KATHMANDU, Jan 19: Remittances inflow recorded a slower growth of 6 percent to Rs 287.66 billion in the first five months of the current Fiscal Year 2016/17.
In the corresponding period last year, remittances inflow had increased by 19.4 percent to Rs 271.37 billion. The central bank has attributed the slower growth to decline in the number of outbound workers and demonetization of high denominations Indian banknotes.
"The fall in the number of outgoing workers and the decline in remittances from India on account of recent demonetization of high value Indian banknotes resulted in the modest growth in workers' remittances in the review period," reads the recent macroeconomic situation report unveiled by the Nepal Rastra Bank (NRB).
The number of outbound workers, based on final approval for foreign employment, decreased by 8.9 percent in the first five months of 2016/17 compared to a decline of 22.6 percent in the same period of the previous year.
Meanwhile, the current account surplus squeezed to Rs 3.49 billion in the review period from Rs 149.13 billion in the same period of the previous year on account of sharp increase in imports. According to the data, the total merchandise imports increased 78.9 percent to Rs 382.64 billion in the review period as against a decline of 32 percent in the same period of the previous year, widening trade imbalance by 87.6 percent to Rs 352.01 billion.
In the first five months of 2016/17, merchandise exports increased by 17.1 percent to Rs. 30.63 billion. The overall BOP recorded a surplus of Rs 28.78 billion in the review period compared to a surplus of Rs 128.11 billion in the same period of the previous year, according to the report.
"Relatively higher rate of growth in imports is likely to exert pressure on the country's balance of payments (BOP). However, a steady growth in remittances and an increased level of official development assistance (ODA) are likely to offset the pressure, resulting in a modest surplus in BOP going forward," the report added.
'Growth expected to rebound'
The central bank has painted a rosy picture of economy in the current fiscal year. The real output is expected to rebound to the targeted level in 2016/17, according to the report.
Favorable monsoon, improved power supply, expected pickup in reconstruction works and steady remittances have the potential to improve the economic growth outlook going forward, reads the report.
According to the report, the better than expected growth in agriculture is slated to propel the economic growth to the targeted level in 2016/17.