…exports grow by 13 percent 

Thuikten Zangpo

Bhutan’s growing export sector has reduced the trade deficit by Nu 11.78 billion, bringing it down to Nu 36.35 billion as of September this year, compared to the same period last year.

Going through the finance ministry’s figures for two years, the deficit was reported at Nu 48.13 billion and Nu 45.22 billion in the same period for 2023 and 2022, respectively.

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

The deficit impacts domestic industries, which may struggle to compete with cheaper imports, leading to job losses and slower economic growth. Over time, a persistent trade deficit can make a country overly dependent on foreign economies, reducing its economic resilience and bargaining power.

To mitigate these effects, countries often aim to reduce trade deficits by boosting exports and supporting local industries.

The country saw its export bills grow by Nu 5.32 billion to Nu 46.8 billion as of September this year from Nu 41.48 billion last year.

Conversely, the country’s import bill saw a drop from Nu 86.7 billion last year to Nu 83.15 billion.

Export with India accounted for 80 percent, while import accounted for 83.35 percent.

The country’s main export, electricity, increased by 15 percent, with 5,072.53 million units worth Nu 16.67 billion exported to India as of September this year. In comparison, electricity exports stood at Nu 18.4 billion in 2022.

At the same time, Bhutan also imported 367.17 million units of electricity worth Nu 1.88 billion in the same period.

Ferrosilicon export was reported at Nu 10.92 billion. This was a decline from Nu 12.93 billion worth of ferrosilicon exports last year and Nu 15.75 billion in 2022.

However, the boulder exports increased to Nu 2.5 billion as of September this year. The country exported Nu 1.61 billion worth of boulders in the same period last year.

Bhutan’s top import, fuel, totalled Nu 10.79 billion as of September this year, comprising Nu 7.96 billion in diesel and Nu 2.83 billion in petrol. For the same period last year, fuel imports stood at Nu 10.67 billion.

The country’s rice import figure significantly reduced to Nu 2.22 billion this year compared to Nu 2.35 billion last year.

At the same time, the import of smartphones increased to Nu 1.95 billion from last year’s Nu 1.92 billion.

Increase in the import bill pushes the country’s declining foreign currency reserves.

As of June, this year, the country’s foreign currency reserves stood at USD 596.85 million, 15 percent decline from March’s reserves at USD 699.6 million.

Foreign currency reserves include convertible currency, Indian Rupee and monetary gold. Convertible currency accounted for USD 423.39 million and INR 14.45 billion as of June.

The Constitution mandates that Bhutan must maintain a minimum foreign currency reserve sufficient to cover at least one year’s worth of essential imports.

With the lifting of the moratorium on housing construction loans from July 1 and vehicle imports from August 18, the foreign currency reserves is further expected to deplete.