Hydropower to Propel GDP Growth in Bhutan
17 January 2015
The World Bank report “Global Economic Prospects: Having Fiscal Space and Using It,” has set Bhutan's economic growth at 7.9% for the current fiscal year—1.1% higher than the Government's target of 6.8%. It also projects Bhutan's gross domestic product (GDP) to increase to 8.4% in 2016, and 8.6% in 2017. Propelling growth, according to the report, is completion of Dagachhu hydropower project.
The report also indicates that Bhutan's public debt ratio exceeds 90% of GDP. Yet, economic prospects for the country remain optimistic, as the debt ratio is set to decline once Bhutan starts exporting more electricity to India. The report also recommends diversifying Bhutan's revenue sources for stable and increased revenue generation.
Regionally, India's burgeoning economy will also lift the economies of its neighbors, including Bhutan. The World Bank estimated growth in South Asia rebounded to an estimated 5.5% in 2014, from a 10-year low of 4.9% in 2013. The trend toward growth is set to continue, according to the report, with a forecast of 6.8% for the region in 2017.
Construction of Bhutan's Dagachhu hydropower plant is financed by the SASEC Green Power Development Project. It is the world's first certified cross-border clean development mechanism benefiting communities in Bhutan and India, has increased clean energy exports, and improved access to renewable electricity.
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