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Bhutan’s Sustainable Development Fee

January 2023

This kingdom is steeped in history, but our gaze is fixed on the future. The future requires us to protect and preserve our heritage but also to forge new pathways leading forthcoming generations to fresh possibilities. This is our moment of evolution; a moment devoted to ensuring that the opportunities our young people seek are found, and realised, here. Our ancestors gave us roots. Now, we help our descendants take wing.

We, the Bhutanese people, take seriously our responsibilities to each other and to our environment. From our reopening on September 23, 2022, we ask each visitor to Bhutan to make an active and meaningful contribution to our kingdom’s preservation and progress.

The Sustainable Development Fee (SDF) enables investment in transformative programmes that sustain our cultural traditions, protect our environment, upgrade infrastructure, and build our resilience. Critically, it supports the creation of training, mentorships and further education that will create long-term opportunities for our young people. Your contribution is not only a critical investment, it is a gesture of belief in our ambitions and our capacity to achieve them. We like to believe that the SDF will create additional value to guests who come to Bhutan, rather than an additional cost. Another way of looking at the SDF is a ‘pay it forward’ concept, whereby you will ensure that the future visitors to Bhutan will get an as good, or even better experience.

Responsibility, transparency, dependability and trust are at the core of who we are, and of our partnership with our visitors. As we build our nation, we strive to be accountable in our dealings and provide clarity on how the SDF will be used.  

What is the SDF used for?

We use the SDF responsibly.

Article 14 of our constitution mandates that all taxes, fees and levies, which include the SDF, are deposited into a Consolidated Account. By law, funds from this general account must cover government recurrent expenditure, to ensure the stability and reliability of government operations. Residual revenue from this account is allocated to specific developmental activities, including building schools, providing free healthcare, skilling youth, maintaining forests and wildlife, providing fresh drinking water sources, renovating historical Dzongs, and other initiatives..

In short, funds from this consolidated general account, including SDF contributions, finance:

-        recurrent expenditures, which includes salaries and interest payment on loans, to maintain stable and operational government services for the Bhutanese people;

-        development projects selected by the government and outlined in Bhutan’s Twelfth Five Year Plan: 2018-2023 issued by The Royal Government of Bhutan’s Gross National Happiness Commission.

What is the process for allocating funds?

We distribute the SDF transparently.

The Royal Government of Bhutan values transparency. Government documents – from audited financial statements, to five-year plans, to Bhutan’s constitution – are the result of rigorous planning and scrutiny. Published in English and Dzongkha, and designed to be as accessible and user-friendly as possible, they can be accessed by anyone online. All documents related to public expenditure are public and published online. 

Bhutan’s five-year plans are the result of a transparent and collaborative process, which includes agency-wide, private sector and public consultation, resulting in published commitments to projects and activities in five-year plan documents. Culture is always of paramount consideration when drafting a plan.

The Royal Government of Bhutan’s Gross National Happiness Commission is responsible for developing its five-year plans. Five-year plans are  approved by parliament.

By law, payment for government-funded projects and activities is derived from the Consolidated Account, into which all taxes, fees and levies – including the SDF – are deposited.

Bhutan’s current five-year plan extends to the end of 2023.  For more information visit:

www.gnhc.gov.bt/en/wp-content/uploads/2019/05/TWELVE-FIVE-YEAR-WEB-VERSION.pdf

More information on the annual financial audit by the Royal Audit Authority:

www.bhutanaudit.gov.bt//wp-content/uploads/2021/12/AAR-2020-21-Volume-1-English.pdf

What is the SDF spent on?

Our citizens can depend on the investment commitments we make.

Allocation of annual recurrent expenditure is laid out in Bhutan’s five-year plan, with any residual revenue earmarked for projects identified in the plan. Budget projections are carefully designed, based on sound financial fundamentals. The Gross National Happiness Commission ensures the five-year plans are designed for the benefit of the population.

Tourism is the second highest revenue source for Bhutan. The closure of Bhutan to international visitors during the height of Covid strained the national economy and its reserves. To meet its domestic financial commitments and uphold its responsibility to its people and continue to support ongoing sustainability projects, it was necessary for the government to take loans.

The breakdown of funds allocated to recurrent expenditure is as listed in the table on the right.

What projects are funded?

We can be trusted in our development plans and approach.

