As of October 2023, Bhutan's foreign currency reserves stood at USD 464.66 million, nearing the constitutional minimum threshold of USD 464 million required to cover one year of essential imports. 🔥🚀
This represents a significant decline from previous years; for instance, in 2021, Bhutan's international reserves were approximately USD 0.9 billion.
The Royal Monetary Authority (RMA) of Bhutan is responsible for managing the country's external reserves, as stipulated under Section 108 of the RMA Act, 2010.
The RMA's mandate includes ensuring that foreign exchange reserves are sufficient to meet the nation's import requirements and to maintain economic stability.
The decline in reserves has been attributed to factors such as limited revenue from exports, tourism earnings, remittances, grants, and commercial borrowings.
This situation poses a risk of breaching the constitutional requirement in the coming months, highlighting the need for measures to bolster foreign currency reserves.
In response to the evolving financial landscape, Bhutan launched ORO Bank in June 2024, Asia's first full-reserve bank, aligning with the country's national values and targeting global tech start-ups.
This initiative reflects Bhutan's efforts to innovate within its financial sector, potentially contributing to economic stability and growth.
It's important to note that the Bhutan National Bank (BNB) holds equity reserves as part of its financial structure.
However, the management of the nation's foreign currency reserves is primarily the responsibility of the RMA.
The current state of Bhutan's foreign currency reserves underscores the importance of effective economic policies and strategies to enhance revenue generation and maintain financial stability.
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