Thukten Zangpo 

If the country imported Nu 30 billion (B) worth of goods in the last three months this year, the import bill would hit over Nu 120B.

The total import bill at Nu 93.03B as of September this year already surpassed one-year’s import of Nu 90.23B in 2021. About 70 percent was imported from India.

The value of exports, including electricity, stood at Nu 44.9B.

Import saw a surge with normalisation of the pandemic. The value of the import also rose because of inflation. The prices of goods and services became costlier by 6.05 percent in September compared to the same month last year.

Statistics from the finance ministry show that Bhutan imported goods worth Nu 22.87B from January to March, Nu 35.89B from April to June, and Nu 34.27B from July to September this year.

The trade deficit, including electricity, stood at Nu 48.14B as of September this year, which was more than the value of export. It saw an increase of Nu 15.9B from the previous year. Trade deficit widened to 23.66 percent of the gross domestic product estimated for the fiscal year 2022-23.

A country experiences a trade deficit when the value of imports exceeds the value of export.

Statistics also show a high dependence on electricity. The trade deficit without electricity with India amounted to Nu 66.53B as of September.

Electricity generation in the first three months of the year from January to March is usually low. The country exported electricity worth about Nu 720 million (M) in the first three months.

The import figures have been growing over the years.

In 2021, the import figures increased by 35 percent, or Nu 23.6B compared to the previous year. Bhutan imported goods worth Nu 66.64B in 2020.

The trade deficit in 2021 was Nu 32.24B and Nu 18.38B in 2020.

The country’s major imports included fuel worth Nu 8.38B last year.

Rice was one of the top ten import commodities, amounting to about Nu 2.18B in expenditure.

With the increase in imports, especially food items, the country’s dwindling foreign currency reserves are at risk.

As per the central bank’s provisional figures, the total reserves have decreased by over 40 percent to USD 729.7M as of September this year from USD 1.29B in the same month last year.

It now only meets 13.11 months of essential imports. The Constitution mandates maintaining a minimum foreign currency reserve adequate to meet the cost of not less than one year’s essential import.

Similarly, the rupee reserve decreased to about INR 9B from INR 25.8B in September last year, a decrease of INR 16.8B.

The rupee reserve will be able to meet only 1.15 months of the merchandise imports.

The budget report 2022-23 states that trade is expected to remain on an increasing trend over the medium term owing to the recovery in the demand coupled with the revival in domestic activities.

The budget report projects that the overall exports and imports to increase by 25.7 percent and 30.7 percent respectively in 2022, further widening the trade deficit.

“This is mainly due to a decline in energy generation and lower hydro exports and a significant increase in imports,” it states.