The Asian Development Bank (ADB) is extending two grants totaling 15 million U.S. dollars to support the development of micro-, small- and medium-sized businesses in the Kingdom of Bhutan, ADB said Wednesday in a press release.
ADB is providing a 6-million-dollar grant to establish an integrated policy, strategy and institutional framework for the development of micro-, small- and medium-sized enterprises. The grant will be released in three equal tranches over a period of three years.
Another 9-million-dollar grant will be used to extend credit to the small enterprises, supporting their development and facilitating program implementation, the lender said.
"Like other developing countries, limited access to financing is a major constraint in doing business. It is more so in Bhutan, particularly for micro and small businesses," said Chia-Hsin Hu, economist for the financial sector of ADB's South Asia Department, adding that the constraint is mainly due to extremely high collateral requirements and low banking intermediation.
The government has placed a high priority on private sector development, which mainly comprises micro-, small- and medium-sized enterprises.
Bhutan is a landlocked country in the eastern Himalayas. It has experienced steady gross domestic product growth averaging around 7 percent a year since the 1980s mainly on gains in the hydropower and its related sectors. The high growth has increased GDP per capita to nearly 1,300 dollars in 2005 from 834 dollars in the previous year.
However, despite strong economic growth, poverty in Bhutan remains a social and economic issue, with an estimated 32 percent of the population living below the poverty line.
"The economy depends on a narrow base for growth, raising serious concerns about the long-term prospects for economic development and employment in the country. Bhutan needs to diversify economic activity to generate employment, raise income levels for the poor and achieve stable, sustainable and broad-based economic growth," said Hu.
Source: Xinhua
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