DOCUMENT OF The World Bank Group FOR OFFICIAL USE ONLY Report No. 75851 BT INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION COUNTRY PARTNERSHIIP STRATEGY PROGRESS REPORT (CPSPR) FOR THE KINGDOM OF BHUTAN FOR THE PERIOD FY11-14 March 28, 2013 Bhutan Country Management Unit South Asia Region International Finance Corporation South Asia Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (effective February 2013) Currency unit = Ngultrums Nu 54.2 = US$1.00 FISCAL YEAR July 1-June 30 ABBREVIATIONS AND ACRONYMS 10FYP 10th Five-Year Plan MYRB Multi-Year Rolling Budget 11FYP 11th Five-Year Plan NHA National Health Accounts BLSS Bhutan Living Standard Survey PER Public Expenditure Review BOB Bank of Bhutan PEFA Public Financial Management Accountability Assessment BNB Bhutan National Bank PFM Public Financial Management CIB Credit Information Bureau PEMS Public Expenditure Management System CPIA Country Policy Institutional PPPD Public Procurement Policy Division Assessment CPS Country Partnership Strategy PRSP Poverty Reduction Strategy paper DHI Druk Holding and Investments PPP Public Private Partnership DPC Development Policy Credit QAA Quality Assurance and Accreditation FDI Foreign Direct Investment RMA Royal Monetary Authority FM Financial Management RGOB Royal Government of Bhutan GEF Global Environment Facility SAARC South Asian Association for Regional Cooperation GDP Gross Domestic Product SCS Special Consultation Services GNH Gross National Happiness SLM Sustainable Land Management IBRD International Bank for SME Small and Medium Enterprises Reconstruction and Development IDA International Development TA Technical Assistance Association IDF Institutional Development Fund UN United Nations MIC Middle Income Countries UCS Use of Country Systems The World Bank International Finance Corporation Vice President Isabel Guerrero Karin Finklestein Director Robert Saum Thomas Davenport Task Team Leader Mark LaPrairie Om Bhandari Acknowledgement: The work of Alema Siddiky in updating the results matrix and shaping the CPSPR BHUTAN text and annexes is gratefully acknowledged. The CPSPR also benefited from the overall oversight and leadership of Anthony Cholst, Country Program Coordinator, from TG Srinivasan, Sr. Economist, and the careful review by Task Teams and the Government.  BHUTAN COUNTRY PARTNERSHIP STRATEGY PROGRESS REPORT TABLE OF CONTENTS I. Introduction ..............................................................................................................1 II. Country Developments Since the Start of the CPS ..................................................1 III. Progress in Achieving CPS Outcomes .....................................................................5 IV. Portfolio Performance ............................................................................................10 V. Strategy Moving Forward ......................................................................................11 VI. Risks and Mitigation ..................................................................................................13 ANNEXES CPSPR Annexes Annex 1: Updated FY11-FY14 CPS Results Framework .................................................15 Annex 2: Progress Towards MDG Targets .......................................................................26 Annex 3: Results of the Latest GNH Survey ....................................................................27 Annex 4: Gender in Bhutan ..............................................................................................29 Annex 5: Active Recipient and Bank Executed Trust Funds ............................................32 Annex 6: Summary of Consultations ................................................................................34 Standard CPS Annexes Annex A2: Country At-A-Glance .........................................................................................36 Annex B2: Selected Indicators of Bank Portfolio Performance and Management ..............38 Annex B3: IDA Indicative Financing Program ....................................................................39 Annex B3: IFC Investment Operations Program .................................................................39 Annex B4: Summary of Non-Lending Activities .................................................................40 Annex B6: Key Economic Indicators ...................................................................................42 Annex B7: Key Exposure Indicators ....................................................................................44 Annex B8: Operations Portfolio ..........................................................................................45 Annex B8: IFC Committed and Disbursed Outstanding Investment Portfolio ....................46 TABLES Table 1: Selected Economic Indicators ..............................................................................3 Table 2: Results Cluster 1: Private Sector Development ...................................................6 Table 3: Results Cluster 2: Employment and Skills Development Progress .....................7 Table 4: Results Cluster 3: Sustainable Urban Development ............................................8 Table 5: Results Cluster4: Access to Quality Public Services .........................................10 Table 6: Initial and Current Estimated IDA Lending Program ........................................12 IBRD Map No. 33373R      I. Introduction 1. This Country Partnership Strategy Progress Report (CPSPR) reviews progress under the World Bank Group (WBG) program of cooperation with the Kingdom of Bhutan under the current Country Partnership Strategy (CPS) (FY11-14). The joint Bank/International Finance Corporation (IFC) CPS was discussed by the World Bank’s Board of Executive Directors on October 27, 2010. The CPSPR takes stock of results from the World Bank Group (WBG) supported program midway through the CPS period of implementation. It evaluates results achieved under each CPS area of engagement, indicates adjustments needed and describes the way forward for the remainder of the CPS period. 2. Overall, the CPS strategy remains valid. The CPS strategy remains closely aligned to Bhutan’s 10th Five-Year Plan and the principles of Bhutan’s homegrown development philosophy of Gross National Happiness (GNH). The WBG continues to support economic growth, employment generation and skills development, while simultaneously supporting the expansion and sustainability of public services in both urban and rural parts of the country. 3. The levels and focus of financing described under the CPS are also valid, with some minor adjustments. The Bank’s programmatic focus on providing a stable and market-supporting macroeconomic framework was reinforced through the use of Development Policy Credit (DPC) operations, in part to help the Royal Government respond to earthquake damage and a shortage of Indian Rupees (to which the Bhutanese currency is pegged at par), while maintaining long-term hydropower investments. The Bank also helped to strengthen country systems, including in the areas of budgeting, poverty monitoring, procurement, auditing – consistent with the country’s emerging middle income country (MIC) status. Support to both urban and rural development reflects strong areas of Bank engagement. The knowledge society agenda remains central to the CPS vision. Work in this area continues through ongoing investments, DPCs and analytic and advisory activities (AAA). However, consideration of a new ‘knowledge society’ investment operation has been deferred to the next CPS period owing to other priorities of RGOB for the use of Bhutan’s limited IDA envelope. IFC’s investment and advisory focus also remained on-track, including a $29m equity investment in Bhutan National Bank, IFC’s largest investment support to a Bhutanese institution and Bhutan’s largest foreign direct investment to date. II. Country Developments Since the Start of the CPS Political Context 4. Bhutan has experienced a stable political environment since 2010. In 2008, the country undertook a transition from an absolute monarchy to a constitutional monarchy and introduced multi- party democracy. The ruling party, Druk Phuensum Tshogpa, holds 45 of the 47 seats in the National Assembly. In the absence of much opposition in the National Assembly, both the National Council and, to some extent, the media have become de facto fora for different views. The next elections are scheduled for Spring/Summer 2013, but are not expected to produce a significant shift in national development policies. 5. Bhutan is slowly increasing its international exposure and presence. The Royal Government has markedly increased the number of countries with which Bhutan has formal diplomatic ties, increasing from only 27 in 2010 to over 47 today. One offshoot of this is more focus internationally on Bhutan’s unique development approach based on GNH and Bhutan’s potential role 1    in the international effort to develop a post-MDG development framework, incorporating well-being more explicitly. In March 2012, the United Nations hosted a major conference on GNH and adopted UN Resolution 65/309 which recognized the pursuit of happiness as a fundamental human goal and provides for Bhutan convening high level experts on the theme of happiness and well-being. Bhutan has since convened a high-level panel of international experts which will make recommendations to the next two UN General Assembly gatherings in New York in 2013 and 2014. Economic Status 6. Bhutan’s growth remains strong, with real GDP growth at an average annual rate of over eight percent over 2009-2012, in-line with the 10th Five Year Plan (FYP) target. Nearly a quarter of GDP originates in hydropower. GDP growth from the hydropower sector (construction, generation and transmission) leveled off during FY12 due to the phasing of construction activities and fluctuations in precipitation affecting river flows. Value added in the non-hydropower sector during the 10FYP was driven mostly by manufacturing and services. The manufacturing sector benefitted from new industries attracted by the availability of power. Growth in the service sector stemmed from an increase in domestic demand and tourism. Performance in the agriculture sector was below average. 7. During 2011-12, the Bhutanese economy showed signs of overheating, with rapidly expanding private sector credit and a shortage of Indian Rupees given the construction phase of several hydropower plants. Annual inflation remained high, reaching 13.5 percent in the last quarter of FY12, similar to the inflation rate in India given that the Bhutanese Ngultrum is pegged to the Indian Rupee and India remains the predominant source of imports. Domestic demand pressures have fueled increases in non-tradables, such as property rents. Fiscal and monetary tightening, coupled with some foreign exchange controls since then, have helped cool the economy. Inflation has moderated to about 9 percent in the last quarter of 2012. The current account deficit persisted at a high of 20 percent of GDP in FY12, mainly due to high imports of consumer durables and hydropower investment-related imports and lackluster export performance. The overall external balance swung to a deficit of 6.4 percent of GDP with diminished external resources. There was a small drawdown of international reserves, but these remain well above levels that would cause concern. 8. Nevertheless, the growth outlook remains overall very positive. GDP growth is projected to continue to be strong at 7-8 percent in FY13 and remain at that level or higher in the next three years. Strong growth will be underpinned by the construction of 11 hydropower projects which are now in various stages of implementation. This will add 10,000 MW of electricity generation by 2020. The fiscal deficit is projected to be kept low at around 1.6 percent of GDP in FY13 by reining in capital (non-hydro) spending to 16 percent of GDP. The current account deficit is projected to remain at about 20 percent of GDP in FY13, but may begin to widen on account of hydropower imports and a decline in grants. 2    Table 1. Selected Economic Indicators    2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 Act. Act. Act. Act. Estimated Projected Real sector (annual percentage change) GDP growth 5.7 9.3 10.0 9.0 7.6 6.7 Hydropower GDP 15.3 39.4 35.0 31.8 Non-hydropower GDP 8.0 4.8 5.1 3.2 Consumer prices (period average) 6.3 5.7 8.9 9.1 7.6 7.6 Monetary sector (annual percentage change) Broad money 24.6 30.1 21.2 -1.0 Credit to private sector 31.1 38.6 33.2 30.1 Fiscal sector (in percent of GDP) Revenue with grants 40.4 46.4 35.6 37.5 31.8 30.4 Expenditure including net lending 38.6 44.7 37.8 38.3 33.4 31.4 Fiscal balance 1.9 1.6 -2.1 -0.7 -1.6 -1.0 External sector (in percent of GDP) Current account balance -1.39 -19.11 -25.50 -20.77 -20.95 -21.88 Trade balance -7.92 -31.00 -32.32 -28.25 -27.00 -24.49 Overall balance 9.96 7.97 5.94 -6.44 2.61 -5.52 Gross int'l reserves (in millions of US$) 704 792 906 770 858 902 Gross int'l reserves (months of merchandise imports) 13.9 11.2 9.5 9.6 9.4 8.3 Source: Bhutanese authorities. 