Joining forces to maximize resources for Bhutan’s citizens

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Public financial management signing
The Multi-Donor fund for Bhutan's Public Financial Management was launched September 21st in Thimphu

Several years ago, a newspaper cartoon in a neighboring country caught everyone’s attention when it depicted the government machinery as a big pipe in which lots of water was being poured from one side as taxpayer’s money and only a drop reached the poor on the other end. The water, representing the funds were being lost due to holes in the pipe. The holes were depicted as inefficiency, wastage, corruption etc. Globally, governments lose trillions of dollars due to various inefficiencies, and lack of proper controls and oversight. Citizens suffer as they do not receive the services that they are promised.

Bhutan provides lots of attention to good governance, which is also one of the pillars of Gross National Happiness. Public Financial Management (PFM) is an important element of good governance and delivering high quality of services to citizens as it’s comprised of budgeting, revenue, procurement, accounting and reporting, internal controls and institutional oversight. Sound PFM systems play an important role in strengthening the efficiency, accountability and transparency of the Government systems. Every dollar, every Ngultrum saved through sound PFM systems mean that more resources are available for better schools, hospitals, roads, and other services.

Knowing its importance, Bhutan has continued to strengthen its PFM systems over the last several years. As early as 2002, it carried out assessment of its PFM systems and implemented several reforms based on identified gaps. These include the 2007 Public Finance Act and its amendment in 2012, capacity building of National Finance Service staff and medium term budget framework. Another assessment was carried out in 2010 was followed by a series of reforms which included strengthening of internal audit function and implantation of Bhutanese Accounting Standards The latest assessment of 2016 shows Bhutan has progressed since the last assessment. Even though the strengthening of PFM systems has been a work-in-progress, Bhutan is ahead of several countries in the world.

To help accelerate the pace of PFM reforms in the country, the World Bank, European Union and Austrian Development Agency have come together to establish a Public Financial Management Multi Donor Fund (PFM-MDF). The PFM-MDF was launched on September 21, 2017 and a Grant agreement was signed by Mr. Nim Dorji, Honorable Finance Secretary, and Mr. Qimiao Fan, Country Director for Bhutan. The $4 million Grant provided by PFM-MDF to the Royal Government of Bhutan shall further strengthen its PFM systems through various activities and initiatives on enhancing the revenue and expenditure efficiency. The joint efforts of the Development Partners and RGoB will help them in working together in a coordinated manner towards this important initiative.

The project aims to further strengthen Bhutan’s PFM systems so that maximum resources become available for the welfare of the citizens of Bhutan.    


Savinay Grover

Sr Financial Management Specialist

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