Abstract
2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bhutan
Fund Relations
(As of July 31, 2018)
Membership Status:
Joined: September 28, 1981; Article XIV.
General Resources Account
| SDR Million | % Quota | |
|---|---|---|
| Quota | 20.40 | 100.00 |
| Fund Holdings of Currency (Exchange Rate) | 15.85 | 77.72 |
| Reserve Tranche Position | 4.55 | 22.29 |
| Lending to the Fund | … | … |
| SDR Million | % Quota | |
|---|---|---|
| Quota | 20.40 | 100.00 |
| Fund Holdings of Currency (Exchange Rate) | 15.85 | 77.72 |
| Reserve Tranche Position | 4.55 | 22.29 |
| Lending to the Fund | … | … |
SDR Department:
| SDR Million | % Allocation | |
|---|---|---|
| Net cumulative allocation | 5.99 | 100.00 |
| Holdings | 6.03 | 100.65 |
| SDR Million | % Allocation | |
|---|---|---|
| Net cumulative allocation | 5.99 | 100.00 |
| Holdings | 6.03 | 100.65 |
Outstanding Purchases and Loans: None
Latest Financial Arrangements: None
Projected Payments to Fund 1/
(SDR million; based on existing use of resources and present holdings of SDRs):
When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.
Projected Payments to Fund 1/
(SDR million; based on existing use of resources and present holdings of SDRs):
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2018 | 2019 | 2020 | 2021 | 2022 | |
| Principal | |||||
| Charges/interest | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.
Projected Payments to Fund 1/
(SDR million; based on existing use of resources and present holdings of SDRs):
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2018 | 2019 | 2020 | 2021 | 2022 | |
| Principal | |||||
| Charges/interest | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.
Implementation of HIPC Initiative: Not Applicable
Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable
Implementation of Post-Catastrophe Debt Relief (PCDR): Not Applicable
Exchange System
Since its introduction in 1974, the ngultrum has been pegged to the Indian rupee at par. Bhutan continues to avail itself of transitional arrangements under Article XIV, Section 2, pursuant to which it maintains exchange restrictions in connection with: (i) the availability of foreign exchange for travel, except for medical travel abroad by Bhutanese citizens, invisibles, and private transfers; (ii) foreign exchange balancing requirement on remittances of income in convertible currencies or other foreign currencies from FDI; and (iii) on the availability of FX for importers who have not provided evidence that goods for which payments have been made were actually imported.1
Bhutan also maintains exchange restrictions subject to Fund approval under Article VIII, Section 2(a) in connection with: (i) the foreign exchange balancing requirements for imports of capital goods (for projects involving FDI) and primary raw materials (for certain industrial projects); (ii) banning residents who do not comply with the requirement to repatriate export proceeds from accessing foreign exchange for unrelated imports; (iii) requiring foreign direct investment companies to pay for their establishment and operational expenses from their own convertible currency resources; (iv) requiring Bhutanese companies to pay the interest on and amortization of external loans from their own convertible currency resources; (v) restricting the availability of Indian rupees for making payments and transfers to India for certain current international transactions2 and banning the access to Indian rupees for unrelated current international transactions for those who contravene RMA ‘s 2012 guidelines on Indian rupee transactions.3
Article IV Consultation
Bhutan is on a 24-month consultation cycle. The 2018 Article IV consultation was concluded by the Executive Board on September 17, 2018.
Technical Assistance
Over the past five years Bhutan has received technical assistance in the areas of: macro-fiscal capacity building, budget planning, treasury and cash management, strengthening the AML/CFT framework, drafting new foreign exchange regulations and removing exchange restrictions, reserve management, foreign exchange operations, national accounts statistics, balance of payments statistics, e-GDDS, producer price index, and the consumer price index. Bhutan has also received technical assistance and training from the South Asia Regional Training and Technical Assistance Center (SARTTAC) covering most recently liquidity management and forecasting, money and foreign exchange market operations, revamping the monetary policy statement, regulation and supervision of insurance and financial institutions, implementation of the goods and services tax, tax administration, national accounts and BOP statistics.
The term of the resident treasury advisor at Ministry of Finance has been extended until end-August 2018, and a Resident Goods and Services Tax Advisor was installed in July 2018 with a term of one year.
Resident Representative
Mr. Andreas Bauer has been the Senior Resident Representative since June 15, 2016. He is based in New Delhi.