9. Bhutan continues to strengthen its governance framework. In 2012, Bhutan moved further up on Transparency International’s Corruption Perceptions Index, from 38 to 33, in recognition of additional steps it has taken to strengthen its anti-corruption legal framework, including passage of the 2011 Anti-Corruption Act, the establishment of an Anti-Corruption Commission (ACC) and further strengthening rules governing asset declaration by public servants in 2012. Indeed Bhutan’s success in fighting corruption may provide lessons for other countries. Given that Bhutan’s economic growth stems in significant measure from corruption-prone sectors (e.g. hydropower and construction), RGOB’s focus on anti-corruption is not misplaced. A key element for improving governance has been an ambitious government-to-citizen (G2C) program to provide services electronically in a timely fashion through community centers, particularly important in light of Bhutan’s significant geographical barriers. Similarly with support from IFC, the Government developed a government to business (G2B) e-portal to provide a comprehensive inventory of licenses and other information on business processes. RGOB has also prepared a well sequenced Public Financial Management (PFM) reform program based on the inputs from the recently completed Public Financial Management Accountability Assessment (PEFA) study. RGOB prioritizes PFM reforms in-line with national priorities, coordinates the actions of donors in this area and ensures a focus on further improving governance and accountability throughout the public sector. Looking forward, it would be useful to consider how to further build institutional capacity to implement transparency rules, and explore the potential for a Right to Information act to provide citizens with more information about public decisions. 10. Public sector debt is high and needs to be closely monitored, though this is mostly for commercially viable hydropower projects. As of June 2012, public sector debt was estimated to be 76 percent, compared to 64 percent a year earlier. It is expected to peak at 115 percent of GDP in 3    2014/15. Of this, more than half is owed to bilateral creditors, largely for hydropower construction. A joint World Bank/IMF 2012 Debt Sustainability Analysis (DSA) indicated that most debt thresholds have been breached in the baseline scenario putting Bhutan at a high risk of debt distress. Risks are mitigated by the concentration of debt in commercially viable hydropower projects, which are both growth-enhancing and self-liquidating. A significant increase in revenues from hydropower will begin to accrue significantly from 2017-18. 11. In addition to debt levels, certain other pressure points require attention. In the near term, until revenue streams come onboard from new hydropower projects, continued vigilance on monetary and fiscal policies will be required to preempt a repeat of the Rupee shortage. It will also be important to closely monitor expenditure patterns to keep tight policies from restraining social sector priorities and boosting the competitiveness of the private sector so necessary for employment. As these pressures ease, a relaxing of foreign exchange controls would be possible and desirable. Increased domestic revenue efforts will also be needed to sustain capital spending as fewer grants are received due to Bhutan’s rising per capita income. In the medium term, increased efforts will be needed to further diversify the economy to reduce shocks as well as put a planning process in place so that when new revenue streams materialize, there will be a process to ensure they do not lead to overheating. Poverty and Social Development 12. Over the past decade, Bhutan has made strong progress in reducing poverty. According to the US$1.25 a day international poverty line, Bhutan’s poverty rate declined by more than half between 1990 and 2008 reaching just ten percent of the population (and 23 percent using a national poverty line). The last Bhutan Living Standard Survey 2012 (BLSS) was conducted between March and July 2012. Preliminary data analysis suggests that poverty has further declined significantly, to about 12 percent led by strong growth in real per-capita GDP. 13. Bhutan has attained or is on track to achieve most of the MDGs by 2015. In education, 2009 net primary school enrollment and primary completion rates are 92 percent and 90.2 percent, respectively. Bhutan has already achieved the MDG of halving the proportion of people without access to improved water sources and sanitation facilities. Other MDG targets, with the exception of one pertaining to gender parity at tertiary education, are expected to be achieved.1 Annex Table 2 presents MDG progress. 14. Bhutan has made a tremendous progress toward gender equality. Key indicators on gender equality show that Bhutan performs well beyond what one would expect from a country at its level of income. The ratio of male to female labor force participation rates in 2010 in Bhutan is as high as 86 percent compared to 77 percent in upper middle income countries and 74 percent in OECD countries. On health, access to modern contraceptive methods in Bhutan has increased sharply from 28 percent in 2003 to 65 percent in 2010. Gender equality in basic education has been largely achieved. Despite good progress, challenges remain mostly in agriculture and land holdings, inheritance, tertiary education, unemployment among young adults and gender gaps in employment quality. 15. Bhutan also holds itself up to a higher standard – the GNH Index. Bhutan’s GNH approach to development emphasizes both economic and material gain in equal measure with the well-being of individuals, communities and society. According to the 2010 GNH Survey, 40.9                                                              1   Bhutan performs less well against the UN’s Human Development Index (HDI) ranking 141 out of 187, weighed down particularly by low adult literacy and schooling.     4    percent of Bhutanese are “happy”, according to the GNH methodology2. The GNH Index is a single number index developed from 33 indicators categorized under nine domains. It is constructed based upon a robust multidimensional methodology and is decomposable by any demographic characteristic. The index is designed to create policy incentives for government, NGOs and businesses to increase GNH. Looking forward, it would be useful to explore the relationship between the poverty survey and the GNH index in the remainder of the CPS period. Also, as noted earlier, Bhutan’s experience in GNH is expected to enable it to play a role in shaping the post- MDG development paradigm. See Annex 3 for details. III. Progress in Achieving CPS Outcomes 16. Progress towards CPS outcomes has been satisfactory and notable advances have been made in each CPS results area. The Results Framework in Annex 1 summarizes recent progress and updates the CPS’ targets. Although some adjustments are needed, the results matrix remains fundamentally on track. The original results matrix is still valid and has been refined and updated to better reflect expected outcomes for the remainder of the CPS period. Results Cluster 1: Private Sector Development: 17. Overall progress in improving the private sector environment has been substantial. The main instruments – two DPCs, the ongoing Private Sector Development Project, investment climate support by the Bank and IFC – have all been satisfactorily implemented. Most projected outcomes have been achieved or on-track, although the ongoing PSD project has been slower to implement than anticipated (see summary table below). This includes strengthening private sector policies and procedures, increasing the number of foreign direct investment (FDI) projects, improved accounting standards and corporate governance of state-owned enterprises (SOEs), and enhanced financial sector efficiency. Under the IDA-financed Bhutan Private Sector Development Project, Bhutan established its first IT Park which is in the process of attracting investment and clients, though slower than anticipated. IFC helped strengthen the operating environment for the private sector largely in three areas. First, to create a modern and efficient business environment, IFC assisted RGOB with optimization of the company registration process and is currently working to improve the efficiency of business entry through an e-portal for business (G2B), including enterprise registration and the process for obtaining a permit to start a new business. Second, to inform the government, IFC continued to engage in the development of PPPs (urban transit) , and undertook other feasibility or diagnostic studies, including on special economic zones, power trading, and the airline sector. Third, IFC further increased its support for Bhutanese financial sector, including through additional trade guarantees ($3.4 million), a $29 million equity investment in BNB, and capacity building engagements with banks. Efforts were continued to create an SME venture program during the CPS period. 18. The Results Framework has been slightly adjusted on PPPs, and on financial services based on evolving circumstances. On PPPs, the draft policy has been prepared and is on-track. The original milestone of having a PPP unit staffed and operational has been replaced by having PPP rules and regulations approved as RGOB chose to mainstream PPP policy across government rather than in a single dedicated unit under one ministry. On financial services, private credit has grown steadily, but vulnerability remains a concern. The credit-to-deposit ratio rose from 57 percent in                                                              2 People are considered happy if they meet the criteria for at least 6 out of 9 GNH domains: psychological well-being, Health, time use, education, cultural diversity and resilience, good governance, community vitality, ecological diversity and resilience, and living standards. 5    2010 to 86 percent in 2012, while NPLs have increased to 8.2 percent on a gross basis. Focus has shifted toward financial inclusion policies and efficiency, evidenced by Bhutan’s first fully operational Electronic Fund Transfer Clearing System and automation of the Royal Securities Exchange of Bhutan. IFC provided policy notes on the national payment systems. A planned World Bank follow-on private sector project was postponed under the current CPS given the slower than anticipated implementation of the ongoing PSD project and the need for increased budget support. This change does not affect the Results Framework. At the request of RGOB, funding initially earmarked for a follow-on PSD project was reallocated to the recent DPC-2 to address the country’s liquidity requirements. Table 2: Results Cluster 1: Private Sector Development CPS Outcomes/Results Progress to Date  Improved framework for policies,  Good Progress. FDI Rules and Regulations were issued procedures and practices resulting in more and amendments to the FDI Policy approved by Cabinet in efficient process of business start-up, project July 2012 approval and licensing for domestic and  Number of days to start a business reduced to 36 days in foreign investors 2012  Increase in the number of FDI project  Achieved. 32 new FDI projects approved approvals  Increased number of public-private  On track. The draft PPP Policy will be submitted to partnerships Cabinet. Two PPPs have been implemented. PPP will now be mainstreamed rather than through a single unit  Increased ratio of private credit over GDP  On track. Due to concerns on the economy overheating, the focus has shifted towards financial inclusion (Financial Inclusion Policy drafted) and on efficiency with the Electronic Fund Transfer Clearing System operational and the automation of the Securities and Exchange and IFC advisory support to the two largest banks  Improved corporate governance for SOEs as  On track and good progress. 60 out of 65 Druk Holding measured by the number of SOEs Investments (DHI) company directors trained. implementing new Corporate Governance  DHI has developed a performance monitoring system for framework six of its companies Results Cluster 2: Employment and Skills Development 19. Impressive progress has been made toward improving skills development and increasing employment opportunities. Under the on-going Private Sector Development Project, 1,034 secondary and tertiary education graduates have been trained in IT/ITES. Approximately 804 tertiary-level graduates aged 19 and 24 years, with equal representation of men and women, are now working in the IT/ITES sector, exceeding the CPS target. This represents a 17 percent share of the total unemployed Bhutanese with a school diploma in 2007. Institutional capacity has been strengthened to facilitate employment of Bhutanese youth. The draft National Employment Policy will soon be presented to the Royal Government for approval. It aims to strengthen employment paths and improve working conditions. This will help foster conditions for achieving full, productive employment, particularly for youth. Through six different providers, training has been provided to approximately100 youth in the tourism and hospitality sector. 20. The knowledge base has been strengthened through analytical work on higher education and a Human Development (HD) Public Expenditure Review (PER). These are anticipated to inform government policy. A new formal college curriculum was launched at the Royal University of Bhutan (RUB) under the PSD project. Three new credit course offerings in analytical skills, language enhancements and entrepreneurship development are now available. In 6    addition, IFC’s potential investments in education are being explored. However, increased access to tertiary education has been dropped as this was to have been supported by a new knowledge economy project which has been postponed to let the first PSD project mature and yield lessons (as discussed earlier). As a result, higher education and apprenticeship outcomes were overly ambitious in light of what could be achieved through only analytic work. Table 3: Results Cluster 2: Employment and Skills Development Progress CPS Outcomes/Results Progress to Date  Competency based curricula in place as  Achieved. Six new learning offerings were made measured by number of new or revised available to youth. Three new credit courses introduced learning offerings at the Royal University of Bhutan  Increased annual number of graduates trained in institutions through public-private  Achieved. 1,034 youth trained through PPP skills partnerships (e.g: tourism, ICT, nursing) development. 