Fixing accountability is the key phrase that sticks out from the Council’s review of the Rupee issue its members deliberated yesterday and made recommendations on what should be done.
It wants some kind of action taken against those responsible for the situation the Bhutanese economy is in and according to their findings the central bank and finance ministry are the institutions to blamed for the mess that is perhaps only beginning.
The council even went on to issue some kind of an ultimatum that the cabinet secretariat must submit a report to the next parliament session on the actions taken.
The council essentially believes that competency of decision makers in these institutions is questionable and they therefore need to be replaced.
The idea of fixing accountability comes at a time when one of the criticisms against Bhutan, as a nation propounding the GNH paradigm, is that it is country where no one is really accountable apart from being dependent on donor money for development.
The council’s review of the Rupee situation, based on access to the minutes of the central bank’s board meetings, is quite revealing.
Since 1993 Bhutan has been borrowing rupee every now and then to meet domestic shortages. Yet the issue never really received importance and was always discussed as ‘any other issue’.
To that extent the central bank’s board of directors ought to be held responsible, because they saw a problem but did nothing to address it or probably had no inkling on how big it might become.
It was only in 2010 the central bank emerged as a separate entity with an act of it own. Before that it was almost like an appendage to the finance ministry with the finance minister as its governor and chairman of the board.
Its key responsibility, besides issuing new notes and burning old ones, was really about maintaining the peg parity between the Rupee and the Ngultrum by making sure there was enough Rupee in the market. Monetary policies have little or no impact because of the dominating effect of the Indian economy on which the local economy is dependent.
How responsibility is fixed on the two institutions as desired by the council will be interesting to see considering the issue, which exploded only recently has been festering over decades and board members and heads have changed overtime.
The general feeling out on the street though is more about doing something to turn the situation around rather than crucifying those accountable. Local observers have made a number of doable suggestions to turn this shortage into a surplus like for example mechanising the construction sector and engaging a better-paid national workforce to a more practical management of reserves.
So far the response from the powers to be have been muted apart from indicating that more rupee will soon be flowing in at a lower interest rate.
It is clear which is the way out and existing restrictions are definitely not the one.