Foreign Economic Relations

Bhutan Table of Contents


Whereas Bhutan was once nearly totally dependent on India not only for its development assistance but also for its entire government revenue, it increasingly turned to various international organizations, such as the United Nations, the Colombo Plan, the World Bank, and the Asian Development Bank, for loans. Since the 1960s, Bhutan, through the Colombo Plan, has received aid from several countries in the form of farm machinery, motor vehicles, school books and laboratory equipment, livestock, seeds, dairy equipment, medicine, and refrigeration and irrigation systems. Participating countries included Japan, Australia, New Zealand, Britain, Austria, Switzerland, West Germany, and Canada. The World Bank granted a US$9 million interest-free loan to help with the development of a calcium carbide plant near Phuntsholing. As of 1990, total Asian Development Bank loans to Bhutan since the latter joined in 1982 amounted to US$30 million. In 1987 and 1988 alone, the bank approved loans totalling more than US$6.9 million to cover the modernization of industrial estates and to provide foreign currency for the Bhutan Development Finance Corporation, which in turn provided credit for agricultural projects and private-sector businesses. Asian Development Bank loans to Bhutan for 1990-93 were projected at US$35 million, plus a grant of more than US$4.85 million; the aid was for technical assistance.

The Sixth Development Plan saw increased involvement of aid both through UN auspices and the non-profit Swiss organization Helvetas (Swiss Association for Technical Assistance). Helvetas began providing funding to Bhutan in 1975 through contributions from association members and the Swiss government. In 1990, for example, Helvetas contributed Nu32.8 million (69 percent of total foreign aid) to establish the Natural Resources Training Institute, a two-year technical training school. The Japanese government gave Nu74 million in grants for agricultural development and audio training equipment in 1990-91.

In 1989 the World Food Programme approved a two-year US$700,000 project to establish food reserves that would help Bhutan handle local emergencies and interruptions of food supplies. The Food and Agriculture Organization of the United Nations (FAO) sponsored a program to assist Bhutan in achieving food self-sufficiency by 1992.

Another form of aid received by Bhutan was through international and foreign volunteer programs. A UN volunteer program initiated in 1980 brought foreign specialists in to assist and advise in the areas of education, health, engineering, animal husbandry, agriculture, and urban planning. By 1990 Japan, New Zealand, Britain, and Canada also were operating volunteer programs in Bhutan.

In addition to the substantial aid it received, Bhutan was itself an aid giver. For example, in 1987 Bhutan provided disaster relief aid to the Maldives (Nu1 million), Bangladesh (Nu0.5 million), and India (Nu5 million).

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Source: U.S. Library of Congress