (avg; percent change): 2023/24 4.3; 2024/25 2.5; 2025/26 3.5; 2026/27 3.8
  - GDP deflator (percent change): 2023/24 4.7; 2024/25 3.6
- General Government Accounts (in percent of GDP, otherwise indicated)
  - Total revenue and grants: 2023/24 27.0; 2024/25 28.4; 2025/26 32.1; 2026/27 30.7
  - Domestic revenue: 2023/24 21.5; 2024/25 21.6; 2025/26 22.6; 2026/27 20.8
  - Tax revenue: 2023/24 13.5; 2024/25 15.3; 2025/26 13.6
  - Non-tax revenue: 2023/24 8.1; 2024/25 6.3; 2025/26 7.2
  - Foreign grants: 2023/24 4.1; 2024/25 8.8; 2025/26 9.3
  - Internal and other receipts: 2023/24 1.4; 2024/25 0.8; 2025/26 0.7; 2026/27 0.5
  - Total expenditure 2/: 2023/24 27.1; 2024/25 31.0; 2025/26 35.0; 2026/27 34.8
  - Current expenditure: 2023/24 16.7; 2024/25 15.9; 2025/26 17.7; 2026/27 18.0
  - Capital expenditure: 2023/24 10.3; 2024/25 15.1; 2025/26 17.2; 2026/27 16.8
  - Primary expenditure 2/: 2023/24 25.2; 2024/25 29.1; 2025/26 33.1; 2026/27 32.2
  - Primary balance: 2023/24 1.8; 2024/25 -0.7; 2025/26 -1.0; 2026/27 -1.5
  - Overall balance: 2023/24 -0.2; 2024/25 -2.6; 2025/26 -2.9; 2026/27 -4.1
  - General government debt 3/: 2023/24 119; 2024/25 118; 2025/26 123; 2026/27 126
    - Domestic: 2023/24 10; 2024/25 16
    - External: 2023/24 109; 2024/25 107; 2025/26 112; 2026/27 110
- Monetary Sector
  - Broad money (M2) growth (percent change): 2023/24 11.2; 2024/25 12.9
  - Private credit growth (percent change): 2023/24 5.6; 2024/25 13.2; 2025/26 11.3; 2026/27 8.5
- Balance of Payments (in percent of GDP unless otherwise indicated)
  - Current account balance: 2023/24 -20.7; 2024/25 -19.2; 2025/26 -17.7
  - Goods balance: 2023/24 -20.0; 2024/25 -24.7; 2025/26 -18.4; 2026/27 -20.4
  - Hydropower exports: 2023/24 5.8; 2024/25 6.9; 2025/26 8.6; 2026/27 8.2
  - Non-hydropower exports: 2023/24 9.5; 2024/25 11.5; 2025/26 10.6
  - Imports of goods: 2023/24 41.0; 2024/25 47.5; 2025/26 39.8; 2026/27 41.1
  - Services balance: 2023/24 1.9; 2024/25 2.7; 2025/26 -0.5; 2026/27 0.3
  - Secondary balance: 2023/24 -5.3; 2024/25 -4.9; 2025/26 -4.4
  - Capital account balance: 2023/24 2.6; 2024/25 7.7; 2025/26 5.5; 2026/27 5.3
  - Financial account balance: 2023/24 7.3; 2024/25 16.3; 2025/26 17.1
  - Net errors and omissions: 2023/24 -8.9; 2024/25 -5.9; 2025/26 -12.8
  - Gross official reserves (in USD millions): 2023/24 624; 2024/25 801; 2025/26 964; 2026/27 1400
  - (In months of goods imports): 2023/24 5.9; 2024/25 9.9
  - (In months of goods and services imports): 2023/24 5.0; 2024/25 5.2; 2025/26 6.2; 2026/27 7.9
- Memorandum Items
  - Hydropower exports growth rate 4/: 2023/24 -25.5; 2024/25 31.2; 2025/26 39.0
  - Non-hydropower exports growth rate 4/: 2023/24 -30.5; 2024/25 78.2; 2025/26 -16.2; 2026/27 0.6
  - Hydropower good imports 4/: 2023/24 28.7; 2024/25 147.3; 2025/26 72.1
  - Non-hydropower good imports 4/: 2023/24 -11.5; 2024/25 29.6; 2025/26 -15.2; 2026/27 3.9

- Notes from source:
  - 1/ The GDP series does not reflect the value added from cryptocurrency mining due to lack of data.
  - 2/ The expenditure for FY2020/21 and FY2021/22 includes an estimated amount for income support provided to individuals and loan interest payment support to borrowers financed by the National Resilience Fund.
  - 3/ Public and publicly guaranteed debt, including loans for hydropower projects.
  - 4/ Nominal growth rates in local currency. No actual data on the breakdown of imports is available. The decompositions are estimates based on reported project spending and assumptions on import shares.

*IMF Executive Board press release, January 27, 2026.*

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## References

- [Bhutan and the IMF](http://www.imf.org/external/country/BTN/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [www.imf.org/Bhutan](http://www.imf.org/Bhutan)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2026/01/26/pr-2619-bhutan-imf-concludes-2025-article-iv-consultation_