“NO MONEY”, says Central Bank Governor
Mar 6, 2012
“After Losar, we simply had no money; people think that we have money and we are not releasing them. We are borrowing at 10 percent,” remarked the Governor of the Royal Monetary Authority of Bhutan, the Central Bank of Bhutan.
Daw Tenzin said that many fuel depots ran out of fuel yesterday. “So not to hold economy to standstill, yesterday also we borrowed 60 million from State Bank of India at 10 percent.”
The Governor said that Bhutanese should realise Rupee is a currency that needed to earned. “We cannot continue with unlimited Ngultrum convertibility into Rupee through the banking channel.”
According to the Governor private consumption has taken economy to the hole. How? The rupee shortage is mainly driven by the private consumption and expenses. This, he said, is because of the easy availability of credit from the financial institutions.
As of December 2011, the outstanding Ngultrum loan from the banks has reached 46 billion.
The Governor said if the trend continues, no amount of hydropower will be enough to solve the Rupee shortage and as a measure the RMA will closely monitor the credit expansion of the financial institutions.
I reckon the Nglutrum should stop being pegged with the Indian Rupee. I think Bhutan will still be able to prosper with the help of India, but not the Indian Rupee.
The Bhutanese people should realise that the impact of Rupee shortage and increasing rupee debt (46 billion rupee @10%) on the economy as a whole.
in my opinion, RMA and Government should suspend some of the credit facilities of the financial institution (especially the financing of luxuries goods from india).
the government should also regulate price of locally made products so as to encourage Bhutanese buying bhutanese products. For example, the products like yathra solar bag cost Nu. 3500 when similar bag is available at cheaper rate from Broader town.
i understand bhutanese economy too is in trouble. Our economic growth could be compromised and ther will be many repercussions after suspending the credit of Financial institutions.
I partially agree that private consumption is the cause of crisis. on the other hand can we stop consumption. Is there other alternativces to curb the demand of people.
Rather it demands more action than words….
I agree with what the governor but he should also propose alternatives. Just controlling banks and rupee is not a long term solution.
actually what is the function of ngultrum being pegged to indian rupee?…. why cant ngultrum stand at its on value, may be lower ofcourse. silly question though, but just culd not understand why.
[…] the other hand, the RMA governor has declared that, “we have no money.” And he has already stopped issuing rupees to commercial banks. He has also […]
Sell Bhutanese and Buy Bhutanese. How? Middle income group and Others below find too expensive to buy Bhutanese products while the same is much much cheaper like basic vegetables from Bordering town. On one hand we encourage the Bhutanese Farmers but we are unable to regulate the price. Example, A Kg of Bhutanese dry chilli cost Nu. 1000/- while it is Nu. 200/- from India. Some price regulations should be there.
Car? Why buy?….The transporation within the city is almost developing. You have no convince to travel around in the public transport and will never reach on time. Taxis takes undue advantage of situations by hiking the price. There is no regulations from the authority unless a written complaints and by this we Bhutanese are not really serious and Jangchub sempa. Therefore many opts for self transportations. With the increase in income people would buy cars but if the transportation system in the city is efficient, why drive our own car at expensive ways. Mant would love to travel by public transport except on family travels.
This severe Ruppe-Ngultrum crunch which is plaguing the country currently is partly because of the lack of far-sighted leadership by the administration. I’m strongly for the motion of having the leader replaced!
Just a few concerns… It is a serious concerns to the Bhutanese and our economy and taking loans is not going to solve our problem. Pulling or pushing here on this forum going to help either. From the thread above, the ideas are good and concerns are good and why not we try practicing it. Make the concerned authorities hear it – through BBS or various media.
Nu-Rs un-pegging may help our economy independently grow with adverse impact on the export of power and some industrial products. One thing i have been seriously thinking about the Bhutanese industries. Are they really contributing to our economy (not all of course but majority)? Say it in terms of revenue? …. Employment? … foreign currency earning? …etc?
Regarding our indigenous or say in house products/produce, government got to take it seriously. Price regulation (as said above) could be one of the solutions but if at all necessary why not try some subsidies. After all i am sure like in many business.. start-up would only be a hurdle. Once it picks up at the commercial pace government can evaluate – to continue or revise the subsidiaries.
Regarding the car…. I have no comment but like Karmak said we can surely minimize fuel consumption by using public transports.
Like the Dasho Governor said… Hydro Power only cannot solve this problem. It’s just 60m now and just think where are we going to stand few years down… (Pls read this http://mg.co.za/article/2013-01-30-zimbabwean-government-bank-balance-down-to-217 to understand what has happened in Zimbabwe government).
Hope BBS and all media can make some of the concerned authorities understand. Government should understand and we are equally responsible. Someone should lead and we all have to save. USD reserves are for some other calamities or purposes…. and cannot depend on it to solve Rupee crunch. They are two different children and should be tackled accordingly.