To further promote inward remittance, the Royal Monetary Authority has increased the incentive on remittances from two to ten per cent. This was announced by the central bank today.
As per the new remittance scheme, the beneficiaries will get a 10 per cent incentive upon converting the remitted amount to ngultrum. The conversion is done based on the prevailing exchange rates. This incentive scheme will last till the end of this year.
The RMA says starting the incentive scheme last year helped increase the remittance inflow which is one of the reasons for the increase this time.
By providing a substantial boost to the remittance sector, the RMA hopes to attract more overseas Bhutanese to contribute actively to the nation’s economy
Meanwhile, economists say this short-term measure will not have much impact on increasing the foreign exchange reserves.
“Despite the migration, the remittances have declined significantly. Last time it was 6.8 billion as compared to 8.3 billion in 2021. So, I think remittances have fallen so and that has impacted the foreign exchange reserves. So, this is one measure that is basically to shore up the foreign exchange reserves and make remittance more attractive to the senders from outside,” said Sanjeev Mehta, Economics Professor at Royal Thimphu College.
The RMA says the monetary incentive will reduce the cost of remitting to Bhutan which will ensure the continuity of remittance flows through formal channels.
According to the RMA, the majority of inward remittances are from Australia.
So far, over 151 M USD has been received since the incentive scheme started in June 2021.