In a positive development, remittance to Nepal surged by 31.4 percent in the first four months of this fiscal year, amounting to Rs. 687.13 billion. This is a considerable rise from last year's 9.4 percent increase. In dollar terms, this is a 25.3% rise, amounting to $4.88 billion, as compared to only an 8.2% jump during the corresponding period last year. From mid-October to mid-November, remittances hit Rs. 133.82 billion, up from Rs. 114.31 billion the year before. This cash inflow has really helped, pushing the current account surplus to Rs. 279.65 billion. This is almost double the amount from last year’s Rs. 147.78 billion. The balance of payments surplus also went up to Rs. 318.40 billion from Rs. 205.83 billion. By mid-November, gross foreign exchange reserves were at Rs. 3,055.52 billion, which is 14.1% higher than in mid-July. In dollars, that's $21.52 billion, a 10.3% rise from $19.50 billion, giving Nepal a solid cushion if the economic situation hits a rough patch. Plus, money transfers went up to Rs. 6.21 billion, which is way more than last year’s Rs. 2.47 billion. Foreign direct investment hit Rs. 2.49 billion, which shows investors are starting to trust us.
Boom Remittance signs MoU with Kasthamandap Bank
The robust inflow is closely tied to Nepali migrant workers going overseas. During the four months, 145,973 Nepali migrants went abroad for the first time, and 127,837 got their re-entry permits. Even though fewer new migrants went this year compared to last, the nation still has remittance money coming in from both returning and new workers. We all know that remittance money has done wonders for the Nepali economy in the time of turbulence, keeping it from crashing too hard. Despite positive development on the remittance front, our overreliance on remittance funds shows deeper structural problems. Lots of remittance cash is frequently spent on daily stuff or luxurious items such as televisions, fridges, watches, mobile phones, land plots and houses, and much more, instead of being invested in productive sectors or activities, which would enhance the money in the form of investments. By spending them on household stuff and luxurious items, families and households that receive remittances might not be getting real returns from such money. However, economists say that such money has helped keep the inflation rate around 1.53% in the last four months, with food prices even dropping a bit.
Ultimately, to maximize the positive impact of considerable remittance inflow, we need to invest this money into productive sectors such as small and medium enterprises, agriculture, infrastructure, and entrepreneurship that can help grow our economy and create more jobs. This would make us less reliant on loans, grants and aid from other countries. The government and financial institutions should encourage households and families, by offering better incentives, to channelize remittance money towards savings, investments and income-generating sectors. If we can manage well, remittances can help build a strong economy, instead of just being a short-term boost for families. Right now, the surge in remittance inflow shows Nepalis are not only working diligently abroad but also are helping our economy. As remittance keeps flowing, now's the time to use the money to build a better future through its investment in the productive sector.