Information on the Activities of Other IFIs
Information on the activities of other IFIs in Bhutan can be found at:
World Bank: http://www.worldbank.org/en/country/bhutan/overview
Asian Development Bank: https://www.adb.org/sites/default/files/publication/27755/bhu-2017.pdf
Statistical Issues
| (as of June 24, 2018) | |
| 1. Assessment of Data Adequacy for Surveillance | |
| General: Data provision—particularly with regards to timeliness—has some shortcomings, but is broadly adequate for surveillance. Most affected areas are: national accounts, balance of payments, and fiscal data. | |
| Real sector: The Statistics Department of the IMF (STA) has been actively providing technical assistance (TA) to improve the national accounts and develop a producer price index. Since 2017, TA is being provided through the South Asia Training and Technical Assistance Center. | |
| National Accounts: The current benchmark year of the national accounts is 2000. Besides benchmarking to an old economic structure of the economy, the accuracy and reliability of the GDP estimates are affected by inadequate source data and by some poor compilation methods. Key shortcomings include lack of source data quality control and long lags in gaining access to some source data. The key factors contributing to the data deficiency are the shortage of qualified personnel and facilities. The National Statistical Bureau (NSB) is also constrained by the absence of a Statistics Act. Thus far, Bhutan does not produce quarterly national accounts data. The NSB is currently carrying out a project to estimate a new benchmark for the national accounts and to rebase the current series and produce quarterly national accounts. | |
| Price statistics: Starting in January 2013, the consumer price index (CPI) is compiled on a monthly basis. More current household surveys should be used to update the current CPI weights (2012). A Producer Price Index is compiled monthly but disseminated quarterly. It covers manufacturing, mining, utilities, transport, information, and communication activities. | |
| Government finance statistics: Despite recent improvements in the quality of government finance statistics (GFS), the fiscal data are subject to frequent and substantial revisions, particularly in the expenditure area. The compilation and dissemination of budget execution data and GFS are very limited. Only annual budget execution data are compiled and disseminated, and with a long lag. No GFS are disseminated nationally. The authorities were planning to start producing and distributing internally quarterly data, but thus far there has been little progress. There are inconsistencies between the fiscal and monetary data with regard to bank financing, stemming from differences in the definition of government. Further improvements in GFS are expected under the new SARTTAC GFS/public sector debt statistics program. | |
| Monetary statistics: Monetary and financial statistics are compiled broadly in line with the Monetary and Financial Statistics Manual. The Royal Monetary Authority (RMA) reports monetary and financial statistics monthly, using Standardized Report Forms (SRFs) for the central bank, other depository corporations, and other financial corporations, and monetary data based on these SRFs are published in the International Financial Statistics. However, some data shortcomings include the valuation of financial assets which are recorded at acquisition cost rather than at market price or fair value. | |
| Financial Sector Surveillance: The RMA reports to STA the Financial Soundness Indicators (FSI) on a quarterly basis which include 12 core and 7 encouraged indicators for deposit takers. The FSIs are published on the IMF’s FSI webpage. | |
| Balance of payments: External sector statistics have improved in recent years. The RMA compiles and disseminates quarterly balance of payments (BOP) and international investment position (IIP) data and participates in the Coordinated Direct Investment Survey (CDIS). RMA is expected soon to start reporting external debt statistics to the World Bank’s Quarterly External Debt Statistics Database. Coverage, accuracy, and timeliness of ESS data has improved. Despite recent improvements, external statistics continue to be affected by shortcomings. These include: (i) limited coverage of services’ transactions in the current account; (ii) long lags in dissemination; and (iii) some inconsistencies between the BOP and the IIP data. As recommended by the last TA mission, conducted in April 2018, currently the RMA is developing a new survey to collect additional data from the hydropower projects and expanding the FDI survey frame to improve the coverage of FDI data. | |
| II. Data Standards and Quality | |
| Bhutan participates in the enhanced General Data | No data ROSC is available. |
| Dissemination System and maintains a regularly updated | |
| National Summary Data Page. | |
| (as of June 24, 2018) | |
| 1. Assessment of Data Adequacy for Surveillance | |