804 Bhutanese graduates working in the IT/ITES  Increased access to tiertiary education and firms providing apprenticeships  Not achieved indicator dropped   Results Cluster 3: Sustainable Urban-Rural Development 21. Progress has been made for improving urban infrastructure, despite initial delays. Municipal finance reform is now on-track. The Bank provided international expertise to the Ministry of Works and Human Settlement (MOWHS) for finalizing the draft Municipal Finance Policy, approved in July 2012. Select priority measures are being implemented in both Thimphu and Phuntsholing, Bhutan’s two largest urban settlements. Initial work on improving services in Thimphu, including the construction of roads, piped water and sewage is underway, despite initial delays. A follow-on operation or additional financing to the current project for FY14 will be prepared to expand gains and address the country’s unabated trend of urban drift. The Bank is also planning to extend an IDF grant to help improve urban budgeting. IFC is exploring several PPP operations to make urban transport more efficient. IFC also considering support for PPP options for urban solid waste management, a dry port at the Indo-Bhutan border and a combined inter-city and intra-city bus terminal. However projects have been deferred currently for different reasons. 22. Substantial progress is being made in improving rural livelihoods, with a moderately adjusted focus under the CPS. The Bank’s support has helped improve access to irrigation, small- scale infrastructure and agricultural extension services in six project districts. These have led to better access to markets, reduced transportation costs and provided more access to agricultural services. Travel time to the nearest motorable road has been reduced by 50 percent. Access to all season feeder roads has improved 100 percent through the construction of 95 km of roads in project areas. The program is being deepened in the poorest and most remote parts of the country through the recently approved Remote Rural Communities Development Project. This operation focuses on the provision of rural infrastructure (e.g. roads, irrigation, water/sanitation facilities) for improving the production and marketing of agriculture products to bolster rural livelihoods. Some adjustment to the expected outcomes as described in the CPS has been made to reflect current government strategy and priorities and the actual focus, size and result targets of the new project (the project had not commenced preparation when the CPS was prepared). The Bank has provided support for the last two CAS/CPS periods to strengthen Sustainable Land Management (SLM) practices in-line with RGOB’s last two successive five-year national development plans. IFC continues to seek opportunities to support agribusiness and other rural bankable projects that may enhance the country’s exports. 7    23. Good progress has been made in developing capacity for an improved system of disaster risk reduction. The Bank’s technical assistance has contributed to capacity building for the Department of Disaster Management (DDM), Ministry of Home and Cultural Affairs, as well as other relevant counterparts through the provision of training and participation in international conferences and seminars on disaster management. RGOB prepared a draft Disaster Management Bill to improve disaster risk management and response through a systematic and streamlined approach. A draft national action plan for schools and hospitals has also been prepared. Table 4: Results Cluster 3: Sustainable Urban Development CPS Outcomes/Results Progress to Date  Increase access to urban services in selected Thimphu  On track local areas plans (LAPs) as measured by access to roads, water and sewage  Improved management of municipal services finance  On track. Municipal finance reform is now on as measured by: (a) increased collection of property track. The draft municipal finance law has been taxes; and (b) increased cost recovery of municipal finalized services  Improved access to markets through: (a)establishment  On track. 95.5 km of farm roads constructed. A of road user group for road maintenance as measured further 18km of new roads has been identified by the number of road users groups; and (b) the  100 percent targeted feeder roads constructed construction of new farm roads as measured by  100 percent of targeted feeder roads improved to kilometers of new road all season standards  Increased number of rural dwellers acquiring new  Dropped skills as measured by the number of people trained  Increased markets for selected agricultural products on  Dropped a pilot basis  Improved community-level preparedness with local  Added: Increase in critical community communities trained and effectively implementing infrastructure for water and sanitation disaster preparedness and adaptation plans and activities  Improved national preparedness through plans  Indicators dropped with revised outcome which developed by vulnerable dzongkhags is on track       8      Results Cluster 4: Access to Quality Public Services 24. Strong progress has been made toward improving country systems, including for budgeting, assessing poverty, allocating expenditures, monitoring service delivery, and procurement. Through the DPC series, the poverty mapping exercise, the PEFA Report and the HD PER, the Bank has assisted Bhutan in better understanding and estimating poverty, expenditure trends in the HD sectors and areas where public spending may yield maximum impact. These efforts have helped RGOB develop a Multi-Year Rolling Budget (MYRB) system, fine-tune annual capital grants to districts, and prepare the 11th Five-Year Plan. 25. An important outcome has been the development of a public expenditure and service delivery standards reporting system, now in place for four RGOB agencies. Progress has been made in implementing recommendations of the Use of Country Systems (UCS) Assessment, which include development of a procurement users’ guide, strengthening the Public Procurement Policy Division (PPPD) within the Ministry of Finance, establishing a PPPD website, creating an independent bid review body, publishing contract awards and revising Standard Bidding Documents for goods and works. 26. Bhutan is also making efforts to further strengthen its system of public financial management (PFM). RGOB has prepared a comprehensive PFM Reform Program to bring about improvement in the national PFM framework for improved quality of public spending. This action plan will be monitored by the PFM-Governance Group being formed by RGOB and will be used by other development partners as the basis for their engagement with RGOB to support improved PFM. 27. Modest progress has been made in the area of tertiary education. Completed analytic work on the tertiary education sub-sector aims to support Bhutan’s goal of establishing a knowledge- based society. With support from the Bank, RGOB has prepared a Quality Assurance and Accreditation (QAA) Framework. The report will be discussed with RGOB to see how to further support this effort, including developing strategic partnerships and the rolling-out of the QAA Framework. 28. An area that has been added to the CPS Results Framework is improving awareness in health and nutrition. Nutrition as a new area of focus stems from the last September 2010 Round Table Meeting where alarming rates of stunting and malnutrition caused concern among Bhutan’s development partners. Subsequent analytical work carried out as the Bhutan National Nutrition Assessment and Gap Analysis were presented to RGOB, describing key determinants of malnutrition, current programs, and gaps, opportunities and implementation challenges. The report has been widely disseminated and included brainstorming with key stakeholders from the health, education and agriculture sectors. Several additional pieces of analytical work in the health sector were undertaken, including Bhutan’s first National Health Accounts (NHA) estimates, a costing study of health facilities and a study on selected health indicators. The HD PER also incorporates findings from these studies. Given the importance of this, an indicator has been added on increasing awareness of health and nutrition issues within the 11th 5 year plan. But this has been kept non-specific for now as the 11th plan remains a work in progress and an ongoing dialogue. When this is assessed at CPS completion, it will be important to identify specific change measures achieved as a result of the recommendations contained in the Bank’s analytic work. 9    Table 5: Results Cluster 4: Access to Quality Public Services CPS Outcomes/Results Progress to Date  Improved allocation of resources in social sectors as  Achieved. MYRB/PEMS system is being evidenced by development of MYRBs piloted in four government agencies  Service delivery standards and criteria in place as  On track. Service delivery standards online for evidenced by annual reporting to the National four agencies Assembly  Identification of strategic partnerships with outside  Modest. Tertiary education report completed institutes of higher learning and will be discussed with RGOB  Quality assurance system established as measured by  Modest. Quality Assurance and Accreditation the number of programs covered (QAA) Framework prepared  Added. Increased awareness of health and nutrition issues and inclusion in the 11th plan of some of the Bank’s analytic work’s recommendations. IV. Portfolio Performance 29. Overall performance of the portfolio is satisfactory with no problem projects or potential problem projects. Bhutan’s portfolio has become more focused, down from eight operations in FY10 to five at present with US$56 million undisbursed. The average age of an operation has declined from 4.7 to 3.0 years. Significant progress has been made in the enhanced use of country systems. All Bank-supported operations now fully use Bhutan’s FM system for budgeting, accounting, funds flow, internal control, financial reporting and auditing. The disbursement ratio has been robust at 40 percent in FY11 and 30 percent in FY12. 30. Three IDA-investment operations in education, HIV/AIDS and institutional capacity building closed in FY11-12 with IEG ratings of moderately satisfactory, unsatisfactory and moderately satisfactory, respectively. The HIV/AIDS project helped RGOB establish a national HIV/AIDS strategy, as well as and train and educate the general populace in HIV awareness and prevention. The project’s Implementation Completion Report found that the project design was overly complex, data unreliable and high risk groups difficult to reach. The main lesson learned was that in a small country with limited capacity, it is important to keep design and results targets simple, to establish baseline data, and to focus more on building country systems rather than targeting delivery to particular groups. 31. IFC’s committed and outstanding portfolio stands at $32.5 million. A $29 million equity investment in BNB, the largest IFC investment and foreign direct investment in Bhutan’s history, was committed in FY 2013. The portfolio also consists of a tourism investment and trade guarantees through Global Trade Finance Program, provided to two banks. 32. The Bank Group lending activities have been complimented by significant use of trust fund resources and a robust program of analytic work. Trust funds have been a significant part of the Bank’s engagement in Bhutan. Currently, there are two large trust funds (GEF and GFDRR) and five Institutional Development Fund (IDF)-supported activities in areas such as public financial management, procurement, environmental safeguards, corporate governance and capacity building in 10    the Ministry of Labor and Human Resources. Annex 5 provides a list of all active Trust Funds which are fully integrated into the Bank’s program. The Bank has provided knowledge to Bhutan through a combination of non-lending technical assistance (NLTA) and economic and sector work (ESW). Prominent among these have been Analytical and Advisory Activities (AAA) for poverty mapping, an Investment Climate Assessment, a higher education study, the HD PER and a financial inclusion focus group exercise. 33. These have been complemented by IFC Advisory Services, including for: (i) structuring PPP infrastructure projects, an urban transit system for Thimphu and Phuentsholing and a parking facility for Thimphu; (ii) improving the investment climate through, among others, FDI and licensing project approvals, environmental clearances and introducing best practices for information sharing for business permits; (iii) financial sector capacity building through policy notes on national payment systems, training on trade finance and targeted advisory assistance for the two largest banks; and (iv) feasibility or diagnostic studies on special economic zones (completed), the power trading company (completed), and a diagnostic study for the national airliner, Drukair. 