Inward remittances hit all-time high in March

Inward remittances hit all-time high in March

Inward remittances has seen a growing trend since 2018

Remittances from Bhutanese living abroad hit the highest level for a single month in March this year compared to the March months of the last five years.

Statistics from the Royal Monetary Authority (RMA) shows that it has increased almost by 27% compared to March of 2021.

As of March, this year, remittance valued in local currency stands at about Nu 1.38bn. The overseas Bhutanese sent home Nu 805mn in March alone which has increased by Nu 515.13mn from February. Nu 587mn was remitted in the same month of the previous year.

However, inward remittance has seen a growing trend since 2018.

A rough calculation of remittances in March months from 2018 to 2022 shows that remittances inflows continued to scale upward. In 2020, inward remittance of March month increases by Nu 388mn and Nu 587mn in 2021.

Remittance is, meanwhile, funds that an expatriate sends to their country of origin. These peer-to-peer transfers of funds across borders are economically significant for many countries that receive them.

However, the figures compiled by the RMA were extracted from the four commercial banks and exclude other channels like the Western Union money transfer and other informal means.

The inward remittance of the Australian Dollar (AUD) has tripled from AUD 4.66mn in 2021 and 11.85mn as of March this year. This could be attributed to the increasing number of Bhutanese leaving for Australia.

Of the total inward remittance received through the formal channels, about 60% was from Australia. The remittance from the US and the Middle East constituted about 30% and 10% respectively.

The inward remittance contributed to more than half of the total remittances, with about Nu 637mn (AUD 11.85mn), followed by Nu 125mn (USD 1.16mn) in 2021 as of March. There were 3.5 times more AUD remittances in three consecutive months of March than in 2020.

Further, remittances in denominations such as Pounds Sterling, Euro, and other European currency roughly equated to Nu 42.9mn as of March this year.

The exchange rate of the Dollar against the Ngultrum increased slightly to Nu 80.80 in March this year and was Nu 75 for the fiscal year average (2020-2021).

Meanwhile, the inflow remittance helps in building foreign exchange reserves.

The US dollar and AUD 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 RMA, the average rate of the Dollar against the Ngultrum in 2022 was 75.73 compared with 74.11 in 2021.

In an earlier interview with the economic affairs minister, Loknath Sharma said remittance is beneficial right now and it received its desired spot of respect in the economy when the country lost its dollar-earning capacity.

“Remittance has a positive and powerful impact on the professionals working outside and contributing to the economy,” Lyonpo said adding it is not only Bhutan, most neighboring countries have a very good source of remittances flowing into their economy increasingly.

Lyonpo said remittance has also helped inject liquidity into the economy and we must be able to produce a relevant skilled, and highly adaptable workforce if remittance is to increase as the global market might demand new skills.

However, some experts said remittance is an important source of foreign exchange earnings for many countries and it helps to reduce the deficit in the current account.

Local economic said that at the micro-level, remittance received by the family members helps boost household consumption, strengthens the resilience of the poorer households, and improves their living standard.

Additionally, remittance would improve the distribution of income, and promote social mobility in long run, they said.

“It is unlikely that international migration is on rising. Such migration helps to ease the pressure of unemployment and balance of payment in the country.”

Kinley Yonten from Thimphu