| General: Data provision—particularly with regards to timeliness—has some shortcomings, but is broadly adequate for surveillance. Most affected areas are: national accounts, balance of payments, and fiscal data. | |
| Real sector: The Statistics Department of the IMF (STA) has been actively providing technical assistance (TA) to improve the national accounts and develop a producer price index. Since 2017, TA is being provided through the South Asia Training and Technical Assistance Center. | |
| National Accounts: The current benchmark year of the national accounts is 2000. Besides benchmarking to an old economic structure of the economy, the accuracy and reliability of the GDP estimates are affected by inadequate source data and by some poor compilation methods. Key shortcomings include lack of source data quality control and long lags in gaining access to some source data. The key factors contributing to the data deficiency are the shortage of qualified personnel and facilities. The National Statistical Bureau (NSB) is also constrained by the absence of a Statistics Act. Thus far, Bhutan does not produce quarterly national accounts data. The NSB is currently carrying out a project to estimate a new benchmark for the national accounts and to rebase the current series and produce quarterly national accounts. | |
| Price statistics: Starting in January 2013, the consumer price index (CPI) is compiled on a monthly basis. More current household surveys should be used to update the current CPI weights (2012). A Producer Price Index is compiled monthly but disseminated quarterly. It covers manufacturing, mining, utilities, transport, information, and communication activities. | |
| Government finance statistics: Despite recent improvements in the quality of government finance statistics (GFS), the fiscal data are subject to frequent and substantial revisions, particularly in the expenditure area. The compilation and dissemination of budget execution data and GFS are very limited. Only annual budget execution data are compiled and disseminated, and with a long lag. No GFS are disseminated nationally. The authorities were planning to start producing and distributing internally quarterly data, but thus far there has been little progress. There are inconsistencies between the fiscal and monetary data with regard to bank financing, stemming from differences in the definition of government. Further improvements in GFS are expected under the new SARTTAC GFS/public sector debt statistics program. | |
| Monetary statistics: Monetary and financial statistics are compiled broadly in line with the Monetary and Financial Statistics Manual. The Royal Monetary Authority (RMA) reports monetary and financial statistics monthly, using Standardized Report Forms (SRFs) for the central bank, other depository corporations, and other financial corporations, and monetary data based on these SRFs are published in the International Financial Statistics. However, some data shortcomings include the valuation of financial assets which are recorded at acquisition cost rather than at market price or fair value. | |
| Financial Sector Surveillance: The RMA reports to STA the Financial Soundness Indicators (FSI) on a quarterly basis which include 12 core and 7 encouraged indicators for deposit takers. The FSIs are published on the IMF’s FSI webpage. | |
| Balance of payments: External sector statistics have improved in recent years. The RMA compiles and disseminates quarterly balance of payments (BOP) and international investment position (IIP) data and participates in the Coordinated Direct Investment Survey (CDIS). RMA is expected soon to start reporting external debt statistics to the World Bank’s Quarterly External Debt Statistics Database. Coverage, accuracy, and timeliness of ESS data has improved. Despite recent improvements, external statistics continue to be affected by shortcomings. These include: (i) limited coverage of services’ transactions in the current account; (ii) long lags in dissemination; and (iii) some inconsistencies between the BOP and the IIP data. As recommended by the last TA mission, conducted in April 2018, currently the RMA is developing a new survey to collect additional data from the hydropower projects and expanding the FDI survey frame to improve the coverage of FDI data. | |
| II. Data Standards and Quality | |
| Bhutan participates in the enhanced General Data | No data ROSC is available. |
| Dissemination System and maintains a regularly updated | |
| National Summary Data Page. | |
Table of Common Indicators Required for Surveillance
(as of June 24, 2018)
Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.
Both market-based and officially-determined, including discount rates, money market rates, and rates on treasury bills, notes, and bonds.
Monthly CPI data for domestic and imported goods are available from April 2013 onward.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-a-vis nonresidents.
Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); Not Available (NA).
