Despite the government claiming economy is back to normal, Bhutan’s trade deficit is likely to skyrocket as hydropower fails to cover import cost of the same sector.
According to latest figure from the government, Bhutan made loss on energy trade. Bhutan’s only export earning to give life to the economy, virtually, is the hydropower. However, last year the country loss Nu 800M on energy trade to the increasing demand of petroleum products and its, simultaneously, increasing prices. The import of petroleum products has increased by Nu 600 million while revenue generated by hydropower decreased by Nu 1B.
This year’s slash in petrol prices has given little relief to the national economy.
The hydropower sector, last year, earned an annual revenue of Nu.7.6B after netting off the loan repayment while the country imported energy in the form of fossil fuel worth Nu.8.4B.
Besides, showing a negative balance of trade, this phenomenon also puts pressure on the rupee reserve, because the entire rupee generated by the hydropower sector is being utilised in importing fossil fuel.