Thukten Zangpo

In a move aimed at conserving foreign currency reserves and reducing trade deficit, the Bhutanese government implemented a vehicle import moratorium in August, last year, resulting in a notable decrease of about 35 percent in vehicle imports in 2022 compared to the previous year.

According to statistics, Bhutan imported vehicles valued at Nu 3.27 billion (B) in 2022, encompassing passenger cars, vehicles for the transportation of ten or more people, goods transport, electric cars, and motorcycles.

Import data reveals a significant decline in vehicle imports from India, which decreased by half, from Nu 4.61B in the previous year to Nu 2.23B in 2022. However, imports from other countries doubled to Nu 1.04B from Nu 467.84 million (M), primarily due to the purchase of electric vehicles.

It is worth noting that vehicle imports from India are paid in Indian Rupee, whereas imports from other countries necessitate payment in USD.

Considering these figures, had Bhutan imported vehicles worth Nu 5.08B, as in 2021, the country would have incurred an additional loss of Nu 1.81B, further straining foreign currency reserves and widening the trade deficit.

In 2022, the trade deficit nearly doubled, reaching Nu 61.92B, in comparison to Nu 32.24B in 2021.

Originally implemented for six months starting from August of the previous year, the government extended the vehicle import moratorium for an additional six months, which will be in effect until August 18 of this year.

The primary objective of this measure was to safeguard Bhutan’s dwindling foreign currency reserves, which amounted to USD 736M in August 2021, meeting 13.2 months of essential imports. The constitution mandates the maintenance of foreign currency reserves equivalent to at least 12 months of essential imports.

By December of the same year, the foreign currency reserve had improved to USD 766.8M, equivalent to 13.8 months of essential imports. In December 2021, the reserve stood at USD 970.4M.

The vehicle import moratorium applies to all vehicle imports, including two-wheelers, with the exception of utility vehicles, heavy earthmoving machines, and agricultural machinery. Only utility vehicles costing less than Nu 1.5M or USD 20,000 (whichever is lower) are exempted. Additionally, vehicles in the tourism sector, buses and taxis (both fossil fuel and electric) that are due for replacement are also exempted from the moratorium.

Despite the decline in vehicle imports, the import value of fuel, including petrol and diesel, increased to Nu 11.37B, representing a rise of Nu 3B compared to the import value of Nu 8.35B in 2021.