The country’s balance of payment is expected to improve in the third quarter of the current financial year. This positive shift will be due to several factors such as an increase in remittances, insurance payments, and a 2.5 billion ngultrum allocated for the Economic Stimulus Programme. Additionally, higher exports from hydropower and revenue from tourism, as estimated in the 13th Five-Year Plan, are expected to contribute to the improvement.
The balance of payment of a country is the difference between all money flowing into the country in a particular period of time and the outflow of money to the rest of the world.
The overall deficit in the external sector is projected to reduce to a little over Nu 1,280 M in the current financial year, down from over Nu 28,790 M in the previous financial year.
By the end of the current financial year, gross international reserves are expected to reach approximately USD 551 M or Nu 45bn, covering more than 14 months of essential imports.
Under the balance of payment, the current account deficit is likely to see an improvement from nearly Nu 81,200 M in 2022 to 2023 financial year to over Nu 51,000 M by the end of the current financial year.
This will be brought about by higher exports, lower imports, and inflow of grants.
However, the trade deficit increased from Nu 13,994 M in the fourth quarter of 2023 to Nu 15,117 M in the first quarter of 2024.
This is due to the import of electrical machineries and smartphones.
The financial account inflows which tracks international monetary movements related to investments is estimated to increase to nearly Nu 41,450 M from over Nu 25,290 M in the previous year.
On the other hand, capital account is estimated to decrease to Nu 8295 M from Nu 9,985 M in 2022-2023 financial year because of lower grants for hydropower development.
It is estimated to improve in the next financial year due to the implementation of the 13th FYP plan and construction of the ongoing and new hydropower projects.
The tourism sector saw an improvement in the first quarter of 2024, with arrivals at over 25,000, about 47 per cent of the 2019 figure for the same period.
The tourist numbers are expected to reach to 200,000 to 300,000 in 2024 and 2025, reaching pre-pandemic levels by 2026.
Deki Lhazom and Tenzin Loday Gyeltshen
Edited by Phub Gyem
