Speaking to the Bhutanese media on April 13, 2023, the Prime Minister (PM) Dr. Lotay Tshering said that the list of items on which moratorium could be issued, if there is a need to maintain the country’s foreign reserve is ready.
The PM also revealed that the government has three lists of items in place; the first is the ongoing moratorium on vehicles which has been implemented. The second list includes non-essential items, which comprises goods and commodities that the country and the people can do without.
“When I say that non-essential list contains items that we can do without, I mean that they are the things that Bhutanese can live without. However, since Bhutan is a high-end tourist destination, tourist may have difficulties if we ban items that they consume (which are the ones that we Bhutanese can survive without), five-star hotels would face difficulty as a result.” The PM said. However, the PM said that currently Bhutan is in a comfortable position and that there is no need to implement another moratorium. “But if things take a different turn and reserves decreases even more, then none of us would have any choice but to do what we have to do,” the PM said.
Speaking about the moratorium on vehicle imports, which was recently extended for another six months, the PM stated that the moratorium had saved the country approximately Nu 2 bn in the past four to five months and that it is expected to save up to Nu 5 bn in a year.
“We are not proud of saving reserves through moratoriums, but we had no other options. If we have enough reserves, we should import versatile commodities to increase the inflow of convertible currency,” the PM said.
He added that while the country has currencies like INR and USD, there are not many businesses that make significant profits in these currencies. The government relies on grants, loans, and business profits to sustain the country comfortably.
According to the PM, since the economy is improving, it’s not yet time to implement moratorium on the second list.
“Things are picking up positively so far and as we all know; we are positioned between two of the biggest economy in the world. The Indian economy is one of the best in the world and ours is closely tied to it like a mirror image.” he said, adding that, 98% of Bhutan’s trade is with India, whether its export or import.
The forecast for the Indian economy is very good and this will eventually be felt here as well. Additionally, the PM said that Bhutan’s economy growth rate is also near to 5% while in other countries growth rate is below 1 or 1.5%.
“Our inflation is almost coming near to pre pandemic level, which is a good sign,” the PM added.
Meanwhile, the PM also spoke on the vehicle moratorium saying that while import of private and BG vehicles have been banned, economic vehicles like trucks and earthmoving machines are still allowed since they are essential for economic functions. “The ban on private vehicles like Prado and all was implemented because they are for private use and do not benefit the economy,” the PM underlined.
Meanwhile, the revised guidelines allocate 603 million USD for 12 months of essential imports for normal period and USD 464 million under the critical period.
If reserves deplete to less than 12 months of imports in three months, the central bank must alert the government.
Government officials have been working hard to preserve the country’s foreign reserves, which have been hovering between 13 and 14 months of essential imports for nearly a year. According to Article 14, Section 7 of the Constitution, “A minimum foreign currency reserve that is adequate to meet the cost of not less than one year’s essential import must be maintained.”
Tshering Pelden from Thimphu
