Foreign Exchange Reserve

While Bhutan already faces a deficit rupee reserve, compelling the central bank to borrow rupees from banks in India to meet import payments, its convertible currency reserve is also already more than utilised.

Constitutional requirements state that the economy’s convertible currency reserve must cover 12 months of essential import expenditure.

But there are other requirements the convertible currency is used for.  Apart from debt servicing on convertible currency borrowings, a certain portion is pledged against the Rupee borrowings made from Indian commercial banks.  It is also used as a back-up currency for the ngultrum printed and issued by the central bank.

Adding up these requirements, Bhutan’s total foreign currency reserve today is short by USD 20M (Nu 1B accounting in today’s exchange rate).

The requirements add up to USD 762M, while Bhutan’s total foreign currency reserve, according to the central bank’s latest publication, is USD 742M.

The task force, formed to tackle the rupee shortage in April this year, redefined what constitutes essential imports, and recommended that Bhutan maintain a minimum foreign currency reserve of USD 500M to meet essential imports expenditure.

Bhutan pledges USD 100M for the Rs 5B borrowings it has from Indian commercial banks.  Borrowings from the government of India line of credit do not require any collateral.  Its payments on concessional borrowings made from institutions, such as the World Bank and Asian Development Bank, today stand at USD 22M.

About USD 140M is used as a back-up currency for the Nu 7.3B that has been printed and issued by the central bank and is in circulation in the economy today.

Economies throughout the world set aside a certain amount of their foreign currency reserves, or maintain gold bullion, to back up currency in circulation, in case public loses confidence in the currency.

A local economist said that printing and issuing currency more than the value of the foreign currency means the government is doing business on risk.

While there are no explicit legal provisions requiring central bank to ration a certain percentage of the reserve for the currency in circulation, it is accounted for in the central bank’s balance sheet.

Given this scenario, the central bank today, if the reserve continues to remain the same, cannot print any more ngultrums, nor borrow any more rupees from commercial banks in India.

In April this year, when the task force redefined essential imports, Bhutan’s total foreign reserve was USD 716M.  The collateral for the Rs 10B borrowings from India was USD 200M.  While figures for convertible currency debt repayment were not available for that time, the currency in circulation was Nu 6B, for which USD 109M would have to be kept as back-up currency.

Even after discounting for currency held by banks, and the repayment on convertible currency debt, the foreign reserve was short by USD 93M (Nu 4.8B).

The central bank, which is responsible for managing the economy’s foreign reserve, said that reserves must now be used cautiously.

Deputy governor Pushpalal Chhetri said figures kept changing and with rupee inflows, the collateral for the rupee borrowings would decrease, which would ease the deficit.

Source: Kunselonline

Druk Chirwang Tshogpa

Selecting competent and right candidates have become a race of sorts with four new political parties aspiring to contest in the 2013 elections. Druk Chirwang Tshogpa said even though identifying candidates is a challenge, they have 30 candidates confirmed.

The party’s spokesperson, Tandin Tshering, said out of the confirmed 30, nine candidates are women. He said they are still looking to fill the vacant constituencies. “Roping in candidates has been very challenging,” he said, “In fact it is difficult for all the parties, even for the ruling government. After the government dissolves you never know if all the candidates will be with the party.”

He also said they have identified two people as the possible party president. “One of them is a woman,” said Tandin Tshering. He said both of them are civil servants and they will be resigning soon.

Tandin Tshering said they will be registering their party with the Election Commission of Bhutan by next month. At the moment, the party has 300 members.

The spokesperson said their manifesto and charter are in advanced draft stage.

Source: BBS

Drukair will resume domestic flight

Drukair will resume domestic flight services to Yongphula and Bathpalathang by next month according to the Department of Civil Aviation. Drukair had suspended its flight operations to Yongphula in May and Bathpalathang domestic airport in July this year.

The flight services were suspended on the recommendation of the Safety and Quality Department after they found out that the runways had developed several cracks and gravels had resurfaced.

The Director General of Department of Civil Aviation, Wangdi Gyeltshen, said they have carried repair works of both the airports. “The runways only required minor maintenance,” he said.

According to the General Manager of Domestic Air Services, Namgay Wangchuk, the reasons for suspending flight services was because of safety reasons and not because they weren’t making profits.

Meanwhile, about 50 people have already booked the tickets for next month.

The domestic airports were launched for flight operations in December last year.

Source: BBS

His Majesty the King promoted Colonel Kipchu Dorji

His Majesty the King promoted Colonel Kipchu Dorji from the rank of Colonel to Brigadier this morning at Tashichhodzong. His Majesty the King awarded Tashi Khaddar to the Brigadier in the sacred chamber of the golden throne room. Following the ceremony, Brigadier Kipchu Dorji made an offering at the goenkhang of the Tashichhodzong.

Brigadier Kipchu Dorji is from Haa Toe village in Haa. He was born in 1955. He was commissioned from Indian Military Academy in December 1974.

Brigadier Kipchu Dorji joined the Royal Body Guard in 1976. This is his 38th year in his service at the armed force.

Source: BBS

Road to Semi Final " Yangphel Archery Tournament"

Teams Yul Gyel and Ata Boning have made it to the semifinals of the ongoing 16th Yangphel open archery tournament.

Yul Gyel team beat Sichey Mavricks, a Sikkimese team and Bhutan Expression Tours to book its spot in the semifinals yesterday. The matches were played at the lower archery range at Changlimithang.

Playing at the upper archery range, Ata Boning team came out victorious after beating Chituen Construction and Planet Gym in the 15th round.

Each of these three teams had won a game set each to have to settle the scores through a penalty shootout.

In the penalty shootout, Ata Boning team hit two kareys to win over Chituen Construction that hit only one and none from the third team.

At the other range, the spectators were for the Sikkimese team despite its opponent having won two straight sets through an impressive three bulls eye hits.

The last quarterfinals will be played today among Paro Snow Lion in Style team, Phuntsholing Kencho Tshering and Phuntsholing Tshamgar Construction to reach the semifinals.

The winning team will be up against eight teams of Pelden Group of Companies, Dragon Roots, Druk Lhayul, Ice Berg, Sonam Automobiles, Gyelyong Gaki, Ata Boning and Yul Gyel to reach the finals.

Of the initial 260 teams from across the country participating and playing in different venues, 27 had made it to the quarterfinal round.

Source: Kuenselonline