Resource information
Bhutan’s hydropower generation potential
raises the prospect of tremendous development opportunities
for the country: fast increasing export revenue, sustained
economic growth, and rapid poverty reduction. Driven by
developments in the hydropower sector, the country has grown
at an average rate of 7 percent per year over the last
decade, while poverty has declined remarkably fast. But
hydropower development also creates significant challenges
as follows: (i) macroeconomic instability; (ii) lack of
self-reliance; and (iii) few private sector jobs. This
policy note assesses the opportunities and challenges
associated with hydropower development. It informs a
possible strategy supportive of macroeconomic stability,
fiscal self-reliance and private sector development. And it
argues that fundamental changes in public finance, amounting
to a paradigm shift, are central to the implementation of
such strategy.