34. The Bank and IFC have also strengthened their presence on the ground. Beginning in FY11, the Bank and the IFC opened a joint office, with a World Bank Representative and IFC Country Coordinator sharing the same office space. This facilitates dialogue with RGOB and mission planning, as well as fosters collaboration between the Bank and IFC. It is expected that Bhutan will play an important role in regional and global issues. For example, Bhutan hosts the headquarters of the recently established SAARC Development Fund for which the Bank is helping build capacity. V. The Strategy Moving Forward   35. The overall focus and the amount of IDA and IFC financing under the CPS remains valid. The CPIA for Bhutan remains one of the highest in the IDA Cohort and its portfolio also remains strong. Consequently, Bhutan’s IDA allocation has grown from US$78 million, as anticipated under the CPS, to approximately US$81 million3. The current IDA programmed allocation totals approximately US$70.5 million, leaving just over US$10 million to be programmed during the current IDA cycle. Although Bhutan is not yet creditworthy for IBRD, as it has exceeded the IDA GNI per capita threshold for more than three years in a row it now receives IDA on hardened IDA credit terms.4 It is anticipated that remaining IDA-16 financing will be used for a new urban project or additional financing to the ongoing Bhutan Urban Development Project-2 investment operation. The main change in the planned IDA program is that funds have been increased for DPC2 and the Royal Government elected not to use IDA resources for a follow-on private sector development project provides further support for private sector development. IFC continues its efforts to build a firm investment pipeline while assisting with creating a modern and sound investment climate through technical support for private sector development. \                                                              3  US$25.5 million in FY11 plus estimated IDA-16 (FY12-14) allocations of SDR 36.9 million, which at current exchange rates is about US$56 million. However, the IDA allocation for FY2014 is indicative only. Actual allocations will depend on: (i) the country’s own performance; (ii) its performance relative to that of other IDA recipients; (iii) the amount of overall resources available to IDA; (iv) changes in the list of active IDA-eligible countries; and (v) terms of financial assistance provided (grants or loans). 4 25 year maturities, a grace period of five years, and an interest rate of 1.25 percent plus the standard service charge of 0.75 percent. 11    Table 6: Initial and Current Estimated IDA Lending Program Estimate in the CPS (US$m) Current Estimate (US$m) DPC 1 24.75 DPC1 24.75 Regional Wildlife Project 0.75 Regional Wildlife Project 0.75 Rural Development 12.00 Remote Comm. Dev 9.00 DPC2 20.00 DPC2 36.00 Urban Dev 3 12.45 Urban Dev – AF 10.50* Psd2 8.00 Total: 78.0 81.0 *Depends on the final IDA-16 allocation. For FY14, the last year of IDA16, the amount is indicative and will depend on a number of factors including performance, as well as the potential for reallocating funds. 36. The Bank will continue to complement this modest lending with grants and analytic work. A GEF-financed project of about US$4m is being prepared to support strengthening implementation of the Bhutan Trust Fund for Environmental Conservation. Several new IDF grants are also planned, including one to support improved PFM, inter-governmental finance and corporate governance of state-owned enterprises under the Ministry of Finance. New grants are also anticipated in the areas of cultural heritage, youth employment and disaster management. The Bank anticipates further analytic work in the financial sector, strengthening the macroeconomic framework and green growth. 37. For the remainder of the CPS period, IFC will prioritize delivery of existing advisory programs and the execution of its existing pipeline of investments, focusing on inclusiveness, clean growth and global integration. IFC has made progress in developing a pipeline of lending and equity investments, including in the financial sector (such as an SME fund) and agribusiness. Going forward, in continued collaboration with the Bank, IFC will look for investment opportunities in diverse sectors, including telecommunications, health, education and tourism, among others. Through its advisory teams in investment climate, financial inclusion and PPPs, IFC will also continue efforts to improve the private sector environment. 38. The next CPS period will begin in July 2014. Areas of focus are expected to be defined by the 11th Five-Year Plan currently under preparation and priorities of the next elected government. Current indications are that the expected themes of the 11th Five-Year Plan – Urban Wellbeing and Rural Prosperity – will provide continuity with the current strategy, and the main themes should continue to resonate. With regard to instruments, the bulk of IDA funds are expected to continue to be provided through development policy lending, supplemented by analytic work. The potential for greater use of results-based financing will be explored. As anticipated in the current CPS, during the next CPS period Bhutan will explore moving toward an IDA-IBRD blend status which would enable Bhutan to obtain higher levels of overall financing. This is in keeping with Bhutan’s emergence as a Middle Income Country (MIC). Close cooperation between the Bank and IFC will be continued. It is also notable that Bhutan has just become a member of MIGA, which should begin operations by the next CPS. 12    VI. Risks and Mitigation 39. The CPS identifies three areas of risk which remain valid: (i) macroeconomic; (ii) capacity; and (iii) program risks. While no major risks have been identified which are likely to derail the country program, there are some that may continue to affect implementation progress and for which mitigation measures are in place. 40. On the macro-economic side, the main risk relates to the shortage of Indian Rupees in the Bhutanese economy. As noted earlier, the economy showed signs of overheating in fiscal 2012 resulting in a shortage of Indian Rupee reserves. Fiscal and monetary measures to curb consumption have helped cool the economy. With adequate planning this situation should be manageable. If fiscal and monetary measures are relaxed, the inability of contractors and suppliers to access sufficient volumes of Rupees could slow crucial infrastructure activities. To mitigate this risk, the Bank will work with the Royal Government through both its economic dialogue and a series of DPCs to identify measures to insulate the economy from the impact of near term Rupee shortages as well as medium term increased Rupee earnings expected to commence over the next three to five years. Dialogue on diversifying the economy to build other areas of economic strength beyond hydropower will need to be deepened. 41. Bhutan also faces vulnerability to external shocks, both as a small landlocked country with a heavy reliance on hydropower revenues, and to natural disasters. On the first, this includes potential economic fluctuations in its large neighboring countries as well as energy pricing. The Bank will continue to work with Bhutan to build a sound medium-term fiscal framework through budget support operations. Economic diversification will also be important. The Bank’s rural operations will help build agriculture potential to help diversify the economy. Further, Bhutan has also suffered a number of natural disasters in the last few years, including two strong earthquakes, flash floods, windstorms and forest fires. While natural disasters cannot be predicted or avoided, their impact can be mitigated by proper disaster preparedness and response measures. The Bank is providing capacity building support to the Department of Disaster Management, Ministry of Home and Cultural Affairs to help Bhutan strengthen its preparedness activities. 42. The CPS identifies risks related to capacity constraints given Bhutan’s small human resource base and limited number of trained people with high-level managerial capacity. In light of this, the Bank is working with the Government to build the use of country systems through a limited number of Bank and IFC financed operations, coupled with continual technical support and training, particularly for fiduciary functions (i.e. financial management and procurement). It also continues to remain engaged at an analytic level as regards higher education. Given its limited staff on the ground, the Bank has combined the position of Resident Representative and Senior Economist in order to provide hands-on economic support to the Government. 43. Finally, the CPS identifies program risks related to evolving priorities. A key mitigating measure the CPS identifies is the frontloading of analytic work to help shape priorities in the CPS period. These have largely been delivered and there is now more clarity on the second half of the CPS. Bhutan will enter an election cycle in the first half of 2013, and a new government may introduce new priorities. The existing government is working to ensure that the introduction of the next national five-year plan, the 11th Five-Year Plan, is being prepared during the same time period and broadly covers the key drivers for development which all political parties agree on. This will form the basis for the next CPS going forward. It is expected that the political transition will be smooth and will respect commitments made for achieving the country’s national development goals. 13    Annex 1: Bhutan CPS Results Framework – Progress to Date Original CPS Outcomes & Revised CPS Outcomes and Progress to Date (As of Original CPS Milestones Bank Program and Partners Indicators Milestones Nov, 2012) Area of Engagement 1. ECONOMIC DIVERSIFICATION, JOB CREATION AND FINANCIAL INCLUSION Results Cluster 1: Privatesector development Country Development Goals: 1.1 : Improved environment for private sector investment Improved framework of Revised FDI rules and No change in original Rules and regulations were Completed/Ongoing Lending: policies, procedures and regulations approved, in line outcomes and milestone. issued and an amendment to practices resulting in more with new FDI the FDI Policy approved by  DPC1 (completed) efficient process of business policy(Achieved) Cabinet in July 2012.  DPC 2 (completed) start-up, project approval and licensing for domestic and As of 2012 it takes 36 days to start a business. Completed/Ongoing AAA: foreign investors as measured Implementation Plan of the by Economic Development As of 2012, 32 new FDI  Investment Climate Policy Dialogue (completed) Number of days to start a Policy (EDP) developed and projects have been approved  Licensing Simplification TA launched. (Achieved) which exceeded the target of business (On track) (IFC) (Ongoing) 25.  Access to Finance Baseline: 46 days in 2010 AAA(completed) RGOB prepared EDP in Target: 30 days in 2014 Bhutanese Accounting  Poverty Mapping April 2010. A number of (Completed) Standards from Phase 1 and 2 policies and laws are being  Corporate Governance TA Increase in the number of of agreed road map notified formulated or reviewed to (Ongoing) FDI project approvals (Achieved) implement the EDP including  (Achieved) business licensing policy,  IDF on improvement of PFM simplification of industry etc. (completed) Baseline: 20 approvals in  Strengthening PFM IDF 2009 Accounting and Auditing (ongoing) Target: 25 approvals in 2014 Standards Board of Bhutan (AASBB) has issued notification to fully adopt the 14    Original CPS Outcomes & Revised CPS Outcomes and Progress to Date (As of Original CPS Milestones Bank Program and Partners Indicators Milestones Nov, 2012) International Financial Reporting Standards by 2021 in phased manner and has developed Bhutanese Accounting standards for the interim period. These standards apply to Bhutanese companies in reporting financial results. Country Development Goals 1.2: Leveraging private sector participation for strategic infrastructure Increased number of public RGOB Public Private Revised milestone: As of now 2 PPP partnership Completed/Ongoing Lending: private partnerships (On Partnership department has been achieved. The IT track) staffed and RGOB Public Private Park has been a flagship and  Bhutan Private Sector operational.(Revised) Partnerships Policy adopted. . pilot for public private Development SIL Baseline: 1 in 2010 partnerships in infrastructure Target: 3in 2014 . and service delivery. Completed/Ongoing AAA: The PPP Policy has been  Improving capacity to drafted with support from the implement infrastructure PPPs Bank and will be submitted PPPs (TA) – (Completed) to the Cabinet by end 2012.  Construction Sector In addition, an institutional Assessment framework has been drafted  Possible support for solid following consultations with waste management in stakeholders. Thimphu (Bank‐IFC)  Possible support for bus service in Thimphu (IFC) (Ongoing but changed to Transport Services)  TA‐ PPP Rules & 15    Original CPS Outcomes & Revised CPS Outcomes and Progress to Date (As of Original CPS Milestones Bank Program and Partners Indicators Milestones Nov, 2012) Regulation(Planned) Pipeline:  PSD/ICT/Knowledge Society SIL (Dropped)  Possible support for telecom, hydropower, and private airliner (IFC) (Ongoing only for hydropower)  ‐Possible support for tourism (IFC) Country Development Goals 1.3: Improved efficiency of and access to financial services Increased ratio of private Financial literacy program Revised Outcome: Financial Inclusion Policy Ongoing/Completed Lending: credit over GDP as measured developed and under was developed that draws out by IFS(Revised) implementation(On track) Financial Inclusion Policy policy objectives, strategies  Bhutan Private Sector Implemented. and an action plan to increase Development SIL Baseline: 29.7 percent Electronic Fund Transfer Baseline: No Policy financial inclusion  DPC1 (completed) Target: 33 percent Clearing System (EFTCS) Framework  Access to Finance TA to fully operational. (Achieved) Target: 100% implementation Electronic Funds Transfer banks (IFC) (Ongoing) of the policy. Clearing System (EFTCS) was inaugurated in June 2010 Ongoing/Completed AAA: New Milestone: in Thimpu and will be Automation of Royal expanded to other regions. As  Access to Finance AAA Securities of Exchange in of January 2012, (completed) Bhutan. (Achieved) US$750,000 million worth of  Poverty transactions processed Mapping(Completed) monthly through the EFTCS  E‐Governance TA a 25% increase since (completed)  ICT Sector Policy TA September 2011. (completed)  SME finance TA (IFC)  Possible support for SME 16    Original CPS Outcomes & Revised CPS Outcomes and Progress to Date (As of Original CPS Milestones Bank Program and Partners Indicators Milestones Nov, 2012) finance (IFC)  Possible support for financial institutions through trade‐line, credit‐ line and equity investments (IFC) Pipeline:  PSD/ICT/Knowledge Society SIL (Dropped)  DPC2 (Completed)    Country Development Goals 1.4: Strengthen corporate governance of state-owned enterprises Improved corporate New corporate governance 60 out of 65 Druk Holding Ongoing/Completed governance for SOEs as framework under Investments (DHI) AAA/NLTA : measured by(On track) implementation. (On track) companies directors have been trained in an  Corporate Governance IDF The number of SOEs internationally renowned Grant (WB) (Ongoing) institute, against an end of  Financial Sector Corporate implementing new Corporate project target of 33. DHI has Governance TA Governance framework developed a performance Baseline: 0 (IFC)(Ongoing) monitoring system for six of Target: 5 its companies, consistent with international standards, in order to better manage their performance.  