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Asia and Pacific > Bhutan

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Cover Technical Assistance Reports
Bhutan: Technical Assistance Report-Financial Sector Stability Review
International Monetary Fund. Monetary and Capital Markets Department
At the request of the Royal Monetary Authority of Bhutan (RMA), an IMF Financial Sector Stability Review (FSSR) mission visited Thimphu, and this technical assistance (TA) report highlights the main FSSR findings. The mission conducted a diagnostic review of the financial sector and proposed a Technical Assistance Roadmap (TARM) to support the authorities’ efforts to strengthen the identification, analysis, and mitigation of risks to financial stability in Bhutan. The RMA has rapidly progressed prudential regulation for the banking sector and must now shift its focus to strengthening supervisory capacity. Non-bank financial institutions play an important role in the financial sector, and with growing digital innovation, it is important authorities develop tailored regulation for the insurance sector and crypto markets, while refining the approach to e-money. Payment systems are advanced with significant progress in modernizing domestic payment systems, but cross-border payments can be improved. More granular collection of financial sector statistics can also support more dynamic tools for analyzing and monitoring systemic risks. The mission’s diagnostic review supports a TA plan. The main recommendations are summarized and the comprehensive TARM is provided in this paper.
Keywords:
Bhutan; Regulation; Supervision; Payments; Systemic Risk; Statistics; Bitcoin; Insurance; NBFI; Financial Sector; Policy.
Cover Finance & Development
Finance & Development, March 2026: The Debt Reckoning
International Monetary Fund. Communications Department
Finance & Development, March 2026
Keywords:
Public Debt; Financial Markets; Taxes; Artificial Intelligence; Political Economy; government policy; IMF photo; finance ministry; policy choice; AI age; Inflation; Gold; Global; Sub-Saharan Africa; Africa; Europe; Asia and Pacific
Cover High-Level Summary Technical Assistance Reports
Bhutan: Review and Diagnostic of the Fintech Regulatory Sandbox Framework
Puja Singh
and
Ken Coghill
This report summarizes the International Monetary Fund's (IMF) technical assistance mission to the Royal Monetary Authority of Bhutan (RMA), focused on reviewing and strengthening the fintech regulatory sandbox (RS) framework. The mission, conducted from August 25 to September 2, 2025, assessed the RS's alignment with Bhutan's digital transformation goals, its capacity to foster financial innovation, and its effectiveness in regulatory oversight. The mission identified critical challenges including unclear strategic objectives, fragmented governance structures, resource constraints, and the absence of formal risk tolerance frameworks. The report recommended realigning the RS with RMA's strategic priorities, narrowing its scope to regulated activities, reorganizing governance structures, establishing dedicated resources, and developing comprehensive capacity-building programs to enhance Bhutan's fintech ecosystem.
Keywords:
Regulatory Sandbox; Fintech; Financial Innovation; Financial Regulation; Digital Financial Services; technical assistance mission; Imf publication; governance structure; staff of the International Monetary Fund; report series; Emerging technologies; Financial sector stability
Cover Technical Assistance Reports
Bhutan: Technical Assistance Report-Review and Diagnostic of the Fintech Regulatory Sandbox Framework
International Monetary Fund. Monetary and Capital Markets Department
At the request of the Royal Monetary Authority of Bhutan (RMA), the Monetary and Capital Markets Department (MCM) conducted a mission to review and strengthen Bhutan’s fintech regulatory sandbox (RS) framework. The mission was held from August 25 to September 2, 2025, in Thimphu, Bhutan and included a two-day capacity development workshop to strengthen the RMA staff’s expertise in managing the RS’s operations and fintech regulation, supervision and oversight. The mission assessed the RS's alignment with Bhutan's digital transformation goals, its capacity to foster financial innovation, and its effectiveness in regulatory oversight. The mission identified critical challenges including unclear strategic objectives, fragmented governance structures, resource constraints, and the absence of formal risk tolerance frameworks. The mission recommended realigning the RS with RMA's strategic priorities, narrowing its scope to regulated activities, reorganizing governance structures, establishing dedicated resources, and developing comprehensive capacity-building programs to enhance Bhutan's fintech ecosystem.
