Economy: Reminiscing the year that passed, the government claims that it took the economy from the “brink of crisis” to a “full-blossomed” one.
It is confident to embrace the New Year with enough Rupee in its coffer.
The country’s Rupee reserve increased from INR 9.7B in July to INR 20.3B in September, which again dropped to INR 18.8B as of October, figures from the Royal Monetary Authority reveal.
Such an amount of Rupee reserve, economic affairs minister, Norbu Wangchuk said has never been the case in last five to six years.
“The whole idea of having Rupee reserve is to spend it wherever necessary so that we don’t have to borrow,” the foreign minister, Damcho Dorji added.
However, even when the government boasts of a huge Rupee reserve, the pressure seems to be building.
For instance, the budget size for the 11th Plan is around 46 percent more than the last Plan and the investment in developmental activities would translate into more government spending resulting into more imports.
The hydropower construction is in full swing demanding more Rupee. The Kholongchhu project alone is estimated to spend around Nu 1.6B this year.
Since the lifting of restriction on vehicle imports, 11,395 vehicles worth Nu 3B were imported into the country indicating a surge in private consumption.
While all these factors combined could again cause Rupee shortage, the finance minister, Namgay Dorji said the government would facilitate the central bank’s move to open Rupee counters. “It indicates that we have enough Rupee,” he said.
As for the vehicle import, he said huge demand for vehicles were created in the economy when its import was banned for two years and consequently more vehicles were imported since lifting the ban.
“From here, we don’t expect that much import,” lyonpo Namgay Dorji said. Should the import of vehicles continue at this rate, he said the government would hold a dialogue with the central bank and stiffen it through monetary policy.
Lyonpo Damcho Dorji said if there is any indication of Rupee reserve entering into negative balance, measure ought to be taken. “But reckless measures such as borrowing excessively and imposing bans should not be the remedy.”