The government of Bhutan is set to provide a significant financial boost to the countryโs hotel industry by rolling out a one-year, targeted interest subsidy under the Economic Stimulus Programme (ESP). The initiative aims to reduce the interest burden on hotel loans by 4%, offering much-needed relief to establishments that continue to face financial pressures in the wake of the COVID-19 pandemic.
Minister of Finance, Lekey Dorji, explained that the support measure is expected to benefit approximately 537 hotels, primarily small- and medium-sized enterprises, which form the backbone of Bhutanโs tourism sector. โThe objective of this targeted intervention is clear: to provide timely relief to hotels that are still stabilizing financially while supporting the tourism sectorโs recovery and long-term sustainability,โ he said.
The Ministry of Finance is coordinating closely with the Royal Monetary Authority (RMA) and commercial banks to finalize operational guidelines that will ensure the subsidy is administered transparently, efficiently, and with minimal bureaucratic hurdles. According to Lyonpo Lekey, banks will disburse the subsidy directly to eligible hotels, allowing support to reach the intended recipients quickly and effectively.
The total cost of the one-year loan subsidy is projected at approximately Nu 844 million, covering eligible hotel loans and effectively reducing interest rates to 4%. While the exact list of beneficiaries is subject to bank-level verification, preliminary estimates indicate that around 537 hotels will qualify. The framework has been designed to be simple and easy to implement, reflecting the governmentโs commitment to minimizing administrative burdens for both banks and hotel operators.
By applying the subsidy directly to existing loans, hotels are expected to benefit from reduced debt servicing costs, improved cash flow, and greater flexibility to focus on operational priorities such as staffing, training, and service quality. โOur priority is to ensure that the financial relief reaches the hotels that need it most without complicating their day-to-day operations or the lending process,โ Lyonpo Lekeyย emphasized.
The Minister also highlighted that Bhutanโs tourism sector has been gradually recovering, although international arrivals have not yet reached pre-pandemic levels. While domestic tourism has seen some growth, many small and medium-sized hotels continue to face liquidity constraints and high operational costs, underscoring the importance of government support.
The ESP loan subsidy is expected to strengthen the hospitality sector, safeguarding employment and ensuring the continued viability of hotels across the country. By reducing financial stress on these establishments, the measure is also anticipated to stimulate broader economic activity, benefiting local supply chains, handicrafts, transport services, and other businesses linked to the tourism industry.
โThe hotel industry is vital to Bhutanโs economy, supporting thousands of jobs and contributing significantly to local revenue,โ Lyonpo said. โThis subsidy will help businesses stay afloat and invest in upgrading infrastructure and staff capacity, which are essential for long-term sustainability.โ
The RMA will finalize the operational framework and communicate it to banks, which will then notify eligible hotel clients on the specific application of the subsidy. Close coordination among the Ministry of Finance, RMA, and commercial banks is considered critical to ensuring a smooth rollout and timely delivery of financial support.
Lyonpo Lekey added that this initiative demonstrates the governmentโs commitment to strategic sectors while maintaining transparency and efficiency in public financial interventions. Once implemented, the Nu 844 million ESP subsidy is expected to provide immediate financial relief, ease debt servicing obligations, enhance liquidity, and enable hotels to concentrate on improving service quality, expanding operations, and planning for long-term growth.
โThis targeted support will contribute to a stronger, more resilient tourism sector, safeguard employment, and strengthen Bhutanโs broader economic recovery,โ the Minister concluded. With this initiative, the government aims to reinforce the hospitality sectorโs capacity to thrive while securing its vital contribution to the national economy.
Nidup Lhamo
From Thimphu
