Outlook for 2011-12

The king, Jigme Khesar Namgyal Wangchuck, will oversee Bhutan's continued adjustment to the political change that occurred in 2007-08, when the transition from absolute monarchy to parliamentary democracy was completed. India will continue to wield enormous influence over the country. The Bhutanese government will attempt to implement a newly formalised economic policy that seeks to generate employment, diversify the base of Bhutan's economy, promote entrepreneurship and growth, increase economic self-reliance and raise merchandise exports. Government policy will also continue to honour the concept of "gross national happiness". Economic growth will continue to be driven by large hydropower projects, but the government will also try to encourage the development of other fast-growing sectors, which include financial services and tourism.

The political scene

The Election Commission of Bhutan (ECB) has set May 24th as the day for electing local government officials in 205 districts. The ECB has also set out some rules for the election campaign. The government plans to put forward an amendment to the 2007 Land Act of Bhutan in the forthcoming session of parliament.

Economic policy

In late March the Royal Monetary Authority (RMA, the central bank) said that it will soon allow the establishment of Bhutan's first credit-rating agency. In February the government's holding company, Druk Holding and Investments, which holds shares in numerous companies and enterprises on behalf of the authorities, issued a draft divestment strategy outlining the guidelines for divesting shares in state-owned companies.

The domestic economy

In April the government finally decided that it would divest some of its holdings in the Bank of Bhutan. Divestment has been held up for more than two years because of a tussle between the government and the RMA.

Foreign trade and payments

According to the latest figures from the RMA, Bhutan's merchandise trade deficit more than trebled during fiscal year 2009/10 (July-June), rising to the equivalent of 22.8% of GDP, from 7.9% in 2008/09. At the end of 2009/10 Bhutan's external debt outstanding totalled US$840.7m, 5.8% higher than the US$794.3m at end-2008/09. Remittances from Bhutanese living abroad reached their highest level ever in 2009/10, exceeding Nu192m (US$4m).