International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of Bhutan is the Bhutanese ngultrum.
Other legal tenderThe Indian rupee is also legal tender.
Exchange rate structureUnitary.
Conventional pegged arrangementThe ngultrum is pegged to the Indian rupee at par. The rates for currencies other than the Indian rupee are determined on the basis of the prevailing quotations by the State Bank of India for those currencies.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payment arrangements
Bilateral payment arrangements
Administration of controlThe MOF controls external transactions and provides foreign exchange for most current and capital transactions. The MOF has delegated to the Royal Monetary Authority (RMA) the authority to release foreign exchange (other than Indian rupees) for current transactions. The RMA is charged with implementing the surrender requirements for proceeds from merchandise exports and approving the use of foreign exchange for payments for invisible transactions.

Payments and remittances by residents to nonresidents other than in cash and traveler’s checks are required to be channeled through authorized banks in Bhutan.
International security restrictionsNo.
Payment arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeImports of gold and silver, up to stipulated quantities, by Bhutanese citizens are permitted. Imports beyond this require special permission from the MOF.
Controls on exports and imports of banknotesThe importation and exportation of cash and securities are subject to declaration of value at the customs point of entry into, and departure from, Bhutan.
On exports
Domestic currencyYes.
Foreign currencyYes.
On imports
Domestic currencyYes.
Foreign currencyForeign currency notes purchased from authorized banks or declared on entry may be exported freely.
Resident Accounts
Foreign exchange accounts permittedThe following categories of persons are permitted to open and maintain U.S. dollar-denominated foreign currency accounts with authorized banks in Bhutan: (1) diplomatic missions in Bhutan and their expatriate employees, (2) representative offices of donor agencies and their expatriate employees, (3) third country contracting firms and their expatriate employees engaged to execute projects financed by donor agencies, and (4) any person who is a national of a third country and resides in Bhutan.
Held domesticallyThe accounts may be opened, but approval of the RMA is required.
Held abroadResidents of Bhutan are not allowed to hold foreign exchange accounts abroad. However, Bhutanese citizens living abroad must close foreign exchange accounts upon return and repatriate any balances to Bhutan.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedThese accounts are permitted, but approval is required.
Domestic currency accountsYes.
Convertible into foreign currencyThese accounts are permitted, but approval is required.
Blocked accountsYes.
Imports and Import Payments
Foreign exchange budgetYes.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementsYes.
Letters of creditYes.
Import licenses and other nontariff measuresImport licenses are governed by Rules and Procedures for Imports of Goods from Third Countries issued by the MOF. An import license is required for the importation of capital and intermediate goods from countries other than India. Foreign exchange for all payments related to merchandise imports is automatically made available by authorized banks against import licenses.
Import taxes and/or tariffsImports from India are free from tariffs and are subject only to the Bhutan sales tax. Tax rates range from zero for essential commodities to 50% on tobacco products and alcoholic beverages.

Imports from countries other than India are subject to tariffs. The maximum tariff rate is 30%, with the exception of the rates for beer (50%), and for tobacco and other alcoholic beverages and spirits (100%).
State import monopolyn.a.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsProceeds in currencies other than the Indian rupee must be surrendered to the RMA either directly or through the Bank of Bhutan within 90 days.
Financing requirementsNo.
Documentation requirements
Letters of creditYes.
Preshipment inspectionYes.
Export licenses
Without quotasYes.
With quotasYes.
Export taxesExport taxes are applied only to exports of unprocessed timber, apples, oranges, and cardamom. Exports to countries other than India receive a rebate at rates ranging from 5% to 20% of the c.i.f. value, with the lowest rate applying to unprocessed primary products and the highest rate applying to processed products.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersAll invisible payments, other than those made in Indian rupees, must be approved by the RMA. The RMA is charged with setting limits (indicative in most cases) up to which foreign exchange may be made available for payments for invisible transactions.
Trade-related payments
Prior approvalYes.
Investment-related paymentsInformation is not available on the payment of amortization of loans or depreciation of direct investments.
Prior approvalYes.
Payments for travel
Prior approvalYes.
Quantitative limitsThere is a travel allowance of $1,500 per ticketed passenger per calendar year. In case of business travel, the foreign exchange cost of an air ticket and country-specific per diem covering accommodation are provided to travelers. There are no time limits, but two weeks is considered the norm.
Indicative limits/bona fide testYes.
Personal paymentsEducational fees and tuition are covered fully and without any limits through direct payments to the universities or institutions abroad. Students also receive a monthly stipend of $900 and a one-time settling-in allowance of $1,500; the settling-in allowance and three monthly stipends are paid in advance.

For medical expenses, subject to referral by a local physician for treatment abroad, foreign exchange is provided to cover the cost of treatment and medicine and for living expenses abroad. Living expenses vary from country to country, but there are no set limits for the other expenses, and all reasonable expenses are covered.
Prior approvalYes.
Quantitative limitsA citizen of Bhutan who, under the recommendation of a medical specialist, is proceeding to a third country for medical treatment is permitted to purchase foreign exchange from authorized banks, within the limit prescribed by the RMA for the cost of treatment, medicine, and living expenses.
Foreign workers’ wages
Prior approvalAny national of a third country who, with the prior approval of the royal government of Bhutan, is employed directly by a public or private organization in Bhutan is permitted to remit his or her salary and savings in foreign exchange through an authorized bank.
Quantitative limitsThe RMA may set limits on any or all such remittances as it deems necessary.
Credit card use abroad
Prior approvalYes.
Other payments
Prior approvalYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsForeign exchange proceeds of any receipts or holdings by Bhutanese citizens and companies should be repatriated to Bhutan by transferring such claims and funds to authorized banks in Bhutan.
Surrender requirementsAll receipts from invisible transactions in currencies other than the Indian rupee must be surrendered to the RMA.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsAll capital transactions must be approved by the RMA.
Controls on derivatives and other instrumentsThere are controls on all derivative transactions.
Controls on credit operationsThere are Controls on all credit operations
Controls on direct investmentThere are controls on all direct investment transactions.
Controls on liquidation of direct investmentYes.
Controls on real estate transactionsThere are controls on all real estate transactions.
Controls on personal capital movements
Gifts, endowments, inheritances, and legacies
To residents from nonresidentsYes.
Transfer of assets
Transfer into the country by immigrantsYes.
Transfer of gambling and prize earningsYes.
Provisions specific to commercial banks and other credit institutions
Maintenance of accounts abroadYes.
Investment regulations
Abroad by banksUp to $5 million (gross) investment is allowed.
Open foreign exchange position limitsYes.
Provisions specific to institutional investors
Limits (max.) on portfolio invested abroadYes.
Other controls imposed by securities lawsn.a.
Changes During 1999
No significant changes occurred in the exchange and trade system.

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