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This paper evaluates Bhutan’s challenges related to resource mobilization for sustainable graduation in the aftermath of COVID-19 and potential avenues to overcome them. Bhutan will be graduating from LDC category in 2023. Its 12th Five Year Plan, conceived as an integral transition strategy, faces severe challenges due to disruptions caused by the COVID-19 pandemic. Delivering on the national development goals and implementing the SDGs amidst the looming pandemic require improvements in both scale and mix of development financing. ODA remains critical, especially as Bhutan’s structural challenges remains to be addressed even as it gears up for LDC graduation in 2023. It is important for development partners to deliver on long-standing commitments and the ODA targets reaffirmed on target 17.2 of the 2030 Agenda for Sustainable Development. 

Various modes of innovative financing have been explored recently to fill up financing gaps and to enhance the role of private sector. Upscaling such initiatives and exploring alternative financing instruments will be critical for Bhutan. Accelerating the progress of crucial SDGs with accurate assessment of cost of implementation, commensurate resource mobilization and investment strategies is important. As the scale of financing required to achieve the SDGs may be beyond the scope of public finance, SDG investment mapping must be used to attract private capital. As Bhutan embarks on preparation of its 13th Five Year Plan, considerations must be made for enhancing meaningful technical cooperation between the government and its development partners such as the United Nations Development System and multilateral development banks. Costing of critical SDGs, SDG investment mapping, reframing of FDI Policy, development of policy guidelines for green financing and exploring alternative innovative financing instruments are some of the key areas that must be prioritized for Bhutan’s sustainable graduation. 

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