Keywords:
Bhutan; Regulatory Sandbox; Fintech; Financial Innovation; Financial Regulation; Digital Financial Services.; IMF publication; Monetary and Capital Markets department; corporate governance structure; Rma staff's expertise; technical assistance provider; staff of the International Monetary Fund; Digital financial services; Technological innovation; Global
Cover IMF Staff Country Reports
Bhutan: 2025 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. Asia and Pacific Dept
The 2025 Article IV Consultation with Bhutan examines that growth is projected at 7.4 percent in FY2025/26 and to remain strong in FY2026/27, reflecting increases in tourism, hydropower exports and capital spending. Inflation is projected to converge toward 4 percent. The medium-term growth outlook is positive, driven by rising hydropower generation and capital spending, but risks are tilted to the downside. These include delays on hydropower projects, a global slowdown, declines in value of crypto asset holdings, fuel-price increases, and climate-related shocks. Tighter fiscal and monetary policies along with enhanced financial sector supervision are key to rebuilding buffers and safeguard macroeconomic stability. The Gelephu Mindfulness City (GMC) project has strong potential to spearhead economic diversification and spur foreign direct investment, but fiscal and financial risks must be mitigated. While the GMC aims to attract private investment and promote diversification, the legal framework governing its status versus the rest of Bhutan remains at an early stage and needs further clarity on labor, goods, and capital mobility.
Keywords:
exchange restriction; accounts statistics; repayment liability; fund relation; IMF executive board; foreign currency resource; downside risk; Global
Cover High-Level Summary Technical Assistance Reports
Bhutan: Development of an Interest Rate Corridor Framework
Oleg Churiy
and
Bernard J Laurens
At the request of the Royal Monetary Authority of Bhutan (RMA), an IMF South Asia Regional Training and Technical Assistance Center (SARTTAC) visited Thimphu during August 20-29, 2024. The mission’s objectives were to assist the authorities in setting up interest rate corridor (IRC) and operationalizing the related instruments, operations, liquidity forecasting, and collateral frameworks.
Keywords:
Monetary policy; International organization; IMF South Asia Regional Training and Technical Assistance Center; capacity development recipient; staff capacity; high-level summary; money market development; Interest rate corridor; Open market operations; Liquidity forecasting; Liquidity management
Cover Technical Assistance Reports
Bhutan: Technical Assistance Report-Development of an Interest Rate Corridor Framework
International Monetary Fund. Asia and Pacific Dept
and
International Monetary Fund. Monetary and Capital Markets Department
In August 2024, at the request of the Royal Monetary Authority of Bhutan (RMA), the IMF South Asia Regional Training and Technical Assistance Center (SARTTAC) conducted a Technical Assistance (TA) mission in Thimphu. The mission aimed to assist the RMA in establishing an interest rate corridor (IRC) and operationalizing related instruments, liquidity forecasting, and collateral frameworks. The mission identified that the RMA lacks necessary monetary policy instruments to effectively address changing systemic liquidity conditions and financial stability challenges. It emphasized the need to move away from reliance on administrative controls, as the absence of appropriate price incentives reinforces the preference for foreign exchange among Bhutanese residents, increasing pressures on the peg. To tackle these issues, the mission proposed a phased approach to introduce the IRC. Initially, relevant external and internal documents should be finalized, followed by mock operations. The first phase involves introducing a one-week main Open Market Operation (OMO), conducted weekly at the policy rate with full allotment. Automatic access to the IRC's standing facilities should be ensured. Later, fixed-quantity, variable-rate OMOs should be utilized, relying on liquidity forecasting to calibrate operations. Additionally, the mission recommended reinstating sweeping arrangements for government accounts and enhancing coordination with the Treasury to improve liquidity forecasting. These measures aim to strengthen the RMA's operational framework and enhance the effectiveness of monetary policy.
