There could be more bans imposed on imported items if the Cabinet is convinced by the finance ministry proposal to do so. On the list are junk food, alcohol, meat, food items, television sets and loans for the construction sector.
The move from the finance ministry is in desperation as the country is witnessing its foreign exchange reserves plummet. The latest figures are not available, but the proposal indicates that our reserves are not in a good position. Our Constitution mandates us to maintain a foreign exchange reserve to cover at least 12 months of essential imports. This is at least USD 668 million (M). The reserve declined by 37 percent last year.
The decline is attributed to the surge in import bills – increasing by the year. Our import bill shot up to Nu 93.03B as of September last year, surpassing the one-year’s import of Nu 90.23B in 2021. Imposing bans whenever the reserves dip or curtailing foreign currency quota is a knee-jerk reaction.
We are an import-dependent country. But we can do without many items that are draining our reserves, INR or USD. There are so many items on our shelves that are not necessary or a luxury, as many would think. Why should we encourage every other Bhutanese in the “container” business to import spicy noodles or skin-whitening cream from South Korea? Why should we import wine from as far as Australia when alcohol is the biggest killer in the country? Why should we not regulate junk and unhealthy items like pan masalas or mouth fresheners when it is the biggest source of waste?
We do not produce anything apart from homemade shakam and daley pickles. The one produced locally is expensive. We can produce rice, but not many can afford it. All essentials, from salt to rice to oil have to be imported. The government will never ban the import of essentials. It will ban those that are not a necessity. Import of vehicles and junk is one. We produce more than enough alcohol to add burden on the health system!
Ban on construction materials could be tricky even as we see some activity in the construction sector after a long lull. The government could stop constructing structures until the situation improves. The private sector has to survive.
The pressure on the scarce convertible currency is mounting. It will increase as more and more Bhutanese travel abroad. It is no more the civil servants or corporate employees on study tour paid a 20 percent daily allowance. Hundreds, if not thousands of Bhutanese, travel abroad for holidays or pilgrimage. Add to it the thousands leaving for Australia.
As the Ngultrum is not a legal tender beyond our borders, we need hard currency. This puts pressure on the central bank. Curtailing the convertible currency quota is a good move. It is misused, especially the USD 3000 quota admissible to those travelling to third countries. Not many, particularly those on training or study tours, need or can afford to spend USD 3,000. Given the shortage, it is sold at a higher rate or given to others who need to import more junk!