RMA Governor slams media reports, said individuals fueled the rupee shortage not the private sector alone

Do not confuse private individual consumption and private sector consumption, said the central bank Governor Daw Tenzin stressed at a conference with the private sector yesterday, here in the capital. He was referring to the cause of Indian Rupee (INR) crunch exacerbating by the day for which the private sector was assumed scapegoat.

Private consumption does not limit to merchants, traders, construction companies and entrepreneurs but includes the general public like civil servants, self employed people, farmers and people from all walks of life.

He also highlighted that the media is creating unnecessary hype and panic by listening to a few individuals.

Secretary General of BCCI Phub Tshering said  the private sector has been made the scapegoat by the government and assumed guilty by the public for the shortage of Indian Rupee (INR).” We are involved in the economic and overall development of the country and that involves monetary transactions”, he said in his welcome address.

Daw Tenzin said, the conference was called for clearing doubts in the minds of the entrepreneurs and not a forum for debate. “Nowhere in the world does monetary policy come under public debate forum”, he explained.

The Governor said each and every individual is responsible for the INR shortage. “We didn’t blame the private sector. Private consumption includes every individual in the country,” he said.

He said it is important to study, analyze and understand situations of this kind.

INR 48.5bn was spent on private consumption through excessive credit by banks. This, the Governor said can also be because of the additional commercial banks, an insurance company and other financial institutions. Bhutan is the only country that allows lending by insurance companies and pension fund.

He said, the central bank borrowing from a commercial bank (SBI) is not a good trend. “A central bank using overdraft facility at an interest rate of 10% from a commercial bank to bail out private sector consumption is happening only in Bhutan”, he explained.

The Governor also cautioned the experts and economists commenting on newspapers on the issue which fueled panic across the country. He said the media, both print and broadcast are being misled by the so called economists and experts. He blamed the media for publishing news items based on comments that lacked proper research and analysis.

“Gossips and informal talks at bars doesn’t sum up to becoming  experts or economist”, he said.

Certain quarters of the nation blamed RMA and the government for delaying action and implementation of austerity measures to tackle the situation. The Governor defended RMA stating that the central bank has been working closely ever since the issue began to surface in 1993 when the first borrowing of INR 100mn was made through Government of India’s (GoI) line of credit (LoC).

He said, it was important for RMA to enhance the payment system and huge investment of time and expenses were made to improve the system.

On certain groups of people blaming the central bank stating that RMA has stopped banks from lending, the Governor said “Money with the banks doesn’t belong to the banks, the shareholders nor the government but the depositors. The directive by RMA has been aimed to protect the depositors”.

“Public and individuals borrows from commercial banks at 10% to build houses or buy cars. RMA borrows INR at 10% interest rate to make raw materials available, profit goes to bank’s pockets and the hit is on central bank’s balance sheet”, he added.

Though our country is tiny, we are independent and one among the 187 members of the International Monetary Fund (IMF). RMA’s monetary system has to come through IMF. “We are signatory to the IMF articles of agreement “, Daw Tenzin said.

Some experts also suggested unpegging the Nu from the INR. The Governor said, anything to do with the peg parity has to be carried out with IMF. “We are not allowed to do it. Our Nu has been pegged with the INR in the exchange arrangement with IMF”, he said.

He said exchange arrangement and restriction by the IMF needs to be understood by the so called experts and economists in town.

In accordance to the IMF’s classification, ours is a conventional peg. The reason for pegging to the INR is because 95% of Bhutan’s import is from India. This is to preserve value of the currency and promote trade.

The Governor also highlighted the responsibility of RMA which is to take care of the government’s reserve, printing of bank notes, act as the last resort of lender, banker to the banks, and banker to the government.

“Earning INR is not RMA’s responsibility. To earn or spend INR is the responsibility of public and government”, he  concluded.


















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  1. “nowhere in the world does monetary policy come under public debate forum” says the RMA Governor.

    Well, nowhere in the world do we have an unqualified bum as the central bank governor.

    Now what do you say to that!

    • Alan Greenspan was asked to come out of retirement and explain his policies…and was reprimanded publicly for his contribution to the present financial mess. (Such comments shouldn’t be made by public authorities because people are now educated in Bhutan…and they know exactly what they are saying. I believe that there are smarter and best educated economists in Bhutan outside of the RMA than in the RMA.)


  2. tingting

    Hit the nail on the head. Totally agree with you. It is indeed amazing that our govt allows an ‘unqualified bum’ to head the central bank and I would go one step further to add that the same govt allows an accountant to head the Finance Ministry.

    I think the Finance minister has been a total disaster in the last 4 years and he should be held accountable to all the mess in the economy. I say this as he has not changed anything despite the rapid changes in the economy. He has always maintained that he does not want to rock the boat which basically means he does not want to make changes. He was also the main reason why the govt lost the first constitutional case. Now it seems he has no clue how to solve the Rs crisis his solution seems to be to take more loan which will eventually lead to us having to sell more dollars (our national reserve). This guy has been a total disaster but for some unexplainable reason PM keeps protecting him. I do not understand why?????????????

