Thursday, 7 August 2008

Bhutan : Thimphu – Financial hub of SAARC fund

6 August, 2008 - A SAARC development fund (SDF), which would serve as the umbrella financial institution for all SAARC projects and programmes, will be based in Thimphu.

Leaders of the SAARC nations endorsed the decision during the 15th SAARC Summit held in the Sri Lankan capital, Colombo on August 2 and 3. It had been proposed by His Majesty the fourth Druk Gyalpo in 1991.

Lyonchhen Jigmi Y Thinley told the Bhutanese media in Colombo that there were several SAARC member countries interested in hosting the fund in their capitals. “We were able to convince leaders on the appropriateness and the merit of Bhutan as the venue,” he said.

SDF will finance the social, economic, and infrastructure development sectors in the region through various arrangements, the principal source being membership contributions.

Lyonchhen Jigmi Y Thinley said that India’s contribution will be about 300 million dollars, Bhutan’s could be 15 to 20 million dollars and other countries would make contributions according to their capability. “There will be floating of equities and it’s possible that banks like ADB and World Bank may participate. We’re talking about a major financial institution here,” he said.

According to the agreement, funds may be mobilised and generated from both within and outside the SAARC region. Technical and financial assistant from UN agencies, multilateral and regional funds, and other non-regional partners, as approved by the governing council, may also be availed.

According to the agreement, SDF would become operational after all the member countries ratify the agreement in their respective parliaments. The institution will then have to be established a year after ratification.

“We’d like to start working on the framework immediately, come to an agreement on how it should function,” he said.

“The institution arrangements that have to be put in place, and how the funding will be organized. We’ll do it by employing experts within the country as well as consulting those of member states”.

“Aside from contributing to the SAARC process, the bank itself, being located in Bhutan, will create many employment opportunities, as well as help in establishing Bhutan as a major financial centre,” said the prime minister.

“The SAARC leaders were unanimous in coming to an agreement on His Majesty’s proposal and accepting Bhutan as the venue for the SDF,” he added. “They were paying tribute to His Majesty and also welcoming Bhutan as a democracy.”

He said that the leaders wished to pay tribute to the extraordinary leader, that the fourth Druk Gyalpo had been, for the way in which he had ushered in democracy to Bhutan and for the extraordinary manner in which he had abdicated his throne at the age of 51.

“These were examples all the leaders admired and so SDF was in a way a gift to young democratic Bhutan,” he said.

Meanwhile, the charter for SDF was finalised with a signing by the foreign ministers of member states at the concluding session of the 15th Summit.

Bhutan’s foreign minister Lyonpo Ugyen Tshering said that Bhutan, as the host country, would make sure SDF becomes a premier banking institution and makes a positive development in tackling poverty among SAARC countries.

“This was something His Majesty foresaw many years ago and it’s now for us to ensure that it’s realised,” he told Kuensel.

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