INR reserve at Rs 27.5B
December 25, 2017
The country’s international reserve position as of September this year was at USD 1.17B, of which the rupee reserve forms Rs 27.5B, and convertible currency reserve USD 746.3B
The rupee reserve was highest recorded in the first nine months of the year. However, the country’s highest rupee stock was recorded in November last year with Rs 31B.
The total reserve is enough to finance 13 months of merchandise import, according to the Royal Monetary Authority’s (RMA) monthly statistical bulletin.
Convertible currency reserve alone is sufficient to finance 50.8 months of import. However, the rupee reserve will meet 5.6 months of essential import.
It is a Constitutional requirement that a minimum foreign currency reserve that is adequate to meet the cost of not less than one year’s essential import must be maintained.
Foreign currency reserve is crucial for Bhutan as Ngultrum is not a legal tender outside the borders. For an import-driven country, rupee reserve is necessary as more than 80 percent of the country’s imports are from India.
But again, rupee is not a convertible currency, thus the importance of foreign currency. In the past, when the country was hit with rupee shortage, the country has sold convertible currency to replenish the rupee stock. Commercial borrowing in rupee was also backed by the country’s convertible currency reserve, like a mortgage.
However, some economist including Nobel laureate professor Joseph Stiglitz since 2012 suggested that reserves should be held disproportionately in the currency in which the goods were imported. This means that Bhutan’s focus of reserves ought to be in rupee since most of the imports were in rupee.
However, during one the meet-the-press session last year, the Prime Minister said that rupee crisis is over, by definition.
An arrangement with the Reserve Bank of India has also been made where the RBI would facilitate exchange of USD for INR and vice versa. The government in consultation with the Central Bank has also decided to set a threshold rupee reserve of INR 10B and convertible currency reserve of USD 757M for all times.
The government will, however, continue to sell the convertible currency reserve as and when required. For example, a donor agency provides funds in USD for a project. But materials have to be imported from India and certain portion of the USD need to be converted in rupee.
Meanwhile, reserves are also used to service the external debts. As of June last year, the country’s outstanding rupee debt stood at Rs 118B and convertible currency debt was recorded at USD 663M (equivalent to Nu 42.7B).
Tshering Dorji
Good roads are at the heart of the nation’s prosperity
December 23, 2017 Editorial Leave a comment 505 Views
For a mountainous country likes ours, roads are the lifelines. Better roads mean better access to market for our farmers. Road, besides water and job, is an important priority that the citizens think the government should focus on. This is according to Bhutan Living Standards Survey 2017. It is a serious message to the government that is this day in power and that which might come to the helm in the future. Election is nearing. The least the citizens of this country deserve is empty election promises.
That poverty in Bhutan is largely in the rural areas is no surprise. Even as we have taken roads to distant villages, they are mostly not motorable, especially in summer. While agriculture is failing due to increased rural-urban migration, lack of access to market has been further aggravating the situation. We may have come up with easy credit facilities to encourage young Bhutanese to take up farming, which has a great potential to address rising youth unemployment, especially in urban Bhutan, roads will continue to be a defining factor. That is probably why many a young Bhutanese today do not see agriculture as a worthwhile option.
But road construction in Bhutan, like much else, is mired deeply in corruption. “Issues and challenges in public road construction sector, given the complexity of the construction industry in general and road construction in particular, as well as the priority investment that is made in it, the road sector in Bhutan is not without challenges.” This is Anti-Corruption Commission report on road sector. The sector today is plagued with issues like poor quality of construction, lack of competition among the contractors, and proliferation of undesirable practices such as fronting and collusion.
Because all these factors and results go against national dream, they amount to criminal activity. Anyone found involved in corrupt practices, from planning to tendering process to construction activities should be nabbed and penalised for cheating the nation. It doesn’t help that we know what is happening and take no action. That makes us privy to corrupt act and, consequently, partners in crime.
The principal objective of public procurement system we have adopted is to obtain quality work and service to support effective and efficient government and to ensure prudent use of the limited public funds. But that is where exactly we are failing. Awarding contracts to the lowest bidders open loopholes and opportunities for corruption. Upending the system will have the same effect if we do not employ strict monitoring and assessment mechanisms. We need to improve our contract management and administration system with non-uniform procurement method.
As a small nation with weak economy, we spend billions of ngulrtulms on constructions of road, a bulk of which comes from donor countries and agencies. It is not fair that perpetrators of corrupt practices get away while ruining the national aspirations and hurting the lives of more than half the citizens of this country.
Roads are critically important to alleviate poverty, which we are told repeatedly is a rural phenomenon. Failure to address issues concerning the sector’s flaws will be expensive for the nation. Good roads are at the heart of the nation’s prosperity.
AMICI DEL BHUTAN - ITALY