This report identifies the key driversof rapid poverty reduction in Bhutan over the recent years,explaining why some dzongkhags are stuck in poverty orreducing poverty is not significant while others prospered,and whether female headed households have a harder timereducing poverty. The exercise draws mainly on data from thetwo rounds of Bhutan Living Standards Survey (2007 and 2012)supplemented with focus group discussions carried out forthe report in select dzongkhags. Bhutan's povertyreduction has been rapid, broad-based, and inclusive.Between 2007 and 2012, the percentage of consumption poorhalved to 12 percent. Bhutan has nearly ended extremepoverty within the living memory of a generation extremepoverty touched a low of two percent in 2012. Broadermultidimensional poverty indices, that include education andhealth outcomes besides standards of living, also indicate asteep decline in the percentage of deprived population bytwo-thirds, from about 25 percent to 12.7 percent. Growth inBhutan helped the previously landless to escape poverty.Education appears to be the most important route by far toescape poverty. This report is a complement to the earlierPoverty Analysis Report 2012 which was prepared with theWorld Bank's technical support.