Nepal’s remittance earning crosses Rs1 trillion markRise attributed to dollar appreciation, growth in outbound worker numbers.
Nepali migrant workers sent home Rs1 trillion in the last fiscal year ended mid-July, a record-high money transfer to Nepal since Nepalis started to look for overseas employment more than two decades ago.
The rise in the earnings has been attributed to the appreciation of the US dollar.
Remittance inflows increased 4.8 percent to Rs1 trillion in the last fiscal year ended mid-July, Nepal’s central bank said on Tuesday. In the previous fiscal year 2020-21, Nepal had received Rs961.05 billion in remittances.
“It’s a slight improvement if we see remittance earning in terms of the US dollar,” said Gunakar Bhatta, spokesperson for the Nepal Rastra Bank. “It has increased by 2.2 percent to $8.33 billion.”
Experts say that though remittance earning has increased marginally, the upcoming years look more optimistic given the outflow of Nepali workers to various labour destinations.
The number of Nepali workers taking approval for foreign employment increased significantly to 354,660 in the last fiscal year, according to the central bank. Similarly, the number of Nepali workers renewing entry permits for foreign employment doubled to 282,453 individuals in the review period.
The total figure of 637,113—new and reentry—makes the second highest numbers in history.
The highest number of labour approval was 642,859 in the fiscal year 2016-17, according to the Department of Foreign Employment statistics.
The foreign labour migration had dropped to a 16-year low to 166,698 in the fiscal year 2020-21 when the Covid-19 pandemic hit the world economy, including Nepal.
“One of the key factors for the increment in remittance, besides appreciation of the US dollar, is the surge in the number of migrant workers after the labour markets started to ease Covid lockdowns and restrictions to kickstart their economic activities,” said Bhatta.
Bhuvan Dahal, former president of the Nepal Bankers’ Association, seconds Bhatta.
“The increment in the number of migrant workers as well as their remuneration with the growth in economic activities might be among the causes of increase in remittance,” said Dahal, the former chief executive officer of Sanima Bank.
Soon after Covid cases started increasing in labour destination countries, where tens of thousands of Nepali workers have been working and living, the Nepal government in mid-March had stopped sending workers to those countries.
Meanwhile, labour destination countries, too, had enforced several coronavirus containment measures like suspending international flights and banning entry of foreigners for months.
However, the foreign labour migration started gaining pace after labour destinations started opening their borders and easing restrictions with the reduction in Covid-19 caseloads.
Though remittance is the largest source of foreign exchange for the country, officials suspect that large sums of money are still being diverted through informal channels using cash bonuses.
Dahal argues that the actual remittance amount might be much higher as a significant portion of it is sent and received through illegal channels.
“As per my assumption, one-third of remittance comes to the country through illegal channels,” said Dahal.
Experts say the government and the central bank needed to incentivise the Nepali diaspora to send remittances through formal channels.