The Royal Monetary Authority (RMA) handed over its highest ever-annual surplus of Nu 3.001 billion (B), from the realisation gain on net sale of foreign assets and RMA’s regular net operating profit, to the finance ministry yesterday.
The net surplus saw an increase of Nu 1.46B from Nu 1.55B incurred by the central bank last year.
A press release from RMA states that the 100 percent increase in surplus reflected the change in accounting policy, which is a national landmark approach.
The central bank has adopted the Bhutanese Accounting Standard (BAS) with the technical assistance from the International Monetary Fund (IMF).
RMA is the second central bank in the region that moved towards international accounting standards. BAS is the 2014 version of International Financial Reporting Standards (IFRS). RMA is expected to fully adopt IFRS by June 30, 2021.
Before adopting RFRS, RMA governor, Dasho Penjore said that RMA gained lots of unrealised gain from dollar rate fluctuation. For instance, if a dollar from RMA cost Nu 50, but its value is Nu 70, the difference of Nu 20 is the unrealised gain.
However, with the new standard in place, the gain from the sale of the dollar is booked as realised gain.
The press release states that the transition to BAS accounting has entailed several accounting policy changes. “The recognition of unrealised gain/losses in the Statement of Comprehensive Income contributed hugely to the surplus.”
RMA has produced its first BAS compliant financial statements for the financial year-end. The transition has enabled the central bank to account realisation of gains on net sale of foreign assets, which amounted to Nu 1.95B for the 2018-19 financial years.
In addition, the central bank’s regular net operating profit amounted to Nu 1.47B.
Meanwhile, the gross international reserve is at USD 1B reflecting the soundness of the economy and efficient management of reserves.
Acknowledging government’s approach in brining foreign reserve from multilateral agencies, the governor reminded everyone not to be complacent. He said that the reserves were mainly coming from donors and multilateral agencies. “Should the reserve come from hydropower, tourism, and private sector the performance will be highly appreciated.”
Besides change in accounting policy, the surplus made by RMA was attributed to two significant reasons. “It indicates the healthiness of the economy. It suggests the excellent investment and management of the international reserve of the country by RMA,” governor said.
The surplus was handed over to the finance minister Namgay Tshering in presence of Prime Minister Dr Lotay Tshering.
Both Lyonchhen and finance minister applauded RMA’s contribution to the country’s economy.