In the last three years, the country’s total inward remittances has 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 have 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.
Bankers attribute the surge in remittances to increasing number of people leaving abroad to work and gaining momentum of the Central Bank’s RemitBhutan initiative, which was launched in September 2016.
Figures also reveal that the United States and Australia are the top sources for inward remittances since AUD 31M (approximately Nu 1.5B) and USD 19M (approximately Nu 1.3B) were remitted to the country last year alone. The flow of Australian currency shot up from about AUD 9M in 2015 to AUD 24M in 2016. Remittances in the form of USD gradually increased from USD 6.5M in 2015 to about USD 10M in 2017. However, it spiked to USD 19M last year.
While remittances denominated in Pound Sterling, Euro and other European currencies roughly equates to about Nu 50M last year.
Inward remittances from other non-European countries, albeit small increased from Nu 1.38M in 2015 to Nu 5M in 2017, which doubled to Nu 10M last year. This could be attributed to overseas employment program in the middle east and UN peace keeping mission in Africa.
These figures, however, is exclusive of the money sent informally. A corporate employee said that many working in Australia bring in a bulk of cash when they leave the country.“Sending money through banks is killing us with high charges and longer transaction time,” he said.
Between 2017 and 2018, there has been a five-fold increase in the amount of money remitted into the country through RemitBhutan.
The RMA launched RemitBhutan in September 2016. Exactly a year after, USD 2M equivalent of currencies were remitted to the country through this channel. As of September last year, the figure stands at almost USD 10M.
RemitBhutan is a platform facilitated by the RMA for non-resident Bhutanese to operate foreign currency accounts with any authorised bank in Bhutan.
An official from the central bank said that RemitBhutan comes 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.
The RMA has also asked the banks to offer attractive interest rates on the foreign currency account. RMA officials also visited Bhutanese living in Kuwait, Australia and USA to advocate on RemitBhutan.
Consequently, the foreign currency accounts with local banks increased from 637 at the initial phase in 2016 to 1,344 in June 2017.
As of September 2017, half of the foreign currency account holders were from Australia, who remitted almost USD 1M, of the total USD 2M.
Last year, 63 percent of the remittances (USD 6M) were from USA and Kuwait, while Australia constituted only 18 percent (USD 1.7M).
Sources from the bank said more transactions in RemitBhutan happens when the exchange is favourable. For instance, he said the appreciation of USD to about Nu 72 attracted people to transfer more USD last year.
On the economy
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.
However, going by RMA’s annual report, the country outward remittances, mostly to India remained constant averaging Nu 1B annually since 2013. However, the inward remittances from countries other than India are recording an upward trend.