The National Council in its discussions said the government sold USD 197 mn since 2014 to meet rupee requirements. This was soon picked up by the Opposition whose members also raised the issue questioning the government’s claim that the rupee crisis is over.
In response, both the Prime Minister and Finance Minister said that the rupee crisis of 2011 onwards had been caused not only due to excess imports over exports but also not knowing the right time to sell dollars leading to Rupee interest rate loss, rupee hoarding and panic in the market.
The Finance Minister Lyonpo Namgay Dorji said that whenever Bhutan takes a soft loan in USD at 1.5% to 1% or even gets grant for developmental works a certain part of that USD has to be converted to rupee as most of the imports associated with that work would be in rupee. He said that if all those dollars are retained with RMA and a part of it is not sold then the rupee reserve would be depleted in no time. He gave the example of a USD 12 mn soft loan for urban development project in Lanjophakha of which around USD 7.2 mn resulted in rupee imports like bitumen, fuel labour etc.
He said that in the past government’s time dollars which gave only around 1 percent interest were not sold and instead rupee at around 10 percent to 10.5% loan was taken from Indian banks. This, the minister said did not make economic sense.
The minister said due to the current government and RMA’s policy the RMA in 2015-16 financial year gave Nu 788 mn in profit that was earlier getting wiped out in paying rupee loan interest rates.
He said the economy also suffered with importers using fake bills to get rupee from RMA as found by the Anti Corruption Commission and the rupee crisis also lead to the unofficial devaluing of the Ngultrum against the Rupee.
The Prime Minister said that he takes objection to the fact that the government has basically been accused of lying in saying the Rupee Crisis is over by selling dollars.
Apart from re-emphasizing the Finance Minister’s points the PM said that instead of selling dollars in small tranches a crisis of the Rupee was allowed to build and then the former government sold USD 200 mn in 11th December 2011, USD 36.84 mn in January 2013 and USD 200 mn in 26th June 2013.
In comparison the current government sold dollars in 8 trances since April 2014 of mainly around USD 20 mn each to ensure there is no rupee shortage and rupee panic.
The Prime Minister said that the government and RMA policy is to sell dollars in small trances so that rupee loans don’t have to be taken and there is no rupee crisis.
The PM said that even with more imports of cars and much more activities the rupee situation was stable and people could easily get rupee which meant the rupee crisis is over.
It was also announced that the RMA would maintain a USD 757 mn and Rs 10 bn reserve as the minimum reserve.
The PM said that even in one of the main sources of USD, which is tourism some rupee has to be released as the tourist has to eat and travel around and so the food imports and fuel imports had to come in from India.
The finance minister said that selling dollars is not the only solution as the government is working on reducing food imports through agricultural programs, increasing investment through ease of doing business index and various other economic activities.