Despite a rising number of outbound migrant workers, remittance inflow decreased 4 percent in the first two months of the fiscal year—the first drop in years.
The inflow has not decreased in any month over the last four years. Although the exact reason behind the decrease in remittance is yet to be ascertained, stakeholders said increased use of informal channels such as Hundi and the strengthening of the domestic currency against the US dollar over the last one year could be the reasons behind the decrease.
However, even in the US dollar terms, the remittance has decreased 1.1 percent, suggesting the inflow has decreased in absolute term.
The remittance grew at a meager 0.8 percent in the first month, and decreased 4 percent to Rs 84.48 billion as of the second month of the fiscal year.
There has been an abrupt break in the surging trend of remittance, which grew at an handsome 34.7 percent rate in 2013-14.
As remittance is the largest source of foreign exchange necessary to fund surging imports of both essential and luxury goods, a decrease in remittance has raised eyebrows. Remittance accounts for 29 percent of the GDP.
However, NRB spokesperson Manamohan Kumar Shrestha said the slight decline in remittance would not make any immediate difference to the country’s foreign exchange reserves.
According to the central bank’s statistics, foreign exchange reserves as of mid-September stands at Rs 660.80 billion, down 0.7 percent from Rs 665.41 billion in mid-July.
The forex reserves are adequate to fund merchandise and service imports for 9.1 months.
Stakeholders see no particular reason behind the fall in remittance. International Money Express CEO Suman Pokharel said although they were doing brisk business, increased inflow of remittance through informal channels might have played a role.
The remittance inflow has been escalating in the recent years, thanks to increased number of outbound migrant workers.
According to the Department of Foreign Employment, the number of outbound Nepali workers has been growing at an annual rate of 12 percent. In the last fiscal year, 527,814 Nepalis left the country for foreign jobs.
Meanwhile, the country’ export earnings also declined in the first two months. The earnings declined 4.8 percent to Rs 14.43 billion. On the other hand, imports surged 20.9 percent to Rs 126.36 billion.
As a result, the country’s trade deficit has crossed the Rs 100-billion mark in just two months, standing at Rs 107.73 billion.