The Economy of Bhutan

Economy

The currency of Bhutan is the Ngultrum (1 Ngultrum = 100 Chetrum). In addition, the Indian Rupee, also counts as an official means of payment.

Cornerstones of the Bhutanese economy are agriculture and forestry, as well as animal breeding, in which 90 percent of the population are engaged. The return from this sector amounts to almost 40 percent of the gross national product (GNP). Most of the farmer's households produce mainly for their own subsistence.

The Royal Government of Bhutan makes considerable efforts to expand the nation's economic basis and to improve the social services. Next to the targeted promotion of the 13 traditional handicrafts, the government also encourages the developmental cooperation with the western European nations, especially in regards to the the realization of infrastructure and educational programs. Due to the mountainous terrain, road construction faces considerable difficulties. Scarcely 2000, of a total of 3300 kilometers of highway in Bhutan, are asphalted. The national airline, Druk Air, mainly flies to over-regional destinations such as Kathmandu or New Delhi. There are no trains in Bhutan.

 

 

The industrial sector of Bhutan is dominated by the cottage industry, however, only two percent of the population are engaged in this area. The production is concentrated on cement, wood products, alcoholic beverages and calcium carbide.

In 1998, the GNP was 1,9 billion dollars with a growth rate of 6,5 percent. 38 percent each of this amount comes from agriculture and industry. Only 24 percent comes from the service sector. The rate of inflation in 1996 stood at 7,4 percent.

The most important trading partner of Bhutan is India, from where it gets 77 percent of its imports. The trade deficit in 1997 was estimated at 32 million dollars at an export volume of 99 million dollars. The household budget of Bhutan lies at about 150 million dollars and is almost balanced. The foreign debt makes up approximately 87 million dollars.

Practically all of the electricity of Bhutan is produced by hydraulic energy. Already now, Bhutan exports 1,5 billion kilowatt hours of electricity per year, mainly to India. Bhutan itself has a yearly consumption of about 275 million kilowatt hours. No doubt, the greatest potential for the further economic development of Bhutan can be found here, as well as in the wood production industry and in tourism.

The Political System
Geography
The Economy of Bhutan
The Population


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In the last 20 years, the Bhutanese capital Thimphu has enjoyed a considerable upswing.
Photograph by Marc Dujardin


On a winter day, a jet from the national airline, Druk Air, lands in front of the Paro-Dzong.
Photograph by Françoise Pommaret


Employees of the national library in Thimphu learn how to work with computers.
Photograph by Françoise Pommaret, 1986