Bhutan's economy has recovered from the series of shocks resulting from the COVID-19 pandemic and Russia's invasion of Ukraine. After experiencing contractions of 2.5 percent and 3.3 percent in FY19/20 and FY20/21, respectively, the economy exhibited signs of recovery in subsequent years. As pandemic-related relief measures were gradually phased out and capital expenditures moderated, the fiscal deficit saw a decline in FY22/23. Borders were open for tourists in September 2022, though tourists' arrivals remained below the pre-COVID level. In December 2023, Bhutan achieved the milestone of graduating from the United Nations (UN) least developed country (LDC) status. Yet, the country faces several macroeconomic challenges. Fiscal deficit is widening due to slowdown in revenue and increase in current expenditure. The national investment in cryptocurrency mining operations resulted in a significant decline of international reserves and a widening of the current account deficit (CAD) due to imports of information technology (IT) equipment and related goods for cryptocurrency mining. Going forward, a fiscal consolidation to keep the fiscal deficit and public debt at a sustainable level and improvement in the external balances would be important to achieve Bhutan's medium to long term goals. See Less