Helping Bhutan’s farmers earn more and supporting small businesses across the country are key elements of IFC’s work in the Kingdom of Bhutan.

IFC’s requirements for robust performance standards in its projects are a natural fit with Bhutan’s philosophy for growth centered around Gross National Happiness. IFC has been working in Bhutan to support the country’s inclusive and sustainable development agenda with a strong focus on job creation and economic and environmental resilience.

The impact of COVID-19 is posing new challenges and opportunities for the private sector to contribute more in rebuilding the economy. Overcoming challenges requires reorienting the government’s policy support towards the private sector. Going forward, IFC’s strategy aims to use a combination of investments and advisory services to promote financial inclusion, boost investor confidence, and helping create jobs.

Since 2003, IFC has invested close to $45 million and helped mobilize $15 million in the Kingdom of Bhutan.


Financial inclusion and support: A key constraint to MSME growth in Bhutan includes access to financial services. IFC’s long-term partnership with Bhutan National Bank, which was amongst the largest foreign direct investment (FDI) in Bhutan, is helping boost access to financing for over 9,000 small businesses. It is one of Bhutan’s five commercial banks and a leading bank with one-third of the market share. IFC’s global trade finance facility supports small-scale local businesses import materials and machinery to help them grow.

Expansion of Agribusiness: Agriculture is the main source of livelihood for more than half the population but accounts for less than one-fifth of Bhutan’s gross domestic product (GDP). An investment in a hazelnut production venture – Mountain Hazelnuts – marked IFC’s first ever engagement in the country’s agribusiness sector. Farmers grow hazelnuts to generate income on degraded, unused land, which would otherwise be left barren. Sales from this project, supported by the private sector window of the Global Agriculture and Food Security Program, are projected to significantly increase the household income for the participating farmers impacting approximately 15 percent of Bhutan’s population.

Innovations in Investment: IFC has pioneered important private sector led investments in Bhutan that are helping address key challenges. Thimphu City, the capital of Bhutan, is growing fast and faces severe congestion. Thimphu Parking was the first public-private partnership supported by IFC in developing urban infrastructure. As a result, private investments are helping alleviate traffic congestion which would otherwise require large public investments. Tourism has historically been a key economic sector for Bhutan and will be critical for the country’s post-pandemic recovery. In Paro, IFC provided a loan to Zhiwa Ling Hotel, which marked the first external commercial borrowing by a private Bhutanese company.

Published in May 2021