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Bhutan’s Country Policy and Institutional Assessment (CPIA) by the World Bank

Introduction

The World Bank conducts a Country Policy and Institutional Assessment (CPIA) to evaluate a country’s policies and institutions in various areas, including economic management. This assessment provides valuable insights into a country’s strengths and weaknesses, helping policymakers identify areas for improvement.

Key Findings

Bhutan’s Commitment to Holistic Development

  • Bhutan’s strong commitment to national policies and service delivery is highlighted by the CPIA, particularly in health and education services.
  • This commitment demonstrates a focus on long-term development and the well-being of its citizens.

Areas Demanding Attention

Social Protection

  • Enhancements are needed in policies related to labor market regulations and strategies to mitigate the risk of poverty.
  • Strengthening social protection measures can help reduce inequality and promote economic growth.

Financial Sector

  • The financial sector is vulnerable, requiring comprehensive reforms in structure, policies, and regulations governing Financial Institutions (FI).
  • Addressing corruption cases in FIs will also be crucial for improving the overall stability of the financial system.

Business Regulatory Environment

  • Low scores indicate that the legal and policy environment is not conducive for businesses to create jobs, invest, and become more productive.
  • Improving the business regulatory environment can help attract foreign investment and promote economic growth.

Efficiency of Revenue Mobilization

  • The need for improvement in the overall pattern of revenue collection suggests potential weaknesses in the de facto tax structure and revenue collection from various sources.
  • Strengthening revenue mobilization will be essential for financing development projects and reducing poverty.

CPIA Ratings on Economic Management

The excerpt provides CPIA ratings on economic management criteria such as:

  • Monetary & Exchange Rate: Evaluates the country’s monetary policy, exchange rate regime, and financial stability.
  • Fiscal Policy: Assesses the country’s fiscal policy framework, including taxation, public expenditure, and debt management.
  • Debt Policy: Examines the country’s debt management strategy, including debt sustainability, debt servicing, and debt relief.

To provide a more detailed analysis, additional information about Bhutan’s policies and institutions in these areas or the full report from which this excerpt is taken would be necessary.