Global crisis hits Bhutan too

Written by Agencies | Thimphu, November 30: | Updated: Nov 30 2008, 20:48pm hrs
The financial meltdown has hit Bhutanese economy as well, increasing the country's import bills, production costs, debt servicing and balance of payments situation, experts say.

The ngultrum has depreciated by 15 to 18 per cent against the dollar in the past two months, with one USD now equivalent to Nu 49.30.

"This has increased our import bills, production costs, debt servicing and the balance of payments situation," a finance ministry official said.

"The constant decline of the ngultrum against the dollar is making third country imports expensive, especially for those that use technology and raw material from them," an expert said, adding "this could affect the future growth of such businesses since in 2007 goods worth Nu 5 billion were imported from these third countries."

Even the government budget will be affected with more money needed for electronic imports like computers.

An MP whose son is studying in Bangkok said, "I had to pay an additional Nu 25,000 this time for my son's fees due to the exchange rate."

This is expected to affect trade diversification with importers focusing more on imports from India, putting further pressure on the rupee reserves.

Bhutan's exports have already taken a hit with some steel industries closing down, since Indian steel has less international buyers thus creating a domestic glut and falling prices, the state-run newspaper Kuensel reported.

Even after excluding Bhutan's debt to New Delhi, the debt owed to other development partners, mainly in dollars, is Nu 16.5 billion.