Table of Common Indicators Required for Surveillance
(as of June 24, 2018)
| Date of Latest Observation | Date Received | Frequency of Data6 | Frequency of Reporting8 | Frequency of Publication8 | |
|---|---|---|---|---|---|
| Exchange rates | 04/2018 | 06/2018 | D | D | D |
| International reserve assets and reserve liabilities of the Monetary Authorities1 | 03/2018 | 06/2018 | M | M | M |
| Reserve/base money | 11/2017 | 04/2018 | M | M | M |
| Broad money | 11/2017 | 04/2018 | M | M | M |
| Central bank balance sheet | 03/2018 | 06 2018 | M | M | M |
| Consolidated balance sheet of the banking system | 03/2018 | 06/2018 | M | M | M |
| Interest rates2 | 03/2018 | 06/2018 | M | M | M |
| Consumer price index3 | 04/2018 | 06/2018 | Q/M | M | M |
| Revenue, expenditure, balance and composition of financing4 – general government5 | 2017 | 06/2018 | A | A | A |
| Revenue, expenditure, balance and composition of financing3 – central government | 2017 | 06/2018 | A | A | A |
| Stocks of central government and central government-guaranteed debt6 | 2017 | 06/2018 | Q | Q | Q |
| External current account balance | 2017 | 01/2018 | Q | Q | Q |
| Exports and imports of goods and services | 2017 | 05/2018 | Q | Q | Q |
| Gross external debt | 12/2017 | 06/2018 | Q | Q | Q |
| International investment position7 | 09/2015 | 05/2016 | Q | Q | Q |
Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.
Both market-based and officially-determined, including discount rates, money market rates, and rates on treasury bills, notes, and bonds.
Monthly CPI data for domestic and imported goods are available from April 2013 onward.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-a-vis nonresidents.
Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); Not Available (NA).
Table of Common Indicators Required for Surveillance
(as of June 24, 2018)
| Date of Latest Observation | Date Received | Frequency of Data6 | Frequency of Reporting8 | Frequency of Publication8 | |
|---|---|---|---|---|---|
| Exchange rates | 04/2018 | 06/2018 | D | D | D |
| International reserve assets and reserve liabilities of the Monetary Authorities1 | 03/2018 | 06/2018 | M | M | M |
| Reserve/base money | 11/2017 | 04/2018 | M | M | M |
| Broad money | 11/2017 | 04/2018 | M | M | M |
| Central bank balance sheet | 03/2018 | 06 2018 | M | M | M |
| Consolidated balance sheet of the banking system | 03/2018 | 06/2018 | M | M | M |
| Interest rates2 | 03/2018 | 06/2018 | M | M | M |
| Consumer price index3 | 04/2018 | 06/2018 | Q/M | M | M |
| Revenue, expenditure, balance and composition of financing4 – general government5 | 2017 | 06/2018 | A | A | A |
| Revenue, expenditure, balance and composition of financing3 – central government | 2017 | 06/2018 | A | A | A |
| Stocks of central government and central government-guaranteed debt6 | 2017 | 06/2018 | Q | Q | Q |
| External current account balance | 2017 | 01/2018 | Q | Q | Q |
| Exports and imports of goods and services | 2017 | 05/2018 | Q | Q | Q |
| Gross external debt | 12/2017 | 06/2018 | Q | Q | Q |
| International investment position7 | 09/2015 | 05/2016 | Q | Q | Q |
Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.
Both market-based and officially-determined, including discount rates, money market rates, and rates on treasury bills, notes, and bonds.
Monthly CPI data for domestic and imported goods are available from April 2013 onward.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-a-vis nonresidents.
Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); Not Available (NA).
Revisions to the description of the exchange restrictions maintained by Bhutan under the transitional arrangements of Article XIV are reflected in this section, which result from findings made by IMF staff following a TA mission in 2016. These refer to: (i) the elimination of a previously identified restriction on the availability of FX for importers who are not able to provide the identity of the seller, because staff confirmed that to obtain an import license the importer indeed has to disclose the identity of the seller; and (ii) the reintroduction in the list of a restriction arising from a 2002 measure restricting the availability of FX for importers who have not provided evidence that goods for which payments have been made were actually imported, as the information that staff had about the removal of this measure at the time of the 2009 Article IV consultation was incorrect given that the measure continues to be present in the 2002 Rules and Procedures on Imports from Third Countries, at Section C.12(v).”
The current international transactions for which access to Indian rupees is limited are: personal and business travel and study-abroad living arrangement, moderate family remittances, advance payments for imports from India, and advance salary payments to recruit Indian workers.
On September 1, 2014, the RMA reintroduced housing and vehicle loans (after temporary suspension of access to Indian rupees to finance imports of personal vehicles and housing construction materials in March 2012). This measure removed the previous exchange restrictions found on the access to Indian rupees for imports of certain construction materials and vehicles from India. Staff also found that the exchange restriction on access to Indian rupees for salary remittances by non-residents has been removed. For a description of the measures which lead to the remaining findings of exchange restrictions outlined above, please see IMF Country Report No. 14/179 (Informational Annex).