The Bhutan We Think We Know

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FAQ

How much does Bhutan hold in foreign reserves — and why does it keep running low?

Bhutan's gross international reserves fell to a cycle low of USD 505 million in October 2023 — 68% below the all-time peak of USD 1,558 million (October 2020) — then began rebuilding: the RMA reported USD 800 million as of June 2025, then recovered strongly: USD 1,316 million by March 2026 — a post-trough high — easing to USD 1,238 million by May 2026 and to about USD 1,190 million in July 2026, a fall of roughly USD 31 million in a single month that the Finance Minister confirmed publicly on 9 August 2026. The swings are structural: reserves rise when tourism, remittances and concessional loans flow in, and fall quickly when imports resurge and convertible-currency debt on hydropower must be serviced as the rupee weakens. Most of the cushion is convertible currency; the thin Indian-rupee layer is what empties first in a squeeze.

Bhutan’s reserves move in sharp cycles rather than a steady line:

DateGross international reserves
October 2020USD 1,558 million — all-time peak (COVID import collapse + external loans)
October 2023USD 505 million — cycle trough, 68% below the peak
June 2025USD 800 million — RMA Annual Report, mid-recovery
March 2026USD 1,316 million — post-trough high (RMA monthly series, provisional)
May 2026USD 1,238 million — RMA monthly series, provisional
July 2026USD 1,190 million — latest reading; a fall of ~USD 31 million on June, confirmed by the Finance Minister on 9 August 2026

Why it falls. After COVID, imports resurged while the current-account deficit widened sharply, and convertible-currency debt service on hydropower rose as the rupee slid from about 74 to 87 per US dollar. Bhutan’s constitution requires reserves to cover at least 12 months of essential imports — a floor the country flirted with, but did not breach, during the 2021–23 squeeze.

Why it recovered. The Royal Monetary Authority credits three drivers: tourism receipts after the Sustainable Development Fee was revised, remittances up 69% year-on-year in FY 2024/25 (Australia the largest source), and moderating imports.

Why it turned again. In August 2026 the Finance Minister confirmed the first official decline since the recovery began, and named the drivers: fuel — close to a fifth of the import bill, with prices spiking toward Nu 200 a litre while the state held the pump price below Nu 105 — alongside ngultrum depreciation and an upward revision to how informal border imports are counted. The subsidy holding that pump price down has now cost more than Nu 1.8 billion, and was paid partly with money originally allocated to affordable housing: the billion and a half that became diesel.

Even so, the IMF’s 2025 review judged reserves “significantly weaker than warranted by fundamentals” — a reminder that the recovery is real but not a cushion, and July 2026 is the first month the direction changed.

The per-capita size of that vault is Paradox #7; the remittance lifeline that refills it is Paradox #8; the rupee peg that shapes the whole reserve question is Paradox #24. See also is the ngultrum pegged?

Primary sources