Amount was higher than the combined payment for the past three years
At NU 8.27 billion (B), remittances in 2020 contributed about 4.82% to gross domestic product (GDP), making it the highest remittance inflow in this country. day. The amount is greater than the payment for the last three years combined.
Remittances in 2017, 2018 and 2019 amounted to NU 7.8 billion, according to the October Monthly Statistical Bulletin from the Royal Monetary Authority (RMA). Remittances in 2017, 2018 and 2019 were respectively 1.9 billion Nu, 3 billion Nu and 2.9 billion Nu.
Remittance is a transfer of money by a foreign worker (non-resident Bhutanese) to their home country. Remittances help improve foreign exchange reserves and reduce the current account deficit by improving the country’s balance of payments.
The growth in remittances was 185%, which was a help when the country lost its ability to earn foreign exchange due to the pandemic in 2020, compared to the previous year.
Australian dollar (AUD) remittances contributed more than half of total remittances, with around 5.34 billion yuan (102.80 million Australian dollars) followed by 2.48 billion Australian dollars ( US $ 33.49 million) in 2020. There were 3.5 times more Australian dollar remittances in 2020 than in 2019.
Meanwhile, remittances in denominations such as the British Pound, Euro and other European currencies were roughly equivalent to NU 758m in 2020.
In July of this year, the country’s remittances were at NU 2.98 billion, the two highest being the AUD at NU 1.89 billion and the USD at NU 953.35 million.
The dollar exchange rate against the Ngultrum edged up to 74.18 Nu in July of this year and was 73.72 Nu for the fiscal year average (2020-2021).
Sending through formal channels
With a -90.03% drop in air transport in the transport, storage and communications sector (8.74% of the country’s GDP) in 2020, remittances increased as Bhutanese abroad sent foreign currency through formal banking channels.
While not independently verified, many attribute the increase in remittances to non-resident Bhutanese who send money to support their families and loved ones during the Covid-19 pandemic and the country’s lockdown. .
RMA statistics show that the highest amount of Nu 1.13B inbound installments was received in June 2020, followed by Nu 1.02B in November and Nu 987.83M in July.
Bhutan confirmed its first case of Covid-19 in March last year and the country experienced the first 21-day national lockdown starting August 11 last year. The second national lockdown began on December 23 of the same year.
Observers also say that the increase in remittances could be due to the fact that they are sent through formal channels. “With the borders closed, there weren’t many Bhutanese returning from abroad, especially from Australia,” one said. “Remittances could have been higher in recent years, but they have not been officially registered as some have brought in money.”
A Bhutanese working in Perth, Australia, Kezang Dorji said he sent money to support his parents during the lockdown and also to buy properties in 2020.
Additionally, Kezang Dorji said that increasing Tashi Bank Limited (TBL) T-Pay Remit caps to AUD 20,000 from AUD 10,000 per month per registered user also contributed to the increase in remittances. funds.
He added that they commonly use T-Pay Remit for the transaction, as the fees are much cheaper than the Commonwealth Bank of Australia, which was the money transfer platform two years before.
T-pay Remit charges AUD 12 per transaction up to AUD 10,000 and AUD 18 per transaction over AUD 10,000.
Yala Real Estate Managing Director Kinzang Lhendup said that up to 90 percent of property buyers are Bhutanese living in Australia, and around 10 percent are from the United States of America.
According to the RMA 2020 report, the sharp increase in remittances could be due to the growing number of expatriates overseas returning due to the Covid-19 outbreak, who have sent their savings back to Bhutan.
Statistics from the Foreign Ministry show that 10,248 Bhutanese returned home from March to December from 61 countries last year. In addition, 12,415 Bhutanese returned from 68 countries in May of this year.
To encourage remittances, the RMA has launched a cash incentive program for Bhutanese who live, work or study abroad as part of a pilot phase from June 1 of this year to May 22 of l ‘next year.
Recipients will receive a one percent cash incentive when converting the amount paid into Ngultrum using current or applicable exchange rates through banking channels and international money transfer operators.
RMA launched RemitBhutan in September 2016 to provide a platform for non-resident Bhutanese to transfer their savings and income to Bhutan through formal banking channels.
By the end of October 2020, the number of accounts opened through RemitBhutan had increased by 19.6% (2,001 accounts). There are currently 2,347 accounts.
At the same time, remittances routed through Prabhu’s money transfer facility and T-Pay Remit initiated by TBL accounted for 83.84% of total remittances in October 2020. The remaining 16.16% were been done through Western Union and normal commercial bank banking channels.