Dechen Dolkar

Members of both the National Assembly (NA) and the National Council (NC) have expressed growing apprehension over the dwindling foreign reserves in Bhutan.

The current budget report for the fiscal year 2023-24 reveals a decline in reserves from USD 833 million in the previous fiscal year to USD 689 million, which is now sufficient to cover only 14 months of essential imports.

This decline has raised concerns as Bhutan’s Constitution (Article 14.7) mandates the maintenance of foreign exchange reserves to cover a minimum of 12 months of essential imports.

During discussions on the annual budget appropriation Bill for FY 2023-24, members of the NA echoed the recommendations put forth by the NC. MPs called for closer collaboration with the Royal Monetary Authority to avert potential violations of the Constitution and other economic risks resulting from the rapid depletion of foreign reserves.

MPs also urged the National Statistical Bureau to re-evaluate the method of calculating inflation, aiming to rectify any discrepancies and ensure a more accurate reflection of Bhutan’s economic reality, rather than solely relying on international standards that may not align with the country’s unique circumstances.

Notably, MP Choki Gyeltshen, representing the Maenbi-Tsaenkhar constituency, proposed that the government permit dollar account holders to withdraw dollars from their accounts. This suggestion aims to address the immediate concerns faced by those holding such accounts.

MP for Bartsham Shongphu, Passang Dorji, stressed the need for the government to explore avenues for attracting foreign currency, such as encouraging investments in foreign direct investments (FDIs), tourism, and education sectors.

Highlighting the potential economic benefits, Opposition Leader Dorji Wangdi emphasised the opportunity to replenish reserves through the export of agarwood, which experiences high demand in the Middle East. He said that some farmers in Gelephu, Pemagatshel, and Zhemgang have already started cultivating agarwood and exporting it.

Nidup Tshering, an agarwood exporter, affirmed the substantial demand for the product in India and the Middle East. However, he pointed out the challenges faced by exporters due to the lack of clear guidance from the government. Tshering highlighted the potential to significantly bolster foreign reserves if the government provided necessary support and facilitated smooth transactions in the trade.

MP for Gangzur-Minjey, Kinga Penjor, suggested the government to create opportunities for Bhutanese living abroad to invest in the country. He said that there are interested Bhutanese individuals seeking avenues for investment within their homeland but currently face limited options.

Responding to the concerns raised, Finance Minister Namgay Tshering highlighted recent developments, including the successful implementation of a 10 percent incentive for remittances, which generated USD 4 million within a week.

Minister further said that the government, in conjunction with the central bank, had decided to liberalise dollar accounts, allowing holders to withdraw funds in the same currency. Moreover, the minister mentioned that USD 15.9 million had been earned from Sustainable Development Fees in the tourism sector within the last eight months, following the USD 25 million earned in 2019.

During discussions on the budget report, the legislative houses recommended five solutions to the government. Among them were calls for a comprehensive review of non-performing state-owned enterprises, further development of the tourism industry, and easier access to credit through loans.