Remittance income of the country in the current fiscal year will be almost equal to the annual budget of Nepal. Remittance sent by around 3.38 million Nepali staying abroad is expected to reach Rs 533 billion in the fiscal year 2070/71 even as the ceiling for the next fiscal year’s budget is Rs 596 billion. Remittance amounting to Rs 444 billion has already entered Nepal in the 10 months of the current fiscal year, according to the Nepal Rastra Bank (NRB).
“It will rise further this year. There will not be much difference between the budget the government is preparing to bring and remittance income,” NRB Spokesperson Bhaskar Mani Gyawali stated. Nepal had received Rs 434 billion in remittance in the last year. Though around 1,500 youths who leave the country every day send back remittance to save the country’s economy, it has not been used in capital formation. Former vice chairman of the National Planning Commission (NPC) Deependra Bahadur Chhetri stated that this money is spent to procure expensive and luxurious goods. Experts claim that almost 80 percent of remittance money is used in goods for daily consumption and entertainment while a meager 2.4 percent is spent in capital formation. “The government must form a mechanism to use such money in capital formation. Though remittance lifts living standard, it cannot be sustainable. We must think about that in time,” he reasoned.
Around seven percent of the remittance amount is spent to repay loans taken while going abroad and just 3.5 percent in education of the children. A study ahs showed that 55.8 percent of Nepali households receive remittance income. Economists fear that poverty will rise at an alarming rate if those families were not to receive remittance. A study published by the World Bank last year showed that poverty falls by 3.5 percent when remittance income rises by 10 percent. Remittance was the main reason for reduction of poverty to 31 percent in 2004 from 42 in 1996. Government data claim that poverty was limited to 23.8 percent last year.
Thirty commercial banks and other companies are currently bringing remittance into Nepal from different countries. International Money Express (IME), Prabhu Money Transfer and Western Union are a few popular companies involved in bringing remittance. Similarly banks and financial institutions like Prabhu Development Bank are also bringing remittance income. Himalayan Bank was the first commercial bank in Nepal to provide remittance service in the name of Himal Remit. Chhetri said rise in remittance is a major reason for easing of liquidity in banks and financial institutions.
Remittance has also become a major business for the banks. It is becoming easier to get remittance from villages as the banks have opened branch offices even in rural areas recently. Gyawali revealed that more remittance arrives especially during festival season. Almost an equal amount is estimated to come to Nepal through hawala trade.
Remittance Coming to Nepal
|2068/69||Rs 359 billion|
|2069/70||Rs 434 billion|
|2070/71||Rs 444 billion (in 10 months)|