…in the first eight months of 2019
The country’s inward remittances as of August last year was Nu 1.5B, half the amount the country received in 2018.
In 2018, the country’s total inward remittances had more than tripled to hit a record of almost Nu 3B last year.
According to figures from the Royal Monetary Authority (RMA), non-resident Bhutanese across the globe had remitted a total of about Nu 860M in 2015. The following year it more than doubled to Nu 1.7B and Nu 1.9B in 2017.
Remittance is a transfer of money by a foreign worker back to their home country.
Since the launch of RemitBhutan in September 2016, inward remittances have been increasing. However, in eight months’ time last year, the amount just reached half the remittances in 2018.
Some bankers anticipate a dip in total inward remittances because of the global economic downturn.
The IMF has projected the lowest level of economic growth in 2019 at three percent.
Despite many Bhutanese leaving for Australia, remittances in form of Australian dollar (AUD) declined to 15M (in eight months) in 2019 compared with 31M in 2018. Even if compared for the first eight months, remittance in AUD came to about 22M in 2018.
The flow of AUD shot up from about 9M in 2015 to 24M in 2016. Remittances in the form of USD gradually increased from 6.5M in 2015 to about 10M in 2017.
Figures also reveal that USD 19M was remitted to the country in 2018 compared with USD 14M in the first eight months of 2019.
Comparing the trends between January and August, remittance in the form of USD has remained almost the same.
However, USD appreciated to the highest level at Nu 70.35 a USD in 2019. In 2018, the average exchange rate was Nu 68.4, meaning that overall contribution to the country’s inward remittances should increase. This did not happen, however.
While remittances in Pound Sterling (GBP) has remained the same at 0.06M, remittances in Euro and other European currencies increased from Nu 3.9M equivalent to over Nu 10M.
Inward remittances from other currencies increased from Nu 1.38M in 2015 to Nu 5M in 2017, which doubled to Nu 10M in 2018 and further increased to Nu 19M last year. This could be attributed to overseas employment programme in the Middle East and the UN peacekeeping mission in Africa. The main channel for remittances from these countries is the RemitBhutan.
These figures, however, are exclusive of the money sent informally.
A corporate employee said that many working in Australia bring cash in bulk when they return. “Sending money through banks is killing us with high charges and longer transaction time,” he said adding that even if the RemitBhutan was free of charge the transaction fee the host banks levied was quite high.
A banker said that RemitBhutan came with many incentives. For instance, Bhutanese living abroad can open a foreign currency account without any charge and zero balance. The only cost is the remittance charges that clients have to pay to the host banks abroad. Once the account is credited with foreign currency, all facilities like online shopping, remittance to other local and international banks and card facilities are provided.
Inward remittances are essential for stabilising the country’s balance of payment. It consists of import and export of goods (balance of trade), services and capital flow, such as foreign aid and remittances.
Remittances form 25 percent of GDP in Nepal and are one of the forerunners for its economy. In Bhutan’s case, it constitutes only about 1.5 percent of the GDP.
If at least 100 Bhutanese residents in Australia remitted their savings every month, it would work out to AUD 300,000 a month—AUD 3.6M a year.
Add to it the saving of dependents, 100 couples could roughly save about AUD 5M a year. Considering the increasing number of people pursuing studies privately in Australia, the remittance could be much higher.
However, foreign currencies are brought into the country through informal channels.
Another Bank official said inward remittance involved transaction between two or three foreign banks and sometimes was time-consuming.