  3. “We didn’t blame the private sector. Private consumption includes every individual in the country,” he said.
    How can all of us be responsible for this crisis? A farmer who donot spend anything. In merak and sakteng, people earn Rs. They never felt the crisis. How can they be responsible. I as a civil servant earn about 20K, how am i responsible for billions of Rs deficit. Don’t blame us for what RMA and this Government failed to manage the economic system. Don’t question how i spend my 20K per month that i earn through my own hard work, when RMAdonot have the guts to question the USD 9 million dollars spent on McKinsey by this government, which is very unnecessary. That is 450 million Rs. RMA’ governor never questioned such stupendous spending by the government. Now we are responsible for this crisis because we individuals spend 10 to 20k per month..

  4. “Public and individuals borrows from commercial banks at 10% to build houses or buy cars. RMA borrows INR at 10% interest rate to make raw materials available, profit goes to bank’s pockets and the hit is on central bank’s balance sheet”, he added.
    You as a Governor of RMA should have not done that, if you knew that before. Why you didnot charge the banks for that? That is one failure on your part.

  5. He said, the central bank borrowing from a commercial bank (SBI) is not a good trend. “A central bank using overdraft facility at an interest rate of 10% from a commercial bank to bail out private sector consumption is happening only in Bhutan”, he explained.
    You knew that was wrong to do as a Governor of RMA. Yet you kept on borrowing from SBI even after knowing the consequences of such borrowing. Who is to be blamed for this? Am i responsible for that as an individual who just spend the money that i earn legitimately.

  6. Blaming the individual citizens for spedning money and leading to the rupee crisis is like a father blaming his children for eating the food in the house. What are children suppose to do? Gag their mouths and not eat at all? Children will eat (so, will private citizens spend the money for their day-to-day living)…it’s the job of the father to bring food on the table so that his children don’t go hungry…Likewise, its the job of the Central Banker to make sure that the rupee-ngultrum exchange flows smoothly and circulate without causing problems in the society.

    If the father can’t bring the food on the table, then the father has no right to blame his children for eating/consuming food in the house. The blame should be on the father. Similarly, its the Central Banker’s failure if he can’t arrange the smooth exchange of Nu-Rs…and causes harm to the country’s economy, private business and individuals. The fault is his and his alone.

    Individuals don’t have policy making powers/authority. Individuals don’t have any say over bank interest rates. Individuals don’t get paid large salaries and patang and landcruiser. It’s the central banker who has all those monetary levers to make sensible policies so that nation is not jolted with last minute shocking bans and impositions. Remember, a central banker has all that pay, perks, patang and landcruiser to do a job…not to blame everyone from government to banks to private sector to now office workers and farmers. If you can’t handle the job…put in your resignation instead of looking like atsara in the midst of a country in a financial mess.

  7. What ??? Governor says nowhere in the World monetary policy is discussed in the Public Forum. He must not read economic news of the World. He needs to educate himself. What can we expect from someone like him who watched the rupee reserve of the country dwindle to negative balance. He can’t get away with the excuse, like it is the Government who earns and spends rupees. Being the Head of the Central Bank of the country, he is supposed to alert and advise  the Government on monetary policy and work together with the Government to solve these problems. Somebody needs to tell him what his role as the Governor is. 

  8. If RMA has foreseen the problem way back in early 90s, then isn’t it surprising to see two more commercial banks (tashi and Druk PB) being opened up…just to facilitate the credit facilities??????? And why banned bhutan lottery in the first place?

  9. Since we are buddhist and compassion is our will The Governer still holds his post with pride, had it been in india people wont tolarate such insults, enough is enough, should someone stage a peaceful demonstration to request government to fire both the finance minister and this thud? Although that dont solve the problem, the severity may just change.
    Well it may seem like personal allegation, it’s sole negligence of the leading party(some policy guidlines were drawn by a committee but DPT never had a time to follow it), finance ministry (it shoud have made an agenda to share in parlaiment about rupee dwindling) and the RMA including other financial institution that ended being a crisis and more problems coming in near future.
    Now at this juncture, better future is forseeable to farmers. Fact has its place here, i heard the agriculture minister saying ‘our farmers need to improve the quality of their products’ in television, while adressing Tsirang thromde regarding cardamom and oranges that fetched filthy prices last year, which means the ministry has nothing it can do, atleast when he is leading the ministry.
    Although the hope is even low for farmers, if interested farmers can ask govt to stop import of agricultural products and rocket their commodity price to near sky. This would balance the financial imbalance between farmers and civil servants brought by three subsequent increases in salaries of civil servants, under the blind rule of DPT. It will bring a variable closer to solving rupee equation.
    Well i will be impacted if farmers all agree by my idea, however; they would benifit. May be health and education sectors can be handled by societies if farmers grow rich, our nation will be benefited immensely.
    Lets hope we are safe, both from farmers’ pressure and Government’s negligence.
    The governer should learn many new dimensions of finance, financing and financial institution, god save his term, people are losing the trust.
    If i meet him somewhere someday, i would ask him if he was there in the bar where such economist and experts arose, mckinsey probably came into Bhutan when all DPT champions were in that bar.

  10. As per per the BNB’s Kepchu Namgyal, the culprit is the investing of the money in DHI power corporations. Can’t there have been some alternative than to hold the nation at ransom and play some blame games?

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