DHI has initiated the development of model corporate governance documents and a Corporate Governance Code. This 17    Original CPS Outcomes & Revised CPS Outcomes and Progress to Date (As of Original CPS Milestones Bank Program and Partners Indicators Milestones Nov, 2012) activity was postponed until after the corporate governance training, so that a quorum of directors could use their CG training to inform the discussions. Results Cluster 2: Employment and skills Development Country Development Goals 2.1: Diversify learning options to meet skills demand and enhance employability through: (a) increasing access to and choice of learning options, and (b) increasing private sector participation Competency‐based Promising occupations Competitive selection of Ongoing Projects: curricula in place as prioritized by MOLHR and private training institutes measured by (Achieved) institutional arrangements for accomplished (for 6 selected  IDF Grant MOLHR curriculum development in institutes)  PSD Number of new or revised place (Ongoing)  BUPD2 learning offerings 5 partnership with private  EDP sector established.  DPC1 Baseline: 5 in 2010 Target: 10 in 2014 6 new learning offers were Non‐lending made available to youth including arts and crafts,  Youth Employment Study Increased number of beauty care, bakery, culinary Criteria defined for ESW (Dropped) graduates trained through arts, commercial cooking, competitive selection of  HE Sector Note ESW public private partnerships textile etc. (completed) private training (e.g. tourism, ICT, nursing)  Urbanization, Growth and institutes(Achieved) 3 new credit courses were (Achieved) Employment Study ESW launched at the Royal (dropped) Baseline: 20 University of Bhutan. Target: 1,000 Training for skills Pipeline: development through PPP has progressed well with  DPC2 (completed) 18    Original CPS Outcomes & Revised CPS Outcomes and Progress to Date (As of Original CPS Milestones Bank Program and Partners Indicators Milestones Nov, 2012) about 100 youth trained or in  PSD/ICT/Knowledge Society training. SIL (Dropped) Increased access to tertiary Revised policy on tertiary Outcome and indicator  BUPD3 education as measured by level entry implemented dropped. 1,034 secondary and tertiary  Possible support for the (Dropped) graduates have been trained. education sector (IFC) the number of people who transition from vocational to Number of Bhutnese tertiary education programs graduates working in the IT/ITES is 804 which (indicators to be determined exceeded the target of 700. under new project) RGOB defines incentive structure for firms to take on (Dropped). apprentices. (Not on track) Area of Engagement 2: Spatial Planning and Public Services Results Cluster 3: Integrated Sustainable Urban Country Development Goals 3.1: Improve urban living standards through increased access to quality services Increased access to urban Construction of water, No change in outcomes or Municipal Finance reform is Ongoing Projects: services in selected Thimphu sewerage and water milestones. now on track. The draft local areas plans (LAPs) as infrastructure underway(On Municipal Finance Policy has  BUDP2 measured by access to roads, track) been finalized and approved  DPC1 water and sewage(On track) in July 2012. Roads Work on roads, water and Non‐lending sewage is ongoing with some Baseline: 0  Urbanization and Growth 19    Original CPS Outcomes & Revised CPS Outcomes and Progress to Date (As of Original CPS Milestones Bank Program and Partners Indicators Milestones Nov, 2012) Target: 200 plots / 12km delay. Study ESW (Dropped) roads constructed  Rural Development Piped Water Strategies ESW (Dropped)  Construction Sector Baseline: 0 Assessment ESW Target: 250 households  Poverty Mapping TA (Target has been revised to (completed) 150 households)  Disaster Management TA (Completed) Sewerage  Solid Waste Management support for City of Thimphu Baseline: 0 (Bank‐IFC joint) Target: 250 households  PPP TA to support bus (Target has been revised to service in Thimphu (IFC) 150 households) (Ongoing and changed to Transport Service) Improved management of  Tax Administration TA municipal services and finance as indicated by (a) Pipeline: increased collection of property taxes as measured  BUDP3 by the percentage of thetotal Property tax records Work on initial stages has  DPC2(completed) due to be collected, and (b) computerization underway been initiated. Technical increased cost recovery for (On track) work will start soon. municipal services as measured by charges/costs received as a proportion of System of training in place (On track) Ongoing and training given total costs incurred in the to the technical staff. provision of municipal services Property taxes(On track) Baseline: 45 percent Target: 70 percent 20    Original CPS Outcomes & Revised CPS Outcomes and Progress to Date (As of Original CPS Milestones Bank Program and Partners Indicators Milestones Nov, 2012) Municipal services Baseline: 40 percent Target: 60 percent Country Development Goals 3.2: Increase the appeal of rural life by creating opportunities for farm and non-farm employment and income generation Improved access to markets Development of reporting 95.5 km of farm roads Ongoing/Completed Lending: through: (i) the establishment and monitoring system for constructed. A further 18 km of community groups for community-based road of new rural roads have been  DRDP road maintenance as maintenance identified.  RAP2 measured by the number of  DPC1 100 percent targeted feeder  Rural Communities community groups, and (ii) roads constructed. Non‐lending the construction of new farm Identification of new roads to roads as measured by  Urbanization and Growth be constructed(On track) 100 percent targeted feeder kilometers of new roads roads improved to all season Study ESW (Dropped)  HD PER ESW(Completed) Community groups standards.  Youth Employment Study New Outcome: ESW (Dropped) Baseline: 0  Rural Development Target: 80 Share of beneficiaries with Strategies ESW (dropped) access to critical community Roads  Poverty Mapping Baseline: 0 infrastructure increased as ESW(Completed) Target: 80 measured by:  Country Social Development ESW (dropped) Improved source of drinking  Disaster Management TA Increased number of rural dwellers acquiring new skills Analytical work to inform the water Baseline: 66% (2012)  Possible support for rural project design(Achieved) Target: 68% (2014) finance (IFC) as measured by the number of people trained(Dropped) New skills development Sanitation: Baseline: 43% programs established in rural (2012) Target: 45% (2014) Pipeline: Baseline: 0 areas. Target: (indicator to be  Integrated Rural 21    Original CPS Outcomes & Revised CPS Outcomes and Progress to Date (As of Original CPS Milestones Bank Program and Partners Indicators Milestones Nov, 2012) determined under new Development Project project) (Dropped)  Knowledge Society Project (dropped) Increased markets for Consultations with  DPC2 stakeholders, including  GAFSP selected agricultural products private sector,  Possible support for on a pilot basis (indicators to completed(Dropped) agribusiness (IFC)  be determined under new project)(Dropped) Country Development Goal 3.3: Decrease in the loss of life and assets through institutional capacity for disaster preparedness and adaptation to climate change Improved community-level New Outcomes: Ongoing Projects: preparedness with local communities trained and Improved capacity of key Completed the first training effectively implementing RoGB agencies for DRM on Basic Urban Search and Rescue Non‐lending disaster preparedness and adaptation plans and Baseline: 0 (2012) Target: 4 Ministries (2014) Completed the draft of  JSDF Seed Fund for “Building activities(Dropped) climate and disaster resilient National Action Plan for both Baseline: 0 Schools and Hospitals. communities in Bhutan” Target: 9 Improved institutional set up proposal. (Dropped) for Disaster Management for Completed the vulnerability  Proposed JSDF project for Improved national the implementation of the “Building climate and assessment form for schools preparedness with disaster DM bill through development disaster resilient and hospitals and conducted communities in Bhutan”. preparedness plans developed of guidelines and the first training to the (Dropped) in vulnerable sensitization workshops Baseline: 0 (2012) Engineers from the key  GFDRR TA for Bhutan dzongkhags(Dropped) agencies on the concepts and Disaster Risk and Recovery Baseline: 0 Target: 4 Ministries (2014) use of the form. Program) Target: 3 Finalized and approved  GFDRR‐GHI Partnership for Safe Schools and Hospitals National Action Plans for  GFDRR “Improving Disaster 22    Original CPS Outcomes & Revised CPS Outcomes and Progress to Date (As of Original CPS Milestones Bank Program and Partners Indicators Milestones Nov, 2012) schools and hospitals. Management Capacity in Bhutan Baseline: No action plan  Japan Policy and Human Target: Action plan finalized Resources Development and approved. (PHRD) TA Program to Support Disaster Reduction Completed training program and Recovery. for national search and rescue team. Results Cluster 4: Access to Quality Public Service Country Development Goals4.1: Improved access to and quality of social services through evidence-based resource allocation and management Improved allocation of Completion of public No change in original MYRB/PEMS system is Ongoing/Completed resources in social sectors as expenditure outcomes and milestones. being piloted in four Lending: evidenced by development of review(Achieved) government agencies. MYRBs(Achieved)  DPC1 Baseline: 0 HD Public Expenditure Ongoing/Completed AAA Target: 2 sectoral MYRBs Review has been completed. Several sector studies  Poverty Mapping developed including National Health ESW(completed) Achieved  HD PER ESW (completed) Accounts, Costing of Public  HE Sector Note ESW Health services and GIS Service delivery standards (completed) and criteria in place as Completion of the second based study on health  Rural Development evidenced by annual phase of poverty mapping infrastructure and indicators Strategies ESW reporting to the National exercise(On track) were undertaken for the first  Construction Sector Assembly time and have provided much Assessment ESW Baseline: not reported needed evidence for informed  Poverty Mapping ESW Target: reported policy making.  Management of Hydropower Revenues TA Completed. Local level  MTFF and MYRB TA indicators have been used  Public Financial increasingly for planning and Management Report ESW 23    Original CPS Outcomes & Revised CPS Outcomes and Progress to Date (As of Original CPS Milestones Bank Program and Partners Indicators Milestones Nov, 2012) resource allocation purposes  Bhutan National Nutrition of RGOB and the poverty Assessment and Gap maps at the gewog (sub- Analysis district) level have been used to determine allocations Pipeline: under the annual capital Service delivery standards grant. The second phase of  Knowledge Society Project online for 50 percent of poverty mapping exercise (Dropped) agencies provided a broader range of disaggregated indicators at the gewog level, through the Bhutan Map Portal, which is hosted and maintained by the NSB. Service delivery standards online for four agencies. Country Development Goals 4.2: Expanded and diversified system of higher education Identification of strategic Roundtable with stakeholders Higher Education Sector Ongoing/Completed Lending: partnerships with outside to discuss the results of the Note has been completed and tertiary education institutes study(On track) will be discussed with the  EDP (Not on track) RoGB soon. Baseline: 2 Ongoing/Completed AAA: Target: 6 Expressions of interest and  HD PER(Completed) RoGB with the technical familiarization visits to/from assistance from the WB has  HE Sector Note(completed) Quality assurance system in international RUB established as measured prepared a Quality Assurance institutes(Dropped) by the number of programs and Accreditation (QAA) 24    Original CPS Outcomes & Revised CPS Outcomes and Progress to Date (As of Original CPS Milestones Bank Program and Partners Indicators Milestones Nov, 2012) and degrees covered Establishment of Bhutan Framework. Pipeline: Accreditation Baseline: 2 Council(Achieved)  DPC2(Completed) Target: 6  Possible support for the education sector (IFC) Country Development Goals 4.3 nutrition and health issues Added: Raising awareness Analytical work carried out Bhutan National Nutrition of health and nutrition issues on health and nutrition and Assessment and Gap Analysis measured by some widely disseminated. recommendations made in the HD PER Bank’s analytic work Health analytic pieces including reflected in the upcoming Bhutan’s first National Health Government’s 11th 5 year Accounts (NHA) estimates, a plan. costing study of health facilities, and a study on health indicators. 25      Annex 2: Progress Towards Meeting MDG Goals With selected targets to achieve b etween 1990 and 2015 (estimate clo sest to date sho wn, +/- 2 years) B hut a n G o a l 1: ha lv e t he ra t e s f o r e xt re m e po v e rt y a nd m a lnut rit io n 19 9 0 19 9 5 2000 2 0 10 P o verty headco unt ratio at $ 1 .25 a day (P P P , % o f po pulatio n) .. .. .. 