Bhutan bans the import of most vehicles as foreign exchange reserves plummet

Bhutan will ban the import of all vehicles except utility vehicles, heavy earth-moving machinery and agricultural machinery to save dwindling foreign exchange reserves, the government said in an announcement seen by Reuters on Friday.

Located between China and India, the country of fewer than 800,000 people is struggling with the effects of soaring oil and grain prices caused by the war in Ukraine, as well as the continuing impact of the pandemic, including a strict zero-Covid policy that has barred foreign tourists for the past two year.

Foreign exchange reserves had fallen to $970 million at the end of December 2021, from $1.46 billion in April 2021, according to data released last month by the Royal Monetary Authority of Bhutan.

The finance ministry said in a statement that imports of utility vehicles costing less than 1.5 million ngultrums ($20,000) would be allowed and that vehicles for the use and promotion of tourism would be exempt.

“The engine is implemented to ensure sufficient foreign exchange reserves to maintain macroeconomic stability,” it said.

The Kuensel daily said Bhutan imported more than 8,000 vehicles in the year to June and that this was one of the main contributing factors to the depletion of reserves.

Bhutan is required by its constitution to maintain reserves to cover at least 12 months of imports.

The government will review and amend the moratorium that came into force on Friday in six months depending on the foreign exchange reserve position, it said.

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