The foreign currency reserve is dwindling, risking the country’s ability to fund essential trade and foreign currency reserves.
Bhutan’s convertible currency (CC) was reported at USD 717 million (M) as of June, according to the Royal Monetary Authority’s (RMA) provisional figure. It was short by USD 40M from the central bank’s threshold of USD 757M.
If the CC is in a freefall, the tricks to get the greenback are not helping. Add on it the increased imports from third countries (having to pay in USD), Bhutanese travellers with a quota of USD 3,000 a year and the gaping loopholes jeopardise the CC, say many.
Many Bhutanese, sources with the regulating authority say, are drawing more convertible currency (USD) than they require or misuse it hampering the reserves.
Take for instance a private traveller leaving for a duration of three-day outside the country. He or she is entitled to USD 3,000.
In most instances, the one travelling needs only a few hundred dollars. The rest is left to manipulation – for some profit or as a gesture.
According to the RMA foreign exchange operational guidelines 2022, cash limits for CC a private traveller can get is USD 3,000 per year.
The cash would be received upon the documentation of the confirmed air ticket or visa for travel to a third country, in person.
That is only on paper. A source who is into regulating foreign currency exchange said that travellers are colluding to make the most out of the loopholes in the regulations. “The genuine traveller would require USD 500 and the rest is given to others,” he said. “In most cases, the quota is given for free or with a few benefits to those who need USD.”
Currently, the RMA’s foreign exchange counters at the Paro International Airport and Bank of Bhutan foreign exchange counters cater to Ngultrum and dollar exchange.
Apart from those travelling to India, all are paid in USD or eligible for the USD quota.
Even when it comes to INR, people manipulate. “Most of them are pilgrims,” a source said, adding that those in need of foreign currency can easily lure and convince them because most of them are either illiterate or old.
It is said that INR 40,000 would be enough for a family on pilgrimage to Ladakh in India when travelling in a tour package that includes both food and lodging expenses.
However, the practice is that if a family of four travels on pilgrimage, all of them claim the INR quota even if the quota of two is enough for all. The rest is given to others who are not travelling but need INR.
As per the RMA, a private Bhutanese traveller can carry up to a total amount of INR 25,000 per person in the form of banknotes or circulation coins when travelling out of Bhutan.
An INR can be exchanged from the central bank’s exchange counters in Thimphu and the central bank’s branch office in Phuentsholing after presenting confirmed travel documents and citizenship identity cards.
A source said that authorities are relooking into curtailing the malpractices. “Releasing foreign currency when a traveller checks in at the airport could minimise the misuse,” he said.
The central bank, knowing the lapses, requested the general public from misusing or abusing the facility for personal gains.
It stated that the financial intelligence unit and the RMA would institute stringent monitoring and surveillance systems and any person found in violation of the law.
Tricks up the sleeves
The shortage and demand for hard currency, however, are making those in need smarter with many tricks up their sleeves. Although Kuensel couldn’t verify independently, it is said that travel agents could help Bhutanese in need of USD to avail the USD 3,000 yearly quota.
“Many request private travellers on short trips abroad for the quota,” said one. “Some wait at the airport to get the dollars before the private traveller boards the plane.”
That the USD quota is approved only after valid travel documents – valid passport and flight tickets, some could collude with ticketing agents in availing of the rare dollar.
“A ticketing agent could issue a fake ticket and the person could easily avail USD 3,000. Fifty people doing that could mean USD 150,000.”
Although officials denied it, sources close to Kuensel said that the central bank is aware of this practice and is planning to plug the loopholes.