10.2 P o verty headco unt ratio at natio nal po verty line (% o f po pulatio n) .. .. .. 23.2 Share o f inco me o r co nsumptio n to the po o rest qunitile (%)a/ .. .. .. 6.6 P revalence o f malnutritio n (% o f children under 5) 34.0 .. 14.1 12.7 G o a l 2 : e ns ure t ha t c hildre n a re a ble t o c o m ple t e prim a ry s c ho o ling P rimary scho o l enro llment (net, %) .. .. 58 89 P rimary co mpletio n rate (% o f relevant age gro up) 19 29 51 95 Seco ndary scho o l enro llment (gro ss, %) .. .. 41 66 Yo uth literacy rate (% o f peo ple ages 1 5-24) .. .. .. 74 G o a l 3 : e lim ina t e ge nde r dis pa rit y in e duc a t io n a nd e m po we r wo m e n Ratio o f girls to bo ys in primary and seco ndary educatio n (%) .. .. 86 102 Wo men emplo yed in the no nagricultural secto r (% o f no nagricultural emplo yment) .. .. .. 27 P ro po rtio n o f seats held by wo men in natio nal parliament (%) 2 2 2 9 G o a l 4 : re duc e unde r- 5 m o rt a lit y by t wo - t hirds Under-5 mo rtality rate (per 1 ,000) 139 111 89 56 Infant mo rtality rate (per 1,000 live births) 96 79 65 44 M easles immunizatio n (pro po rtio n o f o ne-year o lds immunized, %) 93 85 78 95 G o a l 5 : re duc e m a t e rna l m o rt a lit y by t hre e - f o urt hs M aternal mo rtality ratio (mo deled estimate, per 1 00,000 live births) 940 670 430 180 B irths attended by skilled health staff (% o f to tal) .. 15 24 65 Co ntraceptive prevalence (% o f wo men ages 1 5-49) .. 19 31 66 G o a l 6 : ha lt a nd be gin t o re v e rs e t he s pre a d o f H IV / A ID S a nd o t he r m a jo r dis e a s e s P revalence o f HIV (% o f po pulatio n ages 1 5-49) 0.1 0.1 0.1 0.2 Incidence o f tuberculo sis (per 100,000 peo ple) 308 308 253 1 51 Tuberculo sis case detectio n rate (%, all fo rms) 67 81 79 120 G o a l 7 : ha lv e t he pro po rt io n o f pe o ple wit ho ut s us t a ina ble a c c e s s t o ba s ic ne e ds A ccess to an impro ved water so urce (% o f po pulatio n) .. .. 86 96 A ccess to impro ved sanitatio n facilities (% o f po pulatio n) .. .. 39 44 Fo rest area (% o f to tal land area) 64.6 .. 78.4 84.6 Terrestrial pro tected areas (% o f land area) 14.2 26.4 28.3 28.3 CO2 emissio ns (metric to ns per capita) 0.2 0.5 0.7 1.0 GDP per unit o f energy use (co nstant 2005 P P P $ per kg o f o il equivalent) 16.8 .. .. 11.8 G o a l 8 : de v e lo p a glo ba l pa rt ne rs hip f o r de v e lo pm e nt Telepho ne mainlines (per 1 00 peo ple) 0.3 1.0 2.5 3.6 M o bile pho ne subscribers (per 1 00 peo ple) 0.0 0.0 0.0 54.3 Internet users (per 1 00 peo ple) 0.0 .. 0.4 13.6 Co mputer users (per 1 00 peo ple) .. .. 0.58(2001) 2.3(2008) Education indicators (%) Measles immunization (% of 1-year ICT indicators (per 100 people) olds) 125 100 70 100 60 75 50 75 40 50 50 30 25 20 25 0 10 2000 2005 2010 0 0 1990 1995 2000 2010 2000 2005 2010 Prim ary ne t en rol lme nt ra tio Ra tio of gi rls to boy s i n pri mary & seco nd ary Bh utan So uth Asia Fixe d + mo bil e sub scrib ers Intern et users ed uca ti on No te: Figures in italics are fo r years o ther than tho se specified. .. indicates data are no t available. 4/2/12 a/ Figures based o n a 2007 ho useho ld survey; b/ Figure based o n 201 0 B hutan M ulti Indicato rs Survey Develo pment Eco no mics, Develo pment Data Gro up (DECDG). 26      Annex 3: Results of the Latest GNH Survey Background: Gross National Happiness is a term coined by His Majesty the Fourth King of Bhutan, Jigme Singye Wangchuck in the 1970s. The concept implies that sustainable development should take a holistic approach towards notions of progress and give equal importance to non- economic aspects of wellbeing. GNH consists of four pillars: (1) good governance; (2) sustainable socio-economic development; (3) cultural preservation; and (4) environmental conservation. The four pillars have been further classified into nine domains: (i) psychological wellbeing; (ii) health; (iii) education; (iv) time use; (v) cultural diversity and resilience; (vi) good governance; (vii) community vitality; (viii) ecological diversity and resilience, and (ix) living standards. The domains refers to fulfilling conditions of a ‘good life’ as per the values and principles laid down by the concept of Gross National Happiness. The Gross National Happiness Index is a single number index developed from 33 indicators categorized under the nine domains. The GNH Index is constructed based upon a robust multidimensional methodology known as the Alkire-Foster method. The GNH Index is decomposable by any demographic characteristic and so is designed to create policy incentives for the government, NGOs and businesses of Bhutan to increase GNH. The 33 indicators under the nine domains aim to emphasize different aspects of wellbeing and different ways of meeting these underlying human needs. The 33 indicators are statistically reliable, normatively important, and easily understood by large audiences. The 2010 GNH Survey: The most recent GNH Survey was carried out in 2010 with representative samples taken at district and regional levels administered using the GNH questionnaire gathering data from 7,142 respondents. The survey started in April, 2010 and ended in December, 2010 taking nearly nine months to complete the survey. It took on average three hours to complete a questionnaire. One of the major reasons for the extensive field time was the scattered population of the villages, which made it difficult for enumerators to interview more than one person in a day. The methodology provides three types of results: (a) headcount; (2) intensity; and (3) overall GNH index5.  Headcount = 40.8 percent – This means that 41 percent of Bhutanese have sufficiency in six or more of the nine domains and are considered ‘deeply or extensively happy’. Of the rest, 47.8 percent are considered ‘narrowly happy’ and 10.4 percent are ‘unhappy’  Intensity = 43.4 percent -The 59 percent of Bhutanese who are not considered ‘happy’ lack sufficiency in 43 percent of the domains. Nine domains times 0.43 = 3.87. Thus unhappy Bhutanese on average lack sufficiency in just under four domains and enjoy sufficiency in just over five domains.  GNH Index = 0.743 – the GNH Index ranges from 0 to 1. A higher number is better. It reflects the percentage of Bhutanese who are happy and the percentage of domains in which not-yet-happy people have achieved sufficiency (headcount and intensity). Other findings of the GNH Survey 2010:  Men are happier than women on average.  Of the nine domains, Bhutanese have the most sufficiency in health, then ecology, psychological wellbeing, and community vitality.  In urban areas, 50 percent of people are happy; in rural areas it is 37 percent.                                                              5  Headcount refers to the percentage of Bhutanese who are considered happy, and intensity is the average  sufficiency enjoyed by the Bhutanese.  27       Urban areas do better in health, living standards and education. Rural areas do better in community vitality, cultural resilience, and good governance.  Happiness is higher among people with a primary education or above than among those with no formal education, but higher education does not affect GNH very much.  The happiest people by occupation include civil servants, Buddhist monks/nuns, and GYT/DYT members. The unemployed are happier than corporate employees, housewives, farmers or the national work force.  Unmarried people and young people are among the happiest.  There is quite a lot of equality across dzongkhags, so there is not a strict ranking among them. The happiest dzongkhags include Paro, Sarpang, Dagana, Haa, Thimphu, Gasa, Tsirang, Punakha, Zhemgang, and Chukha.  The least happy dzongkhag was Samdrup Jonkhar.  The ranking of dzongkhags by GNH differs significantly from their ranking by income per capita. Sarpang, Dagana, and Zhemgang do far better in GNH than in income.  In terms of numbers, the highest number of happy people live in Thimphu and Chukha – as do the highest number of unhappy people.  Thimphu is better in education and living standards than other dzongkhags, but worse in community vitality. The Royal Government of Bhutan has also developed a ‘GNH Screen Tool’ for all development projects and activities in the country. The main objective of this tool is to systematically assess impacts of policies and projects on GNH, thereby simultaneously selecting GNH enhancing policies and projects and rejecting projects and policies that adversely affect key determinants of GNH. The GNH screening tool forces project sectors to consider GNH dimensions in project formulation process. As the screening tool requires all policies and projects, including those externally financed, to be assessed in terms of other dimensions of life (e.g. culture, community vitality, etc.). This aims to ensure a holistic approach to project development. Scoring is done by a heterogeneous group from across the Royal Government with diverse occupational backgrounds as a means of achieving consensus on likely or possible project impact(s). 28      Annex 4: Gender in Bhutan This annex summarizes the main findings of the Gender Policy Note (under preparation) and in doing so (i) updates the gender annex in the CPS FY11-14, and (ii) provides additional analysis on gender issues in Bhutan to inform the remaining CPS implementation period. A full Poverty Assessment will be prepared by the end of the CPS Period to inform the next CPS. Status of Bhutanese women Bhutan’s culture fosters gender equality. Bhutan’s matrilineal inheritance systems grant women access to land, as well as ownership and thus provides for a degree of financial autonomy. The tradition is more matrilineal in the west and central and more patriarchal in the south and east. An estimated 60 per cent of rural women have land registered in their names. The level of gender equality in Bhutan is relatively high and, in many areas, comparable to high income countries. Key indicators on gender equality show that Bhutan performs well beyond what one would expect from a country at its level of income. While there are gender gaps in Bhutan the nature of gender inequality in Bhutan is similar to those in higher-middle income or in OECD countries. For example, the ratio of female to male labor force participation rates in 2010 in Bhutan is as high as 86 percent, compared to 77 percent in upper middle income countries and 74 percent in OECD countries. Over the past few decades, Bhutan has made a tremendous progress toward gender equality. Its performance in a number of human development sectors has lifted women to be on par with men. These figures are even more remarkable when looking at historical trends, where the ratio of female to male labor force participation increases from 63 percent in 1990 to 86 percent in 2010. On health issues, access to modern contraceptive methods in Bhutan has increased sharply from 28 percent in 2003, to 65 percent in 2010, higher than the South Asia and Lower-middle income country averages of about 50 percent. The differences in use by rural versus urban residences are minimal. As a result, the Total Fertility Rate (TFR) has declined from 4.7 births per woman in 2000 to 2.5 in 2005. In the education area, gender equality in basic education has been largely achieved. The ratio of female to male primary enrollment has reached 102 percent, and there is equality in secondary education where the ratio of female to male enrollment stands at 103 percent in 2010. Moreover, gender parity has nearly been achieved at the higher secondary level (Grades 11-12) where females comprise 46 percent of enrollments. The preliminary diagnostics of gender equality reveal that Bhutan performs remarkably, yet challenges remain. Currently, few Bhutanese women are active participants in the national and local political process. During the recent local elections in 2011, out of 1,102 candidates (in all positions), only 76 were women. As a result, only one among 205 Gups (sub-district heads) is a woman. The situation is similar at the national level, where only 10 out of 72 members of Parliament are female. Remaining gender gaps and the Gender Policy Note In order to address the remaining gender gaps, the RGOB sought guidance from the Bank through the Gender Policy Note (GPN). The GPN attempts to provide such guidance by examining patterns related to economic empowerment of both men and women. Recommendations from the GPN are intended to inform Bhutan’s government policy aimed at improving key economic outcomes for men and women, as well as the country’s next 5-year development plan, which will cover the 2013 – 2018 period. The work of the Gender Policy Note focuses primarily on the following gender gaps: (i) agricultural land holding and inheritance practices, (ii) gender gaps in tertiary-level education, (iii) 29      unemployment among young adult females, (iv) gender gaps in employment quality, and (v) gender and happiness. Some of the initial findings are: (a) Gender Gap in Tertiary Education Parity in primary and secondary education has been achieved, but there is still a gap at the tertiary level. Female enrollment at the tertiary level in Bhutan is only at 50-60 percent of male students, which is lower than the South Asian average (70 percent). The three main reasons for women's non- enrolment in or dropout from tertiary education, as reported from youth focus group discussions are: the burden of household chores among female youth; teenage pregnancy; and early marriage.6 Time use data indicates that female youth spend about 50 percent more time on household chores than male youth, (6.5 hours per day for female vs. only 4.2 hours for male youth). Moreover, the adolescent fertility rate (number of births per 1,000 of women ages 15-19) in Bhutan is higher than in other comparable countries. The rate for Bhutan is 47, compared to 40 for Thailand, and 20 for the East Asia average. Additionally, there is a large regional variation in Bhutan, where the eastern region has a higher adolescent fertility rate than the