The government maintains that there is foreign currency reserve to last for more than one and a half years.
As per the Constitution, a minimum foreign currency reserve adequate to meet the cost of not less than one year’s essential import must be maintained.
The budget report of FY2022-23 states that in FY 2020-21 reserve stood at USD 1,559.2M, which decreased to US$ 1,328.024M in FY 2021-22.
The convertible currency reserve stands at US$ 1157.408M and INR reserve stands at Rs 13,076.040M.
During the question hour at National Assembly yesterday, MP Tshering Chhoden of Khar-Yurung raised the concern.
She said that there is more import than export and Foreign Direct Investment (FDI) and grants are decreasing every year.
Responding to the question, Prime Minister Dr Lotay Tshering said that as per the central bank, the government has a foreign currency reserve to last for more than one and a half years.
Lyonchhen said that since Bhutan trades 95 percent with India, there is a need to have enough INR reserves. The maximum reserve government maintains is Rs 20B and minimum of Rs 10B.
As of now, INR reserves stand at Rs 12B.
Lyonchhen said that the government had to sell dollars to maintain the INR reserve.
The government also gets rupee from exporting the electricity and five-year plan grants. Lyonchhen said that with this, in total, the reserve stands between Rs 12B and Rs 15B.
Lyonchhen mentioned that the reserve was depleting since we could not export for more than two years and lack of revenue from the tourists in the country due to the pandemic.
Lyonchhen said that the government has plans if worse comes to worst. Firstly, import would be stopped.
The government has already identified which items to be stopped.
“Individuals should be responsible for what they consume and buy. If they buy only the necessary products and substitute with the local products, import will decrease,” Lyonchhen said.
He said that in a year, around Nu 10B was spent on the import of fuel, which is a necessity. In a year, around Nu 5B is spent on importing rice and Nu 2.5B on importing meat items.
“DHI is coming up with two to three projects to earn the foreign reserve,” Lyonchhen said.
Every year the government uses US$ 300 M to 400M from reserves. In 2021, the government used US$ 600M from the reserve for Covid.