WB: Remittance inflows soared after earthquakeRemittance inflows to Nepal rose sharply immediately after the Gorkha Earthquake as migrant workers rushed money to their families for living expenses and rebuilding destroyed homes, a World Bank report said.
Remittance inflows to Nepal rose sharply immediately after the Gorkha Earthquake as migrant workers rushed money to their families for living expenses and rebuilding destroyed homes, a World Bank report said.
According to the report entitled Migration and Remittances Recent Developments and Outlook, remittance surged 20.9 percent to $6.6 billion in 2015, basically to finance daily needs and to deal with the effects of the disaster. The growth rate of remittance in 2014 was 3.2 percent.
Nepal Rastra Bank (NRB) confirmed the spike in remittance inflows following the massive earthquake that rocked the country last year. NRB Spokesperson Trilochan Pangeni attributed the increment in remittance to migrant workers sending money to rebuild their damaged houses after the tremor and finance basic consumption in the absence of income generating activities.
Migrant workers were sending money at shorter intervals and in larger amounts to help their families after the disaster, remittance companies said. “Many workers even borrowed money from their friends and employers to support their families at the time of the disaster,” said Chandra Prasad Dhakal, executive chairman of International Money Express, a leading remittance service provider in the country. “This will result in a significant decrease in remittance flows in the coming years.”
According to experts, the money that poured into the country right after the earthquake became one of the most important income sources for the earthquake-affected households as no immediate government aid was forthcoming.
“Increased inflows to finance daily household needs became a vital support for the affected households,” said economist Chandan Sapkota. Remittance inflows swelled also because migrant workers dipped into their savings pool and a number of employment destinations waived transaction fees, according to Sapkota.
Remittance service operators in the United Arab Emirates (UAE) waived fees for transferring money to Nepal for a period following the earthquake.
According to the report, the average number of returns at the airport jumped five times to around 4,000 per day as many migrant workers returned home to take care of their families.
Nepal received remittances from around 35 countries in 2015. The World Bank report estimated that the highest bilateral remittance inflow was from Qatar with $2.02 billion followed by Saudi Arabia with $1.8 billion.
The higher inflows from Qatar and Saudi Arabia are understandable as these two countries are the major foreign employment destinations for Nepali migrant workers.
The other major contributors to remittance are India from where Nepal received $1 billion followed by the UAE with $803 million and the United States with $332 million.
However, the report has a word of caution for the Nepali authorities. It states that remittance inflows to Nepal are expected to decelerate in the future after the surge following the earthquake.
“The regional growth rate of remittances is projected to exceed 4.5 percent over the next two years,” the report said. “Also, the lower oil prices may dampen remittance inflows from Gulf Cooperation Council Countries—Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman. The remittance flows, however, from the United States are likely to remain robust.”
The World Bank report’s assumption on a slowdown in remittance inflows matches a decline in worker departures this fiscal year. In the first eight months of the current fiscal year, departures plunged 45 percent after the government made it mandatory for overseas employers to provide free tickets and visa to their prospective employees.