western region. (b) Unemployment among female youths Despite gradual decrease in the overall youth unemployment over the years, female youth employment is still a great concern of the Royal Government of Bhutan (RoGB). The Labor Force Survey 2011 reveals a large gender gap in youth unemployment, with an unemployment rate of 12 percent among women age 20-24 (compared to 7 percent among male youth). Such large gaps are a common phenomenon in many countries. The higher unemployment rates among youth are attributed to: (i) the transition from school to work, (ii) frequent job turnover early in adulthood, (iii) lack of skills and (iv) a queuing problem—waiting for preferred jobs. Female youth unemployment tends to be higher as women face more challenges in types of jobs and mobility. Initial findings have identified several causes of female unemployment in the Bhutan context. Female youth tend to have longer job searches than male youths, and thus a higher unemployment rate, because they tend to: (i) look for jobs that are close to home; (ii) have limited mobility, partly due to land ownership in cases of matrilineal land inheritance practices; and (iii) lack skills that are required by the job market. (c) Gender gaps in employment quality Female labor force participation in Bhutan is high with a gap in employment quality, namely wages and earnings, occupations, and career advancement. A significant earnings gap exists between men and women, particularly in urban areas where women earn 34 percent less than men. What explains these gaps? Econometric analysis of earnings data reveals a significant gender gap after controlling for workers’ characteristics such as age, education level, experience with technical and vocational education and training (TVET), and job type. Gender-based employment segregation, which usually coincides with inferior female occupations — low pay, low skills, little decision- making authority, and few opportunities for promotion. For example, in the education sector, men account for 73 percent of higher education and 61 percent of secondary school teachers while women are concentrated in the lower-skilled “other teaching professionals” jobs, accounting for 69 percent of this occupation. CPS activities and way forward The CPS addresses gender issues both in the context of lending and non-lending activities. As suggested in the CPS, a gender-informed Economic and Sector Work—the Bhutan Gender Policy                                                              6 Rapid Qualitative Assessment conducted in Bhutan for the WDR 2012 between December 2010 and January 2011. 30      note—is being completed in partnership with the National Commission for Women and Children. A full Poverty Assessment will be prepared by the end of the CPS. Policy reforms under the DPC address the gender gaps in a way that is consistent with empirical analyses from the GPN. The improved road network will reduce travel time from home to workplace and lower barriers for young women to take jobs that are situated farther from their homes. The job- matching services under the reforms will also address the gender gap and the training programs that cater to low-paid employees will enhance labor market opportunities of these workers. Among technical training courses, a significant portion of trainees are women, even in trades not traditionally favored by women such as electrical engineering, plumbing, etc. Women are also expected to benefit from the reforms to improve access to finance. A recent survey on financial inclusion shows that women represent an opportunity to extend financial access because they are increasingly integrated into family business and are more willing to embrace new technology. Additionally, attempts to leverage traditional matrilineal property rights would extend financial access among women and could promote gender equality, especially in rural areas where land and property markets are still developing. 31      Annex 5: Active Recipient and Bank Executed Trust Funds Recipient Executed Trust Trust Fund Project Name Grant Grant Net Grant Fund Fund # Name Effective Closing Amount Disbursement Date Date (In to Date thousand) TF010597 Sustainable BT; Biodiversity 3/21/2012 1/3/2013 130 73.40 Financing for Conservation Biodiversity Conservation and Natural Resource Management TF055967 GEF FSP- BT; Sustainable 1/1/2006 6/30/2013 7,660 7,496 Bhutan: Land Sustainable Land Management Management TF094360 Bhutan BT: 5/28/2009 5/27/2013 484 275.84 Strengthening of Strengthening of the Public PPPD Procurement Policy Division TF097102 IDF: Bhutan: BT: Institutional 7/7/2010 7/7/2013 498.50 436.54 Institutional Strengthening of Strengthening of MoLHR the Ministry of Labor and Human Resources TF098505 Bhutan: BT: Improving 5/19/2011 10/31/2013 300 58.71 Improving Statistical Statistical Capacity Capacity TF098827 Additional BT: 4/26/2011 12/30/2013 5,000 289.12 Financing for Decentralized Bhutan Rural Decentralized Development Rural Development Project TF098973 Strengthening BT: Corporate 7/4/2011 5/17/2014 500 432.11 Institutional Governance TA Capacity of Druk Holding and Investments to Improve Corporate Governance of State-Owned Enterprises in Bhutan 32      Bank Executed Trust Trust Fund Project Name Grant Grant Net Grant FY Fund # Name Effective Closing Amount Disbursement Date Date (In thousand) TF011421 Mainstreaming BT: Poverty 12/9/2011 6/30/2013 85 31.19 Map Portal for the Monitoring Local Development Planning and Service Delivery TF011607 Bhutan Gender Social 1/11/2012 4/30/2013 120 98.79 Policy Note Development and Cultural Heritage TF011758 Thimpu Strategic Thimpu Cultural 2/3/2012 6/30/2013 45 4.01 Cultural Heritage Heritage and and Sustainable Tourism Tourism Plan and Implementation of Priority Actions TF012082 PPIAF BHUTAN: Bhutan PPP 2/27/2012 3/13/2013 70.90 37.13 Pre-Feasibility Assessment of Infrastructure Projects under a Public Private Partnership (PPP) Model TF012082 Bhutan National BT: Nutrition 3/18/2012 3/13/2013 148.20 54.96 Nutrition Assessment Assessment TF013466 Bhutan BT: Remote 11/1/2012 6/30/2013 50 0 Diversification of Rural Rural Livelihoods Communities for Youth Development TF013492 Bhutan-BETF: Bhutan Disaster 10/29/2012 6/30/2014 440 37.29 Improving Risk and Disaster Recovery Management Program Capacity in the Kingdom of Bhutan (GFDRR) TF098351 Bhutan Disaster Bhutan Disaster 11/17/2010 3/31/2013 300 230.26 Risk and Risk and Recovery Program Recovery (GFDRR: Track Program III TA-SAR Task) 33      Annex 6: Summary of Consultations Stakeholder consultations were held in-country in two rounds during the period October 2012-January 2013 to ensure that a wide range of stakeholder views were accounted for. A first round in the form of a Country Portfolio Review was held with the Royal Government of Bhutan on October 15, 2012. Participants included all Royal Government ministries and agencies involved in World Bank-supported activities in Bhutan. The Royal Government and the Bank made presentations on the overall portfolio status, issues, challenges and opportunities. This was followed by round-table discussion to solicit suggestions on how to improve implementation during the remainder of each project period, and the accuracy of and need to update the results framework. A second round of in-country consultations was carried out with key development partners and non-governmental organization on January 9, 2013 at the World Bank Group Bhutan Country Office. The consultation started with a presentation outlining the scope and objectives of the CPSPR, as well as an update on the analysis and findings of the progress report and updated results framework. Discussions during the second round touched upon the following points: (i) Foreign Direct Investment (FDI): Participants supported the Bank’s efforts to increase foreign direct investment and noted that the Government has prioritized areas for FDI in Bhutan. (ii) Financial Inclusion: Participants appreciated the World Bank Group’s assistance to the Royal Monetary Authority (RMA). This report has been used in formulating the draft financial inclusion policy of the country. (iii) Tourism – There was strong interest in the World Bank supporting tourism development. Currently, there are only a few grants from The World Bank Group which are directly for tourism development. IFC is exploring areas of collaboration in areas related to eco- tourism and tourism-related SMEs. (iv) Development Partner Coordination: It was noted that there are several development partners working in similar areas of engagement with RGOB. While the World Bank Group works very closely with the other development partners in Bhutan, there is room for further efforts to make sure that there is no duplication and to align complementary activities. (v) Nutrition: The Bank’s nutrition agenda in Bhutan was appreciated. The World Bank is concerned on stunting of children in Bhutan and fielded a mission to closely examine this issue. (vi) DPC: There was appreciation for the need for the Government to meet critical reforms in advance of the DPC and the inclusion of service standards tracking as part of the DPC series. (vii) Gender: Although it was noted that the Bank attaches importance to gender as a development priority, the impact of specific projects on gender could be evaluated and further enhanced where relevant. 34        STANDARD CPS ANNEXES    35      Annex A2: BHUTAN AT A GLANCE B a la nc e o f P a ym e nt s a nd T ra de 2000 2 0 11 Governance indicators, 2000 and 2010 (US$ millio ns) To tal merchandise expo rts (fo b) 100 648 To tal merchandise impo rts (cif) 187 1,127 Voice and accountability Net trade in go o ds and services -87 -524 Political stability and absence of violence Current acco unt balance -43 -406 as a % o f GDP -9.4 -23.5 Regulatory quality Rule of law Wo rkers' remittances and co mpensatio n o f emplo yees (receipts) .. 5 Control of corruption Reserves, including go ld 216 897 0 25 50 75 100 2010 Country's percentile rank (0-100) C e nt ra l G o v e rnm e nt F ina nc e higher values imply better ratings 2000 (% o f GDP ) Source: Worldwide Governance Indicators (www.govindicators.org) Current revenue (including grants) 41.2 39.2 Tax revenue 14.7 15.5 Current expenditure 17.5 19.9 T e c hno lo gy a nd Inf ra s t ruc t ure 2000 2 0 10 Overall surplus/deficit -3.6 -3.5 P aved ro ads (% o f to tal) 62.0 .. Highest marginal tax rate (%) Fixed line and mo bile pho ne Individual .. .. subscribers (per 1 00 peo ple) 2 58 Co rpo rate .. .. High techno lo gy expo rts (% o f manufactured expo rts) 0.5 0.1 E xt e rna l D e bt a nd R e s o urc e F lo ws E nv iro nm e nt (US$ millio ns) To tal debt o utstanding and disbursed 204 1,287 A gricultural land (% o f land area) 14 13 To tal debt service 7 87 Fo rest area (% o f land area) 78.4 84.6 Debt relief (HIP C, M DRI) – – Terrestrial pro tected areas (% o f land area) 28.3 28.3 To tal debt (% o f GDP ) 47.6 74.4 Freshwater reso urces per capita (cu. meters) 133,658 109,295 To tal debt service (% o f expo rts) 4.6 12.8 Freshwater withdrawal (billio n cubic metres) 1,225.2 1,607.3 Fo reign direct investment (net inflo ws) 3 12 CO2 emissio ns per capita (mt) 0.70 1.0 P o rtfo lio equity (net inflo ws) 0 0 GDP per unit o f energy use (2005 P P P $ per kg o f o il equivalent) .. 11.8 Composition of total external debt, 2011 Energy use per capita (kg o f o il equivalent) .. 354 Short-term, 0 IBRD, 0 IDA, 133 Private, 0 IMF, 0 Wo rld B a nk G ro up po rt f o lio 2000 2 0 11 Other multi- lateral, 281 (US$ millio ns) IB RD To tal debt o utstanding and disbursed 0 0 Disbursements 0 0 Bilateral, 872 P rincipal repayments 0 0 Interest payments 0 0 US$ millions IDA To tal debt o utstanding and disbursed 26 133 Disbursements 4 0 P riv a t e S e c t o r D e v e lo pm e nt 2000 2 0 11 To tal debt service 0 2 Time required to start a business (days) – 36 IFC (fiscal year) Co st to start a business (% o f GNI per capita) – 7.2 To tal disbursed and o utstanding po rtfo lio 0 4 Time required to register pro perty (days) – 92 o f which IFC o wn acco unt 0 4 Disbursements fo r IFC o wn acco unt 0 0 Ranked as a majo r co nstraint to business 2000 2 0 10 P o rtfo lio sales, prepayments and (% o f managers surveyed who agreed) repayments fo r IFC o wn acco unt 0 3 n.a. .. .. n.a. .. .. M IGA Gro ss expo sure – – Sto ck market capitalizatio n (% o f GDP ) 11.0 .. New guarantees – – B ank capital to asset ratio (%) .. 10.1 No te: Figures in italics are fo r years o ther than tho se specified. 4/2/12 .. indicates data are no t available. – indicates o bservatio n is no t applicable. 36      Lo wer Ke y D e v e lo pm e nt Indic a t o rs So uth middle B hutan A sia inco me Age distribution, 2010 ( 2 0 11) Male Female P o pulatio n, mid-year (millio ns) 0.73 1,633 2,51 9 75- 79 Surface area (tho usand sq. km) 38 5,131 23,579 60- 64 P o pulatio n gro wth (%) 1.7 1.4 1.5 Urban po pulatio n (% o f to tal po pulatio n) 37 30 39 45- 49 30- 34 GNI (A tlas metho d, US$ billio ns) 1.5 2,151 4,458 15- 19 GNI per capita (A tlas metho d, US$ ) 2,070 1,299 1,760 GNI per capita (P P P , internatio nal $ ) 5,480 3,314 3,832 0-4 10 5 0 5 10 GDP gro wth (%) 7.7 8.1 6.9 percent of total population GDP per capita gro wth (%) 5.8 6.6 5.3 ( m o s t re c e nt e s t im a t e , 2 0 0 4 – 2 0 10 ) P o verty headco unt ratio at $ 1 .25 a day (P P P , %) 10 36 .. Under-5 mortality rate (per 1,000) P o verty headco unt ratio at $ 2.00 a day (P P P , %) 30 71 .. Life expectancy at birth (years) 67 65 65 150 Infant mo rtality (per 1,000 live births) 44 52 50 Child malnutritio n (% o f children under 5) 13 33 25 100 A dult literacy, male (% o f ages 15 and o lder) 65 73 80 A dult literacy, female (% o f ages 15 and o lder) 39 50 62 Gro ss primary enro llment, male (% o f age gro up) 110 1 13 110 50 Gro ss primary enro llment, female (% o f age gro up) 112 107 104 0 A ccess to an impro ved water so urce (% o f po pulatio n) 96 90 87 1990 1995 2000 2010 A ccess to impro ved sanitatio n facilities (% o f po pulatio n) 44 38 47 Bh utan So uth Asia N e t A id F lo ws 2000 2 0 11 (US$ millio ns) Net ODA and o fficial aid 53 131 Growth of GDP and GDP per capita (%) To p 3 do no rs (in 2010): Japan 7 43 15 Denmark 8 13 A ustralia 1 8 10 A id (% o f GNI) 13.1 9.2 A id per capita (US$ ) 93 181 5 Lo ng- T e rm E c o no m ic T re nds 0 05 Co nsumer prices (annual % change) 4.0 9.1 GDP implicit deflato r (annual % change) 3.9 5.3 GDP GDP pe r capi ta Exchange rate (annual average, lo cal per US$ ) 46.4 50.3 Terms o f trade index (2000 = 100) .. .. 