Funny money?

For over a decade now, every time I’ve fueled up in Phuentsholing, I’ve asked the petrol pump cashier to exchange various amounts of Ngultrums for Indian Rupees. I’ve had little problems changing small amounts, like Nu 500. But for larger amounts, say Nu 5000, it would sometimes get difficult to change my money.

I’ve rarely needed the Indian Rupees for my stay in Phuentsholing, yet I’ve made it a point to request for the informal currency exchange every time I visit our border town. I’ve developed this odd tradition to give me a very rough idea of the state of our economy.

My assumption is simple – petrol pumps in Phuentsholing should always have a ready supply of rupees. Why? Because many Indians fuel up in Phuentsholing. And they pay for it in rupees. Plus, since fuel is cheaper in Bhutan, some Indian’s take away petrol in barrels, presumably to sell at a profit … but that’s another matter.

So if I can change my money easily, it would mean that rupees are easily available; that the ngultrum is at least as strong as the rupee; and that, overall, we export more than we import from India. This is good sign.

But if I can’t change my money easily, it would mean that the rupees from the petrol pump are quickly diverted elsewhere; that the true value of the ngultrum is not at par with the rupee; and that, overall, we import much more than we export to India. This is not a good sign.

All things considered, I’ve had no cause to be concerned. Like I said earlier, changing small amounts of money has generally been easy.

But now I’m very worried. It appears that small shops in Phuentsholing are doing a brisk business charging a whopping 10% to change ngultrums to rupees (read The ‘swop’ shops of Phuentsholing). That means that you get only Rs 10,000 in exchange for Nu 11,000. That means demand for rupees outstrips supply. That means we import much more than we export to India, our principle trade partner. That means the market value of the ngultrum is not at par with the rupee.

Huge amounts of rupees have been pumped into our economy to construct hydropower projects. Even larger amounts of rupees come in as Indian aid. And most of our government’s revenue is realized through the sale of electrical power to India bringing in yet more rupees. And still we have difficulty changing ngultrums for rupees?

We should be very worried.

But there’s little point in treating the symptom. So trying to stop small business from selling rupees at a profit, for example, won’t provide real relief. It won’t be possible to forcefully stop them, anyway. Instead address the problem: reduce unnecessary imports; decrease dependence on foreign workers; increase farm productivity; support rupee generating businesses; and strengthen the private sector.

We have free and full access to one of the world’s largest and fastest growing markets. Use it. Tourism, education, health, ICT, manufacturing, finance, agriculture, and hydropower … any one of them should be able to generate more than enough rupees. Used together, we should be able to fulfill His Majesty the King’s vision of creating a robust and vibrant economy for our country.