USD 12M credit advanced

Bhutan Urban Development Project II14 July, 2010 - Bhutan will receive USD 12 million for the Bhutan urban development project II (BUDP) from the World Bank (WB), according to an agreement signed between the World Bank and Bhutan yesterday.

The agreement for the international development association (IDA) credit was signed between the WB country director, Nicholas Kraft, and the finance secretary, Lam Dorji, in Thimphu.
IDA is the part of the World Bank that helps the world’s poorest countries. IDA lends money (known as credit) on concessional terms. This means that IDA credit has no interest charge, and repayments should be made within 20 years, including a 10-year grace period.

Secretary Lam Dorji said that once the loan is received, USD 8 million will be released to Thimphu city corporation (TCC), and the rest to the works and human settlement for capacity building.

The whole amount will be used to support urban infrastructure development in two local area plans, Langjophakha and Dechencholing, under the BUDP. It will be also used to strengthen the institutional capacity of the city corporations in Thimphu and Phuentsholing.

Of the total, USD 9.3M will be used for improving infrastructure development, such as road, storm water drainage, water supply, proper sewerage system and street lighting; USD 1.5M for municipal reform and USD 1.2M for capacity building.

An official from TCC said that municipal reform includes improving the system of finance, accounting, create revenue section offices, provide infrastructure and management trainings. “Development would also include cable services, sanitation facilities and river protection work.”

The project will kick off from Dechencholing with USD 4.56M and for Langjophakha with USD 4.89M, said TCC officials. “The affected families will be compensated by the government.”

Besides the USD 12M, the government has already received USD 20M as budgetary support under the development policy financing during the last fiscal year. The balance of USD 20M, said officials, is still being processed. The project is scheduled to be completed by December 2015.

By Yangchen C Rinzin
Kuensel