KATHMANDU, Oct 2: In the month of Shrawan (mid-July to mid-August 2023), Nepal received the all-time high remittance inflow. Nepali migrant workers sent a total of Rs 116.2 billion in remittances through official channels.
The country has been consistently receiving over Rs 100 billion in remittances each month since Mangsir (mid-November to mid-December) last year, and a historic high has been received in Shrawan (mid-July to mid-August).
Generally, remittances used to come in a little higher before Dashain and Tihar. Since Dashain falls around October/November, remittances increase at a high rate in September and October. This year, however, the surge in remittances began as early as May/June.
There are two primary factors contributing to this rapid increase in remittances. Firstly, a significant number of people left the country this year for employment and education opportunities abroad. Secondly, the strengthening exchange rate of the US dollar has further boosted the remittance influx.
"The main thing is that when there is large-scale immigration, it has an impact on remittance income," said Trilochan Pangeni, former executive director of Nepal Rastra Bank (NRB). “If we can control the hundi (an illegal form of remitting money from abroad), the remittance base will increase further,” he added.
Families residing in Nepal tend to spend more during Dashain and Tihar, covering expenses related to food, clothing, transportation, and more. As a result, individuals working abroad tend to send larger remittances during this period. "What makes Dashain and Tihar vibrant is basically remittances," former governor of NRB Dr Chiranjibi Nepal said, "Though the local income is low this year, the money sent from abroad will support these festivals."
According to him, due to a large number of people going abroad, this year's remittance income will be higher than previous years.
There was no significant improvement in the remittance data of previous years before Dashain. Due to the ongoing effects of the Covid-19 pandemic, a large group did not go abroad like this time. At that time, those who went abroad also returned to Nepal.
In contrast, this year, due to the economic recession, weak morale, high prices, and declining business activities in the domestic economy, the youth have either gone to work or have gone out on the pretext of pursuing higher education. Both groups contribute to the increase in remittances during festivals, as they send money back home. As a result, the NRB also expects remittances to increase in September and October.
“Our estimate is that it will increase by about 20/25 percent. As Rs 116 billion came in July/August itself, it should easily exceed Rs 125 billion in September/ October," said a senior official of the NRB. "The increased deposits in the banks in the last few days also indicate that there will be a good improvement in remittances."
The growth rate of remittances was not encouraging last year. With a remittance inflow of Rs 92 billion in August, it was limited to Rs 94.83 billion in September and Rs 94.1 billion in October.
In 2021, Rs 76 billion were received in August, Rs 79.2 billion were received in September and Rs 81 billion in October.
Due to the increase in remittances, the country's foreign exchange reserves have also improved significantly. The foreign exchange reserves had fallen to Rs 11.47 trillion in April, 2022. Now, it has risen to Rs 15.73 trillion in July/August.
According to the Department of Foreign Employment, 354,000 people went to work last year, and this year 497,000 have gone abroad. Last year, 13,800 people went for foreign employment in July/August while this year 44,540 people went abroad, as per the latest data.