Bhutan - Balance of payments



Bhutan's current account deficit was at a low of 11.1% of GDP in 1998, the year construction began on the Tala hydroelectric project. This ratio more than doubled the next year, to 24.1% of GDP in 1999, reflecting increased capital goods imports and rising factor service payments for the project dependent on foreign labor and expertise. The proportional deficit on the current account ranged even higher in 2000 and 2001, to 28.4% of GDP and 26.8% of GDP, respectively, and was expected to be yet higher for 2002. However, foreign aid increases, also largely attributable to the Tala project, which is financed by India, have, to date, more than compensated for the current account deficit. In 2000/01, according to the IMF, the current account deficit was at $126.2 million while compensating grants came to $129.1 million, including $100.1 million (77.5% of total grants) from India. As a percent of GDP the overall balance of payments surplus in 2000/01 was 5.9%, a decrease from more comfortable ratios of 8.2% in 1999/2000, 11.0% in 1998/99, and 11.7% in 1997/98. The decline in the overall payments surplus reflects not just increased imports of goods and services, but also an increased share of concessional loans over grants in foreign aid received.

The US Central Intelligence Agency (CIA) reports that in 2000 the purchasing power parity of Bhutan's exports was $154 million while imports totaled $196 million resulting in a trade deficit of $42 million.

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