Bhutan is undertaking an ambitious, wide-ranging programme of transformation. The Consolidated Account – the repository for the SDF and other taxes and levies – is directed to support our development on an agile basis. Other nations may structure their development initiatives as discrete projects or specific causes, but this can become piecemeal and fragmented. Our government approaches our nation’s development programme holistically. Alongside specific, ongoing donor and grant-funded development initiatives, our central transformation plans are cohesive and touch every sector and corner of our society.

Bhutan follows a five-year socio-economic development planning cycle. The Five Year Plans (FYP) articulate the socio-economic development priorities and programmes to be implemented over a five-year period.

The planning process for the 12th FYP covering the period 1st July 2018 to 30th June 2023 began in January 2016 with a series of extensive consultations with all relevant stakeholders, including individuals, government agencies, local governments, private sector, Civil Society Organizations, political parties and more.

In order to ensure that socio-economic development is aligned with the overall development philosophy of Gross National Happiness (GNH), all agencies and local governments ensure that cross-cutting themes are mainstreamed in the programmes and projects supported by the SDF funds.

What are the major themes?

1  Environment, Climate Change and Poverty (ECP)

As per Article 5 of the Constitution, “the Royal Government shall secure ecologically balanced sustainable development while promoting justifiable economic and social development through integrating ECP into all policies and plans at both sector and local government levels”. Mainstreaming replaces the “development versus environment” debate with one of “development that utilizes resources sustainably”, placing particular emphasis on the opportunities the environment provides for development that is sustainable.

2  Disaster

Since there is a direct link between disasters and situation of poverty, measures for prevention and mitigation of disasters are included in all programmes, wherever possible. Development planning must take into consideration disaster risks and incorporate prevention and mitigation measures by mainstreaming them into the programmes.

3  Gender

The National Plan of Action for Gender (2008-2013) highlighted seven critical areas for action during the 10th FYP. Visible gender gaps and issues that need attention in the 12th FYP are in the areas of education (tertiary and vocational levels), employment, political representation and Violence against Women. The concerned sectors and local governments shall be responsible for addressing gender gaps by integration into their plans and programmes on the basis of gender analysis.

4  Vulnerable Groups

All agencies including local governments shall also consider addressing emerging issues related to youth, child rights/orphans, single parent, old aged, senior citizens and differently abled people wherever relevant, in their programmes and projects.  Special consideration must be made to address challenges of youth in conflict with law, people with disabilities, and senior citizens while formulating all our development plans. Amongst others, we must ensure that new infrastructure including area plans must incorporate these concerns.

5  Sports

Recognizing the positive contribution sports has to our natural environment, health, youth issues, community cohesiveness, culture and traditions, all sectors and local governments shall strive to promote a vibrant sporting culture and environment by mainstreaming sports in their programmes and projects.  Amongst others, Local Governments must strive to build minimum necessary sporting infrastructure and promote a culture of sports in their area.

6  Nine Domains

While the achievement of the National Key Results will be measured through the KPIs identified against each of the NKRAs; the progress towards our long term goal of maximizing Gross National Happiness will be measured through the overall GNH Index and the progress on the 9 Domains. As such, it is imperative that all of our policies and programmes mainstream the 9 Domains into their five year plans and programmes. In particular, all the budgetary agencies will be required to assess and identify the impact of their proposed programmes on the different domains and incorporate measures to achieve synergy and mitigate any negative impacts.

7  Integrating relevant Sustainable Development Goals (SDGs)

·       Central Agencies and Local Governments shall identify SDGs which are relevant to their sectors within the scope of the NKRA/AKRA/LGKRA;

·       The lead Agencies for sectors and Local Governments shall integrate relevant SDGs into their KRAs. The following is a suggested guidance to integrate SDGs into KRAs:

§  SDGs (Goals) can be integrated at AKRA/LGKRAs level;

§  SDGs can be integrated at AKRA/LGKRAs KPI level;

§  SDG Indicators can be integrated at AKRA/LGKRAs KPI level;

§  SDGs, Targets and indicators can be integrated into programs at Outcome, Output and Activity levels;

§  SDGs, Targets and indicators can be customized and contextualized to the realities of sectors and LGs.

The SDF provides us with essential resources as we work towards realizing our vision for a thriving Bhutan for young people now and in future. We are grateful for our visitors’ trust and support for our nation’s evolution.