ADB approves $17.42 million support package for Bhutan as Middle East conflict raises import costs

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ADB aid for Bhutan import crisis

Highlights

Asian Development Bank approved a $17.42 million package, including a $13.45 million grant and $3.97 million loan, to support Bhutan amid rising import costs from the Middle East conflict.
The assistance targets Bhutan's $267.88 million Anti-Crisis Action Plan with direct monthly aid of up to 10,000 ngultrum ($104) for eligible women, expanded food subsidies, tax exemptions, and energy bill support.
ADB forecasts Bhutan's GDP growth slowing from 8.5% in 2025 to 6.5% in 2026, with program measures addressing unemployment and resilience through public works and procurement of 45 electric buses.

Financing package and policy measures

As reported by the Asian Development Bank, the lender has approved $17.42 million to help Bhutan cushion the economic effects of the Middle East conflict through its Enhancing Resilience with Countercyclical Expenditures Program.

The financing supports the Government of Bhutan's $267.88 million Anti-Crisis Action Plan and includes a $13.45 million grant from the Asian Development Fund and a $3.97 million loan from ADB's ordinary capital resources. ADB President Masato Kanda says rising fuel prices are affecting all households in Bhutan, with the poorest families facing the sharpest pressure.

Under the program, women in eligible large families will receive monthly assistance of up to 10,000 ngultrum, or $104, while rural households will receive support for energy bills. The plan also expands school feeding programs, broadens tax exemptions on basic foods such as butter, rice, refined oil, and salt, and extends relief to other necessities including wheelchairs and sanitary napkins.

Economic pressure and wider regional response

Bhutan remains exposed to external shocks because of its reliance on imported food and fuel and its limited domestic revenue base. Higher fuel and commodity prices are disrupting trade and sectors such as tourism, slowing growth and adding to unemployment and poverty pressures.

ADB expects Bhutan's growth to slow from 8.5% in 2025 to 6.5% in 2026 before recovering to 7.2% in 2027. The program also includes small-scale public works to support employment and essential services in districts and subdistricts, alongside efforts to replenish fuel storage facilities and promote electric transport through the procurement of 45 electric buses for urban and interdistrict services.

The financing forms part of ADB's broader response to the economic fallout from the Middle East conflict across Asia and the Pacific. The bank says its multi-donor-financed Asian Development Fund is aimed at helping the region's most vulnerable countries manage immediate pressures while supporting longer-term growth.

In our earlier coverage of how Middle East conflict disruptions are reshaping global trade, we explained that companies are redesigning supply chains and shipping routes to reduce exposure to geopolitical shocks. We also noted that the WTO expects a sharp contraction in Middle East exports and imports, even as demand for AI-related products helps support the broader global trade outlook.

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