The paper addresses the issue of financing the achievement of the Millennium Development Goals in a sustainable manner in a small, low income and landlocked country, the example being Bhutan. The analysis shows that although mdg financing is nested within the plan outlay, significant efforts will be needed to ensure adequate resources for financing the plan and smoothening the wide year-to-year fluctuations in revenues and expenditure flows. The paper explores the availability of additional fiscal space using the fiscal diamond framework to identify policy and institutional reforms needed for raising revenues from tax and non-tax sources, improving productivity from public spending through reprioritisation, accessing external grants and borrowing from domestic and foreign sources.