Keywords:
Monetary policy; International organization; Bhutan.; RMA money market contact group; IMF South Asia Regional Training and Technical Assistance Center; IMF's Monetary; expert of the IMF Monetary; interest rate corridor framework; Liquidity management; Interest rate corridor; Liquidity; Commercial banks; Central bank policy rate
Cover IMF Working Papers
Remittances in Times of Uncertainty: Understanding the Dynamics and Implications
Patrick A. Imam
,
Kangni R Kpodar
,
Djoulassi K. Oloufade
, and
Vigninou Gammadigbe
This paper delves into the intricate relationship between uncertainty and remittance flows. The prevailing focus has been on tangible risk factors like exchange rate volatility and economic downturn, overshadowing the potential impact of uncertainty on remittance dynamics. Leveraging a new dataset of quarterly remittances combined with uncertainty indicators across 77 developing countries from 1999Q1 to 2019Q4, the analysis highlights that uncertainty in remittance-sending countries negatively affects remittance flows. In contrast, uncertainty in remittance receiving-countries has a more complex, dual effect. In countries with high private investment ratios, rising domestic uncertainty leads to a decline in remittances. Conversely, in countries with low public spending on education and health, remittances increase in response to uncertainy, serving as a social safety net. The paper underscores the heterogeneous and non-linear effects of domestic uncertainty on remittance flows.
Keywords:
Remittances; Uncertainty; Shocks; remittance flow; remittance dynamics; IRF of remittance; remittances in times; uncertainty indicator; Migration; Private investment; Health care spending; Global
Cover IMF Working Papers
Global Shocks Unfolding: Lessons from Fragile and Conflict-affected States
Jocelyn Boussard
,
Chiara Castrovillari
,
Tomohide Mineyama
,
Marta Spinella
, and
Maxwell Tuuli
This paper investigates the consequences of global shocks on a sample of low- and lower-middle-income countries with a particular focus on fragile and conflict-affected states (FCS). FCS are a group of countries that display institutional weakness and/or are negatively affected by active conflict, thereby facing challenges in macroeconomic policy management. Examining different global shocks associated with commodity prices, external demand, and financing conditions, this paper establishes that FCS economies are more vulnerable to these shocks compared to non-FCS peers. The higher sensitivity of FCS economies is mainly driven by procyclical fiscal responses, aggravated by the lack of effective spending controls and timely access to financial sources. External financing serves as a source of stability, partially mitigating the adverse impact of global shocks. This paper contributes to a better understanding of how conditions of fragility, which are on the rise in many parts of the world today, can amplify the effects of negative exogenous shocks. Its results highlight the diverse nature of underlying sources of vulnerabilities, spanning from fiscal and external buffers to institutional quality and economic structure, with lessons applicable to a broader set of countries. Efficient and timely external financial support from external partners, including international financial institutions, should help countries’ counter-cyclical responses to mitigate adverse shocks and achieve macroeconomic stability.
Keywords:
Global shocks; external financing; low-income countries; Fragile and conflict-affected states (FCS); FCS economy; Commodity tot shock; FCS list; shock variable; decline shock; Technology transfer; Exports; Commodity prices; Commodity price fluctuations; Global
Cover IMF Staff Country Reports
Bhutan: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bhutan
International Monetary Fund. Asia and Pacific Dept
The 2024 Article IV Consultation highlights that Bhutan achieved significant improvements in social conditions during the last decade, raising living standards. Poverty and inequality have declined, while extreme poverty has been eliminated. Growth is projected to accelerate over the medium term as a large hydro-project is commissioned and capital spending is boosted with the support of external grants. Pull factors are expected to slow down emigration, thereby reducing pressures on the supply side. A gradual fiscal consolidation based on revenue mobilization and accompanied by some spending restraint is needed to increase fiscal space and to reduce reliance on external grants in the longer term. Structural policies should focus on fostering high-quality private sector jobs, as well as diversifying exports. There is scope to strengthen the Royal Monetary Authority’s governance framework, as well as to step up anti-money laundering/countering the financing of terrorism efforts. Improvements in data quality have been significant, but further actions are needed to address remaining weaknesses. These include a need for greater transparency on crypto assets operations.
Keywords:
FDI company; foreign exchange resource; cover loan restructuring; capital investment; IMF team; Global