COUNTRY BACKGROUND - Gross National Happiness Commission

Aid Policy
9.9 Sectoral Allocation of Third Country Aid Aid allocations have reflected national development priorities. The
largest shares of technical assistance have tended to be provided to the following areas, in descending order:
Human Resource Development, Agriculture and Forestry, Health and Population, and Development
Administration. Industry and Transport and Communications, which take only a small share of technical
assistance, have received a greater proportion of capital assistance, of which Agriculture and Forestry have received
the largest share.
III. Aid Policy for the 7FYPIII. Aid Policy for the 7FYP
Basic PrinciplesBasic Principles
Figure 9.3
9.10 The Royal Government welcomes aid from the international community. National development objectives
will not be readily achieved without external funding and technical expertise. In Bhutan's case, the low level of
monetisation of the economy and the limited tax base have made it more difficult to mobilise internal resources. As
explained in the Chapter on Approach to Development, one of the main strategies to is to increase self reliance,
which will mean increasing internal resource mobilisation and reducing dependence on aid. However, to raise
adequate revenues to become completely self sufficient will not be possible within the 7FYP period and thus
Bhutan will continue to seek assistance from her international partners.
9.11 Continuing aid to Bhutan is justified by Bhutan's status as a Least Developed Country. In addition the low
levels of health and education indicators combined with the physical constraints, described in Chapter 2, provide
further reason for Bhutan to seek aid. However the Royal Government recognises that there are dangers as well as
benefits associated with aid. Aid must complement Bhutan's own efforts and must not be a substitute for them; and
the responsibility for deciding national priorities and development strategy must remain with the Royal
Government.
9.12 An important aspect of the strategy set out in Chapter 3 is to reduce reliance on external sources of funding
and thus the Government will take the necessary steps to increase domestic resource mobilisation, including
ensuring that communities continue to contribute to the costs of development activities, through provision of labour
etc. The economic growth envisaged during the 7FYP, will also enable the RGOB to finance an increasing
proportion of expenditures from domestic revenues. At the same time, the RGOB is determined to be prudent in its
development expenditures and to keep its borrowing comfortably within its capacity to service debt.
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