Time For Tightening The Belt

The Honorable Prime Minister Dr. Lotay Tshering is right to worry - I do too. Bhutan has been hit with a double whammy - the anticipated fall in dollar earnings from tourism as a result of tripling the SDF, and more than 50% dip in the inward remittances from the none-resident Bhutanese working and earning abroad. But just talking about it is not enough - what is called for is single-minded, bold and resolute action. If we hesitate to act now, we are doomed.

I was being cute when I wrote in my post of July 24, 2022 that I hope the RMA would throw the rule book out the window and jack up the $$ to Ngultrum currency conversion rate to Nu.100.00 per $1.00 – and hold it there for the next 2-3 years! We all know that it does not work like that. Even more important, I know for sure that this is not the route to take.

But being cute is in poor taste – particularly when the proverbial Dionysius’ sword is hanging over our heads. In all provability the single strand of horsehair that holds in place the sword that dangles perilously over Damocles’ head is at risk of snapping any moment - goring him to death.

“The world may soon be teetering on the edge of a global recession, only two years after the last one,” Pierre-Olivier Gourinchas, the I.M.F.’s chief economist, wrote. Put simply, the outlook for the global economy is “increasingly gloomy,” he added.

Such ominous predictions can only mean greater pain in the coming months and years. It is now time to tighten our belts and brace ourselves for another round of even greater hardships.

The tourism industry collectively is perhaps the biggest tax payer: at the first stage the government collects SDF from every tour sold, it collects BIT from tour operators at the end of the year. Across the tourism industry chain, it collects BIT from hotel owners, vehicle owners, handicraft outlet operators, restaurateurs etc. But with the tripling of the SDF, that well is all set to run dry.

Businesses who are supposed to bring in $$ are supposedly parking them outside.

The inward remittances from none-resident Bhutanese have apparently taken the Hawala route for greater bang for the buck. All these means our foreign exchange reserve will not get replenished – it will run dry in the next 15 months as publicly confirmed by our head of government.

So what do we do?

Two simple steps: We halt the outflow of foreign exchange. We torpedo the Hawala transections. 

Do away with the issue of vehicle quota – Kuensel editorial of this morning says Thimphu has one vehicle for every two residents. Import of vehicles is a big drain on the foreign exchange. What benefit we derive from generation of hydroelectricity is wasted on import of fossil fuel, to power the vehicles. For decades I have been going hoarse shouting that this is not justified.

Disallow imports of goodies such as chocolates, cigarettes, alcohol, noodles, biscuits, blankets and the like – we can do without them.

Limiting or restricting import of these none-essential items will effectively control the transections between Hawaladars – thereby redirecting the flow of remittances through the traditional banking system, thus improving our foreign exchange reserve.

It is an occasion for every Bhutanese to recognize our vulnerabilities – time is now to show that we care. There can be no gain without hardship.