After Sri Lanka, Bhutan in danger of economic crisis as foreign exchange reserves fall

After Sri Lanka, Bhutan in danger of economic crisis as foreign exchange reserves fall

Bhutan bans import of most vehicles as foreign exchange reserves fall

Kathmandu:

Bhutan will ban the import of all vehicles except commercial vehicles, heavy earth-moving machinery and agricultural machinery to save dwindling foreign exchange reserves, the government said in a notice seen by Reuters on Friday.

Nestled between China and India, the country of less than 800,000 people is grappling with the effects of soaring oil and grain prices caused by war in Ukraine as well as the continued impact of the pandemic. , including a strict zero-COVID policy that has banned foreign tourists for two years.

Foreign exchange reserves had fallen to $970 million at the end of December 2021, from $1.46 billion in April 2021, according to data released last month by the Royal Monetary Authority of Bhutan.

The Ministry of Finance said in a notification that the import of commercial vehicles costing less than 1.5 million ngultrums ($20,000) would be allowed and those intended for tourism use and promotion would be exempt.

“The moratorium is implemented to ensure sufficient foreign currency reserves to maintain macroeconomic stability,” he said.

The Kuensel daily said Bhutan had imported more than 8,000 vehicles in the year to June and it was a major contributing factor to the depletion of supplies.

Bhutan is required by its constitution to maintain reserves to cover at least 12 months of imports.

The government will review and modify the moratorium which came into effect on Friday in six months’ time depending on the position of foreign exchange reserves, he said.

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