… Remittances in January this year fell by more than 50%
The Royal Monetary Authority (RMA) has extended the Inbound Remittance Incentive Scheme for Bhutanese who live, work or study abroad for six months from yesterday.
The authority also increased the incentives from 1% to 2%. According to the RMA press release, the increase was in recognition of significant contributions made to increasing remittances since May 2021 and foreign currency reserves and promoting savings and investments.
Beneficiaries will receive an enhanced cash incentive of 2% when converting the remitted amount into Ngultrum using prevailing exchange rates through banking channels and international money transfer operators, a press release from RMA said. .
However, the authority said the incentive will not apply to remittances received for the purposes of foreign direct investment, donations and trade, including remittances received in favor of non-governmental organizations. , civil society organizations and businesses.
RMA’s latest Monthly Statistical Bulletin reported a remittance of Nu(M)286.1 million equivalent to USD 3.24 million in January this year.
Remittances in January this year were down more than 50% compared to the same month last year, mainly due to a drop in remittances in Australian dollars. In January last year, Bhutan received remittances of Nu 612.16 million of which Nu 427.74 million was denominated in Australian dollars.
More than half of the remittances received in January this year are denominated in USD, amounting to USD 2.05 million equivalent to Nu 152.28 million. A third of the remittances came from Australia at Nu 101.76 million equivalent to AUD 1.9 million.
The authority’s statistics also show that remittances increased significantly from Nu(B)2.9 billion in 2019 to Nu(B)8.269 billion in 2020 during the pandemic. However, it declined by 2.5% to Nu 8,062B last year.
Remittance is a transfer of money by foreign workers (non-resident Bhutanese) to their country of origin, which helps improve foreign exchange reserves and reduces the current account deficit by improving the balance of payments of the country. country.
According to the Ministry of Finance in the Fiscal Report 2022-23, Bhutan’s gross international reserves are expected to deplete to $1.33 billion in this fiscal year from $1.56 billion in the previous fiscal year. .
Of the total, convertible currency reserves are estimated at USD 1.157 billion and Indian rupee reserves at Nu 13.076 billion (USD 171.6 million).
The total reserves would be sufficient to finance 22 months of essential imports, which is more than provided for by the Constitution.
The Constitution requires the maintenance of a minimum reserve of foreign exchange sufficient to cover the cost of at least one year of essential imports.
However, the Ministry of Finance warns that the downward trend in reserves without new investments generating foreign exchange earnings with a significant increase in imports could eventually jeopardize the pegged exchange rate regime.
To encourage remittances, the authority launched a cash incentive scheme for Bhutanese abroad in a pilot phase from June 1 last year to May 22 this year.
The RMA also launched the RemitBhutan in September 2016 to provide a platform for non-resident Bhutanese to transfer their savings and income to Bhutan through the formal banking channel. There are currently 2,534 accounts with RemitBhutan.