The migrant workers abroad are sending home about Rs 1.5 billion on an average each passing day.
Nepal has received Rs 397.8 billion so far in last nine months since the fiscal year began in mid-July, 2013, according to Nepal Rastra Bank’s macroeconomic report for nine months published today.
The amount of remittance that the country received during the period is four-and-a-half times higher than the country’s allocated capital expenditure for the current fiscal year. The budget for 2013-12 had allocated Rs 85 billion under the section of capital expenditure meant to finance country’s infrastructure projects.
Till mid-April, the nation saw the incoming remittance surge by 31.5 per cent in the nine months. Moreover, the massive inflow has made Nepal the third highest remittance receiver in the world according to World Bank’s Migration and Development Brief. Nepal’s remittance income is equivalent to 24.7 per cent of the nation’s Gross Domestic Product in the year 2012.
In last fiscal year ending in July 2013, Nepal’s annual remittance income — Rs 435 billion — was equivalent to 25.6 per cent of the recently published GDP figure of Rs 1,690 billion. Despite all the worries regarding the repercussions of overdependence on remittance instead of creating employment opportunities within the country, remittance has kept the country solvent since past few years.
Although trade deficit is widening, thanks to massive surge in the amount of remittance being sent home, Nepal can easily afford to pay for the imports for next nine months and eight days.
The bulging remittance has contributed in country’s balance of payments (BoP) recording surplus of Rs 106.23 billion by mid-April. The growing BoP surplus is an indication that Nepal is earning more than it is paying for the transactions done with the rest of the world. During the same period of the previous year, Nepal’s BoP was surplus by mere Rs 30.7 billion.
Despite the inflated surplus in both BoP and current accounts, trade statistics continue to be worrisome. Total trade deficit — difference between country’s exports and imports — during the review period surged by 29.1 per cent to Rs 454.06 billion compared to an increase of 23.6 per cent during the same period previous year.
During the period, merchandise exports increased by 19.1 per cent to Rs 68.12 billion compared to rise of 3.5 per cent during previous year. Likewise, during the review period, merchandise imports surged by 27.7 per cent to Rs 522.19 billion. Such imports had risen by 20.3 per cent a year ago.