Inward foreign remittance from non-resident Bhutanese increased significantly in 2020 despite the Covid-19 pandemic affecting the global economy badly.
Non-resident Bhutanese remitted a total of Nu 8.27 billion (B) from January to December last year, according to the Royal Monetary Authority’s (RMA) monthly statistical bulletin for March 2021.
The remittance from non-resident Bhutanese in 2019 was Nu 2.679B. This means that the remittance increased by 208 percent last year.
Remittance inflow helps in building foreign exchange reserves.
Of the total inward remittance received through formal channels, about 80 percent was from Australia. The remittance from the US and the Middle East constituted about 10 percent and 2.5 percent respectively.
The appreciation of the US dollar against the ngultrum is one of the reasons for the significant increase in inward remittance. A stronger dollar bodes well for the recipients through conversion into the ngultrum.
According to statistics released by the central bank, the average rate of the dollar against the ngultrum in 2020 was 74.11 compared with 70.58 in 2019.
The monthly exchange rate of the ngultrum increased to 76.2 per dollar in April 2020 from 71.3 per dollar in January 2020. The exchange rate, however, dropped to 73.66 in December last year.
According to RMA, an Australian dollar account has been opened with the Reserve Bank of Australia to support and incentivise remittance during the Covid-19 pandemic. This move is aimed at minimising the exchange loss for the remitter through currency conversions.
The South Asia region has been the biggest beneficiary of remittance in the world, according to the RMA’s annual report 2019. However, it states Bhutan has lagged behind in capitalising the benefits although inward remittance is considered a stable and reliable source of non-debt financing source for a country.
The government in September 2016 launched RemitBhutan platform to provide a platform for non-resident Bhutanese to remit their savings and earnings to Bhutan through the formal banking channel.