macroeconomic outlook role of financial sectors in … 1 session...securities brokers pension fund...

Macroeconomic OutlookRole of financial sectors in Bhutan.

TSHERING DHENDUPDMRSROYAL MONATERY AUTHORITY OF BHUTAN11th December, 2018

Financial Sector StructureRoyal Monetary Authority

Banks

BoB

BNB

BDB

Druk PNB

T Bank

Insurance Companies

RICB

BIL

GIC  Bhutan Re

Capital Markets

RSEB

Securities Brokers

Pension Fund

NPPF

2

Macroeconomic Outlook

REAL SECTOR

• Unfavorable hydrological flows for electricity generation(3.8%)

• Decrease in hydropower construction activities(13.3% to 6.3%)

INFLATON

BALANCE OF PAYMENT

• In 2017/18, current account deficit 19.02 % of GDP. (Nu.31,306.95 million)

• As compared to 2016/17 24.23 % of GDP (Nu .36,142.83 million)

• Narrowing deficit in trade‐in‐goods• Merchandise exports (5.39%)• merchandise imports(3.24%)

• Gross Intl. Reserve ‐ USD 1,110.91 million as of  June 2018, sufficient to finance 13 months of merchandised import 

CREDIT MARKET

• Total credit Nu. 107,720.41 million by FIs (June 2018).•13.32%

•The continues reliance on credit from the Fis ---increasing trend.

•Majority of the FI credit was concentrated in Housing (23.58%) followed by Service and Tourism  (23.06% ) and Trade in Commerce with (13.96%)

ROLE OF FINANCIAL SECTOR IN BHUTAN

1. Mobilization of savings 2.Link between savings & investment3. Liquidity4.Transfer of risk5. Employment 

ROLE OF FINANCIAL SECTOR IN BHUTAN

6. Financing the key sectors in the economy.

Points for consideration?

Points ‐ Development of the Capital Market

‐ Maintaining External Stability(credit concentration)

‐ Priority Sector Lending (PSL) – CSI sector • Five economic Jewels

• Boost domestic production/reduce dependency on imports• Coordination of several Government agencies• Role of FS‐ collective commitment for better financing• Catalyze the CSI sector into growth driver.

‐ Alternate source of financing (CF,AI)

‐ Interbank borrowing

‐ Financial Literacy (NFLS 2018‐2023)

‐ Compliance to regulatory requirement

Thank you!