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The Economic Stimulus Programme (ESP) is a Nu 15 billion (~USD 180 million) post-pandemic recovery package launched on 18 May 2024 by the second government of Prime Minister Tshering Tobgay. It is funded in full by the Government of India and structured as a multi-window programme spanning concessional credit, business reinvigoration grants, sectoral price guarantees, and skilling. The programme is administered by an ESP Secretariat housed within the Cabinet Secretariat, with disbursement routed primarily through the Bhutan Development Bank Limited (BDBL).

The 2024 ESP should not be confused with the earlier Economic Stimulus Plan of 2013, a Nu 5 billion package launched under the first Tobgay government to address a different crisis — the rupee shortage and credit freeze of 2012–13. The 2024 instrument is called a Programme rather than a Plan, is three times larger in nominal terms, and addresses the aftermath of the COVID-19 pandemic rather than a balance-of-payments squeeze.

Background

Bhutan's economy contracted sharply during the pandemic. Tourism, which had contributed roughly 5 per cent of GDP before 2020, collapsed after the border closure of March 2020 and recovered slowly after reopening in September 2022. Non-performing loans rose, youth unemployment climbed above 28 per cent by 2023, and outmigration to Australia accelerated. The People's Democratic Party campaigned in the 2023–24 general election on an economic recovery platform and won 30 of 47 National Assembly seats.

Tobgay was conferred dakyen on 28 January 2024. Within weeks the new Cabinet began drafting the ESP, working with the Royal Monetary Authority on the credit windows and the Ministry of Finance on the financing arrangement with New Delhi.

Funding and launch

The Programme is funded in full by the Government of India. The first tranche of Nu 2.5 billion (~USD 30 million) was handed over by Indian Ambassador Sudhakar Dalela to Finance Minister Lyonpo Lekey Dorji at Tashichho Dzong on 22 May 2024, four days after the public launch. Subsequent tranches were released against implementation milestones.

An ESP Secretariat was established within the Cabinet Secretariat to coordinate disbursement across line ministries and financial institutions. The Programme is intended to run over two years, with the bulk of credit windows targeted for closure by the end of 2026.

Components

The ESP is structured as several distinct windows rather than a single fund. The principal components are:

Concessional Credit Line

Launched on 7 August 2024, the Concessional Credit Line offers collateral-free loans at a 4 per cent interest rate for new and expanding ventures in agriculture, livestock, cottage and small industries, and manufacturing. The first phase was allocated Nu 5.3 billion (~USD 62 million), of which Nu 3.3 billion was earmarked for concessional loans and Nu 2 billion for the Reinvigoration Fund described below.

Initial sectoral allocations included Nu 500 million for primary agriculture and livestock, Nu 1.8 billion for medium-scale production and manufacturing, and Nu 200 million for film production. By September 2025, Nu 3.012 billion had been approved across 2,313 applications, with Nu 1.709 billion actually disbursed — a take-up rate well below the original ambition.

Reinvigoration Fund

The Reinvigoration Fund subsidises interest payments by 4 percentage points for up to three years on existing loans held by pandemic-affected businesses. Applications opened in August 2024 and closed on 31 December 2024. The fund is administered through commercial banks and BDBL.

Price Guarantee Scheme

The Price Guarantee Scheme for Livestock and a parallel scheme for priority crops commit the state to buying specified produce — chicken, pork, trout, and six designated crops — at a floor price through the Bhutan Livestock Development Corporation and the Food Corporation of Bhutan's Farm Machinery Corporation Limited (FMCL) "Aggregation Program". Nu 500 million was earmarked for the livestock and agriculture price guarantees, expected to reach more than 70,000 farmers. By February 2025, BLDCL had facilitated Nu 69.7 million in livestock procurement under the scheme.

Skilling and tourism

Further windows fund the De-Suung Skilling Programme, tourism recovery initiatives including festivals in Indian cities and new air route subsidies, support for journalist training, and promotional grants for the creative industries.

Implementation

Disbursement has been concentrated in the Bhutan Development Bank, which initially shared the credit windows with other commercial banks before BDBL was made the primary implementer. The bank hired twenty contract staff plus a dedicated ESP manager and reassigned roughly seventy existing employees to ESP work, framing the assignment as a "social mandate" rather than a commercial line of business.

Common rejection grounds for loan applications have included existing non-performing loans, business proposals falling outside ESP eligibility criteria, and concerns about financial viability — a stance that drew complaints from some applicants who argued that the strict assessment defeated the programme's recovery purpose.

Parliamentary scrutiny

The Cabinet Secretariat presented the ESP to the National Assembly's Economic and Finance Committee in 2024. The Committee submitted formal recommendations including calls to expand the price guarantee scheme to potatoes and chillies, to clarify operational rules of the funds, and to tighten reporting on disbursement. The National Council conducted its own review and pressed for more granular sectoral reporting. The ESP Secretariat subsequently briefed both houses on implementation status, citing the gap between approvals and actual disbursement as the central challenge.

Distinction from the 2013 stimulus

The 2024 ESP differs from the 2013 Economic Stimulus Plan in scale, structure, and purpose. The 2013 Plan, totalling Nu 5 billion, responded to a rupee crunch by writing off non-performing loans and providing concessional credit through the Business Opportunity and Information Centre. The 2024 Programme is three times larger in nominal terms, funded by India rather than domestic banks, and built around windows that cover sectoral price guarantees and skilling in addition to credit. Both were launched by Tobgay-led PDP governments, separated by the Druk Phuensum Tshogpa term of 2018–23.

Outlook

Take-up of the Concessional Credit Line has been slower than projected, with disbursement at roughly 57 per cent of approved amounts and approvals at roughly 57 per cent of the first-phase allocation by September 2025. The government has signalled it will reallocate underspent windows toward sectors with stronger demand and has extended some application deadlines. Whether the Programme will measurably reduce youth unemployment and outmigration — the political problems it was designed to address — remains contested in Bhutanese media, with The Bhutanese and Kuensel publishing competing assessments of early results.

Economic Stimulus Programme of Bhutan