19 9 5 – 2 0 0 0 2 0 0 0 – 11 (average annual gro wth %) P o pulatio n, mid-year (millio ns) 0.6 0.7 1.9 2.4 GDP (US$ millio ns) 455 1,730 6.4 8.5 (% o f GD P ) A griculture 26.7 14.9 3.2 1.7 Industry 37.0 42.6 7.0 10.7 M anufacturing 8.5 9.0 4.7 10.8 Services 36.3 38.6 9.8 9.4 Ho useho ld final co nsumptio n expenditure 52.6 41.6 .. 5.9 General go v't final co nsumptio n expenditure 20.4 22.0 .. 8.6 Gro ss capital fo rmatio n 48.2 60.8 .. 9.7 Expo rts o f go o ds and services 30.5 34.6 .. 22.7 Impo rts o f go o ds and services 51.3 55.1 .. 14.2 Gro ss savings 34.8 44.4 No te: Figures in italics are fo r years o ther than tho se specified. .. indicates data are no t available. 37      Annex B2 - Selected Indicators* of Bank Portfolio Performance and Management Indicator 2010 2011 2012 2013 Portfolio Assessment Number of Projects Under Implementation a 8 5 4 5 Average Implementation Period (years) b 3.9 4.2 4.7 3.0 Percent of Problem Projects by Number a, c 0.0 20.0 0.0 0.0 Percent of Problem Projects by Amount a, c 0.0 26.9 0.0 0.0 Percent of Projects at Risk by Number a, d 0.0 20.0 0.0 0.0 Percent of Projects at Risk by Amount a, d 0.0 26.9 0.0 0.0 Disbursement Ratio (%) e 39.9 40.0 30.8 12.0 Portfolio Management CPPR during the year (yes/no) Supervision Resources (total US$) Average Supervision (US$/project) Memorandum Item Since FY 80 Last Five FYs Proj Eval by OED by Number 16 4 Proj Eval by OED by Amt (US$ millions) 151.9 63.0 % of OED Projects Rated U or HU by Number 25.0 50.0 % of OED Projects Rated U or HU by Amt 14.8 10.7 a.As shown in the Annual Report on Portfolio Performance (except for current FY). b.Average age of projects in the Bank's country portfolio. c.Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d.As defined under the Portfolio Improvement Program. e.Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year.           38      Annex B3: IDA Indicative Program Summary Actual and Proposed IDA Base-Case Lending Program Fiscal year Proj Name US$(M) Actual 2011 DPC1 24.75 Regional Wildlife 0.75 2012 2013 DPC2 36.0 Remote Community Dev 9.0 Proposed 2014 Urban Development –AF 10.5 Overall Result 81.0   Annex B3: IFC Investment Operations Program 2010 2011 2012 2013* Original Commitments (US$m) IFC and Participants 0.68 0.99 1.26 29.4 IFC's Own Accounts only 0.68 0.99 1.26 29.4 Original Commitments by Sector (%)- IFC Accounts only FINANCE & INSURANCE 100 100 100 100 Total 100 100 100 100 Original Commitments by Investment Instrument (%) - IFC Accounts only Guarantee 100 100 100 11 Equity 0 0 0 89 Total 100 100 100 100 *as of March 11, 2013 39      Annex B4: Summary of Non-Lending Activities (planned vs actual) FY Planned CPS Progress Report New AAA/NLTA 2011 HD Public Expenditure Review Delivered FY 13 NLTA to ICT Sector Bhutan Investment Climate Follow‐Up Delivered PFM Improvement (IDF) (Delivered) Higher Education Policy Note Delivered FY 13 Solid Waste Management in Thimpu (IFC) Deferred Poverty Mapping (TA) Initiated FY12 Advisory on Licensing Simplification (IFC) Ongoing E‐Governance (TA) Delivered FY12 JSDF Seed Fund for ‘Building Against Under consideration Disasters and Climate Change’ Bus Service in Thimphu TA (IFC) Ongoing Access to Finance TA to Banks (IFC) Ongoing SME/Finance TA (IFC) Ongoing Disaster Risk and Recovery Program Ongoing (GFDRR grant) 2012 Youth Employment Study ESW Not Delivered Telecom sector roadmap DPC 2 related AAA Various delivered Developing and strengthening the regulatory framework for Pension, Provident Fund and other such schemes in Bhutan (Delivered) Access to finance advisory (WB‐IFC) Ongoing Building Public‐Private Partnerships (TA) Delivered The name changed to “Improving the Capacity of the government to implement infrastructure PPPs. Rural Development Strategies (ESW) Dropped Medium‐Term Fiscal Framework Part of DPC2 ICT Sector Policy and Regulatory Issues Delivered Country Sustainable Development Analysis Not yet 40      Auditing and Accounting (TA) Ongoing IDF Decentralization and Sub‐National Ongoing IDF Strengthening (TA) 2013 Public Procurement (IDF) Ongoing. Will be Financial Inclusion Survey (just delivered in FY13 in time AAA) (Delivered) Poverty Assessment (ESW) Delivered Gender Policy Note (Ongoing) Construction Sector (ESW) Dropped Improving Statistical Capacity (TA) (Ongoing) National Transport Plan (ESW) Transport TA Social Development & Cultural provided under DPC2 Heritage (Ongoing) Disaster Risk Management TA Ongoing Bhutan Disaster Risk & Recovery (Ongoing) Tax Administration (TA) Dropped Policy & Regulatory Assistance to MOIC Urbanization and Growth Study (ESW) Planned Green Growth Strengthening of PFM (IDF) study (Ongoing) JSDF support for ‘ Building Resilience of Dropped PPP Rules and Regulations –TA Communities Against Disasters and (Planned) Climate Change’ 2014 Management of Hydropower Revenues Possible Institutional Strengthening of the Ministry of Labor and Human Resources. Ongoing. Decentralization IDF approved Bhutan National Nutrition & Gap Analysis (ESW) (Ongoing) Corporate Governance Ongoing. Environmental Safeguards (IDF) Delivered FY12 41      Annex B6: Key Economic Indicators Actual Estimate Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 National accounts (as % of GDP) a Gross domestic product 100 100 100 100 100 100 100 100 100 Agriculture 19.2 19.0 18.7 17.5 15.9 15.1 13.7 13.1 12.4 Industry 45.4 44.5 43.2 44.6 43.9 44.7 47.9 47.8 48.6 Services 35.4 36.5 38.1 37.9 40.2 40.2 38.4 39.0 39.0 Total Consumption 62.1 67.3 68.9 60.8 53.5 55.2 57.2 58.6 57.2 Gross domestic fixed investment 37.5 36.5 37.8 47.3 53.2 57.3 64.7 66.2 67.5 Government investment 12.1 11.6 10.5 13.1 9.0 9.3 10.0 10.0 10.1 Private investment 25.4 24.9 27.3 34.2 44.2 48.0 54.8 56.2 57.4 b Exports (GNFS) 52.2 44.0 41.9 36.5 32.8 30.5 28.6 26.9 27.1 Imports (GNFS) -54.4 -54.5 -56.9 -53.6 -49.9 -50.5 -51.2 -52.0 -50.9 Gross domestic savings 37.9 32.7 31.1 39.2 46.5 44.8 42.8 41.4 42.8 c Gross national savings 45.2 39.3 38.9 46.9 51.8 48.0 44.8 44.1 43.5 Memorandum items Gross domestic product 1260 1332 1381 1729 1935 1940 2135 2378 2671 (US$ million at current prices) GNI per capita (US$, Atlas method) 1720 1800 1910 2090 2310 2610 2960 6370 6920 Real annual growth rates (%, calculated at 2000 prices) Gross domestic product at market prices 10.8 5.7 9.3 10.0 9.0 7.6 6.7 7.4 7.6 Gross Domestic Income 14.2 -1.4 6.8 9.3 5.3 6.1 5.8 6.7 8.9 Real annual per capita growth rates (%, calculated at 2000 prices) Gross domestic product at market prices 8.7 3.8 7.3 8.0 7.1 5.7 4.9 5.6 5.9 Total consumption 22.5 9.5 8.1 9.5 -1.2 6.7 10.0 7.9 4.1 Private consumption 31.9 9.9 7.7 10.9 -0.3 6.0 8.9 8.1 2.3 Balance of Payments (US$ millions) b Exports (GNFS) 633.5 653.5 572.6 613.4 747.1 735.2 766.2 835.5 905.4 Merchandise FOB 573.3 598.8 516.1 544.5 665.3 648.2 669.2 720.9 770.2 b Imports (GNFS) 583.8 764.6 682.0 933.7 1301.5 1258.9 1288.9 1501.8 1792.7 Merchandise FOB 526.6 671.2 606.6 843.2 1184.7 1126.5 1125.2 1305.2 1555.4 - - - Resource balance 49.8 111.1 109.4 320.3 -554.4 -523.6 -522.7 -666.3 -887.3 Net current transfers 95.7 117.2 125.8 238.9 224.4 239.3 178.4 82.9 161.9 - Current account balance 145.2 -28.1 -13.9 142.2 -410.8 -406.3 -467.1 -725.4 -904.1 Net private foreign direct investment 74.0 3.1 6.5 19.0 16.4 11.5 10.9 10.9 10.9 Long-term loans (net) 16.9 39.2 73.2 107.5 368.1 383.2 331.3 366.3 738.8 Official 16.9 39.2 73.2 107.5 368.1 383.2 331.3 366.3 738.8 Private 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - Other capital (net, incl. errors & ommissions) 121.7 46.3 48.8 122.3 125.0 99.8 148.9 264.4 312.3 - - - d Change in reserves 114.4 -60.6 114.7 106.6 -98.7 -88.2 -24.0 83.7 -157.9 Memorandum items Resource balance (% of GDP) 4.0 -8.3 -7.9 -18.5 -28.6 -27.0 -24.5 -28.0 -33.2 42      Bhutan - Key Economic Indicators (Continued) Actual Estimate Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 e Public finance (as % of GDP at market prices) Current revenues 22.2 23.7 24.2 23.4 22.9 22.9 20.7 18.8 17.8 Current expenditures 16.8 18.7 19.1 19.3 19.2 19.9 17.8 16.9 16.2 Current account surplus (+) or deficit (-) 5.4 5.0 5.2 4.1 3.6 2.9 2.8 1.9 1.6 Capital expenditure 16.6 19.1 17.0 19.3 19.2 23.6 15.9 11.1 10.8 Foreign financing 14.4 9.1 10.6 16.3 14.4 14.0 12.9 2.8 7.1 Monetary indicators M2/GDP 52.1 58.5 68.0 69.9 58.8 .. .. .. Growth of M2 (%) 2.3 24.6 30.1 21.2 -1.0 .. .. .. Private sector credit growth / 37.4 31.1 38.6 33.2 30.1 .. .. .. total credit growth (%) 32.8 21.7 42.3 32.7 51.3 .. .. .. Price indices( YR 2000 =100) Merchandise export price index 132.0 136.4 151.0 157.0 163.3 169.8 176.6 183.7 191.0 Merchandise import price index 132.0 143.8 159.5 165.9 172.5 179.4 186.6 194.0 201.8 Merchandise terms of trade index 100.0 94.9 94.7 94.7 94.7 94.7 94.7 94.7 94.7 f Real exchange rate (US$/LCU), base 2005. 102.7 99.1 94.2 97.4 98.6 .. .. .. .. Real interest rates .. .. .. .. .. .. .. .. .. Consumer price index (% change) 5.1 6.8 6.3 5.7 8.9 9.1 7.6 7.6 7.6 GDP deflator (% change) 4.1 3.4 5.3 5.5 5.7 5.3 4.8 4.5 4.6 a. GDP at factor cost b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Consolidated central government. f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation. G. "2007"= FY2007/2008 43      Annex B7: Key Exposure Indicators Actual Estimated Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total debt outstanding and 803.0 695.0 761.0 907.0 1035.0 1159.6  1360.9  1657.1  1986.9  disbursed (TDO) (US$m)a Net disbursements (US$m)a 10.0 -22.0 48.0 132.0 219.0 186.6  149.6  381.7  561.6  Total debt service (TDS) 32.2 81.5 75.5 84.2 84.7 80.7  82.3  84.5  84.9  a (US$m) Debt & debt serv indicators (%) TDO/XGSb 122.4 101.2 128.7 145.2 136.1 163.9  179.5  201.9  224.4  TDO/GDP 67.1 55.3 60.2 57.2 59.8 69.8  71.8  76.7  82.3  TDS/XGS 4.9 11.9 12.8 13.5 11.1 11.4  10.9  10.3  9.6  Concessional/TDO 39.1 46.2 47.8 44.7 .. .. .. .. .. IBRD exposure indicators (%) IBRD DS/public DS .. .. .. .. .. .. .. .. .. Preferred creditor DS/public .. .. .. .. .. .. .. .. .. c DS (%) .. .. .. .. .. .. .. .. .. IBRD DS/XGS .. .. .. .. .. .. .. .. .. d IBRD TDO (US$m) .. .. .. .. .. .. .. .. .. Of which present value of .. .. .. .. .. .. .. .. .. guarantees (US$m) .. .. .. .. .. .. .. .. .. Share of IBRD portfolio (%) .. .. .. .. .. .. .. .. .. d IDA TDO (US$m) 87.5 94.3 113.9 112.3 138.1 133.5  173.0  175.0  177.5  IFC (US$m) Loans 0.1 0.6 0.7 1.0 1.3 0.5 Equity and quasi-equity /c 0 0 28.9 MIGA MIGA guarantees (US$m) a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short- term capital. b. "XGS" denotes exports of goods and services, including workers' remittances. c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements. d. Includes present value of guarantees. e. Includes equity and quasi-equity types of both loan and equity instruments. 44      ANNEX B8 Operations Portfolio (IBRD/IDA and Grants) (As of March 5, 2013) IBRD/IDA Total Disbursed (Active) 11.02 of which has been repaid 0.00 Total Disbursed (Closed) 195.94 of which has been repaid 10.74 Total Disbursed (Active + Closed) 206.96 of which has been repaid 10.74 Total Undisbursed (Active) 18.39 Total Undisbursed (Closed) 0.00 Total Undisbursed (Active + Closed) 18.39 Difference Between Active Projects Last PSR Expected and Actual Supervision Rating Original Amount in US$ M Disbursements a Development Implementation Fiscal Frm Project ID Project Name Objectives Progress Year IBRD IDA GRANT Cancel. Undisb. Orig. Rev'd P073458 Private Sector Dev. S S 2007 8 0.335418 0.0403943 Remote Rural P123820 S S 2013 9 9.21918 0.15 Communities Sustainable Land P087039 S S 2006 7.66 0.163892 0.1448916 Management P090157 Urban Development II S MS 2010 12.0075 8.830498 -3.062181 Overall result 29.0075 7.66 18.54899 -2.726895 a Intended disbursements to date minus actual disbursements to date as projected at appraisal. 45      Annex B8: IFC Committed and Disbursed Outstanding Portfolio Committed Disbursed Outstanding FY Approval Company Loan Equity *Quasi Equity GT/RM Participant Loan Equity *Quasi Equity GT/RM Participant 2008/ 2009/ 2010/ 2011/ 2012/ 2013 BNB 0 28.43 0 0.48 0 0 28.43 0 0.46 0.00 2004 BRPL 3.64 0 0 0 0 3.64 0 0 0 0.00 Total Portfolio 3.64 28.43 0 0.48 0 3.64 28.43 0 0.46 0.00 * Quasi Equity includes both loan and equity types 46    BH UTAN 89°E 90°E 91°E SELECTED CITIES AND TOWNS 0 10 20 30 40 Kilometers DZONGKHAG (DISTRICT) CAPITALS NATIONAL CAPITAL 0 10 20 30 Miles RIVERS BHUTAN MAIN ROADS RAILROADS GEWOG (SUB-DISTRICT) BOUNDARIES DZONGKHAG (DISTRICT) BOUNDARIES INTERNATIONAL BOUNDARIES Him GASA ala 92°E ya 28°N 28°N Mo u unt To Ch ains Cona o Ph Gasa Thunkar To Gamba LHUENTSE TRASHI dee W ANG DUE gd 'YANGTSE ng an PUNAKHA PH ODRANG Ma M THIMPHU BUMTHANG Punakha Tang Lhuentse Shingkarap Trashi Tango ’Yangtse u Chari Kulo Kuru Ch PARO Lobesa gCn Haa Paro Trongsa Jakar Chu hu Pa ro THIMPHU Wangdue Haa Ch Khasadrapchu TRONGSA u TRASHIGANG San HAA os h Lingmithang Monggar Trashigang k Bumthang Kisona Zhemgang Torsa MONGGAR Wamrong Tendru Yebilaptsha DAGANA ZH nas Ma Chhukha Daga EM Pema Gatshel G W AN a ng PEMA G Damphu S A M D R UP 27°N S A R PA N G G 27°N SAMTSE AN Chu GATSHEL Ton JO N GKHA R Daifam gsa Panka CHHUKHA IR Chu Samtse Sarpang Panbang Nganglam Samdrup TS Pheuntsholing Jongkhar To Gorumara To To To To IBRD 33373R2 Goalpare Guahati Guahati Goalpare To To This map was produced by the Map Design Unit of The World Bank. Guahati Alipur Duar APRIL 2012 The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. 90°E 91°E 92°E