2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bhutan


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

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SDR Department:

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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):

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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:

Statistical Issues

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Table of Common Indicators Required for Surveillance

(as of June 24, 2018)

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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).