Bhutan is exploring green government bonds as an alternative financing option


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With the growing need to fund climate mitigation and adaptation activities, Bhutan will develop a government green bond framework.

A government green bond is a debt instrument issued by a government to borrow money from investors with a commitment that the funds raised will be used to finance eligible green projects.

This will help bridge the green investment gap and help countries reach their sustainability goals.

During a discussion yesterday in Thimphu on “Financing Bhutan’s green transition,” Deanna Morris, economics officer at the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), said government spending should be in line with the government’s priorities. It should ensure debt sustainability and will require significant inter-ministerial coordination. He said a government coordination committee should be set up.

Dina Morris also said that the Green Bond Framework is a document that outlines the characteristics of the bond. The main components of the Green Bond principles are the use of the proceeds, the evaluation and selection process, the management and reporting of the proceeds.

“Each issuer will have to develop the framework,” said Dean Morris, adding that voters will look at how and who selects projects, to ensure that projects are moving towards a green social sustainability project. and report to investors. Target set.

“Bhutan can be considered for project categories – renewable energy, energy efficiency, green building, clean transportation, sustainable water and wastewater management, pollution prevention, control and circular economy, climate change adaptation, biodiversity conservation, sustainable use of natural resources said dr. Patrick Martin, Climate Finance Advisor for Management and Land Use ESCAP.

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The Treasury Department said the ability to issue green bonds would provide new investment opportunities for local institutional investors, attract international investment and create green jobs.

An official from the Royal Monetary Authority said the authority will finalize and review the first version of the green taxonomy in November 2021. However, he added that the lack of data is still a challenge.

Green taxonomy is a list that classifies all business activities based on their contribution to environmental goals and limits.

ESCAP provides Bhutan with a government green bond framework and a green taxonomy, and also provides training support to relevant stakeholders on green bond issuance.

The Debt Management Department of the Ministry of Finance leads Bhutan’s green finance efforts.

Green bonds have long been a major player in thematic bond space, with issues expected to reach $1 trillion globally by 2021.

Officials from the Ministry of Finance, the Central Bank, Financial Institutions and other relevant agencies participated in the stakeholder meeting yesterday.




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