Services account also slips into deficit amid rising travel payments
KATHMANDU, May 23: Nepalis travelling abroad spent a total of Rs 67.94 billion in first nine months of the current fiscal year – FY2018/19.
According to Nepal Rastra Bank, total money that flowed out of the country for travel purpose rose to Rs 67.94 billion in the review period, up by 16.4 percent in the corresponding period of FY2017/18. Such spending was Rs 58.34 billion in the first nine months of the last fiscal year.
The rise in travel payments indicates a growing trend of Nepalis going abroad for vacation. While nearly half of the total amount, or Rs 35.44 billion, represents the money spent for education by students going abroad, the remaining is expenses of outbound Nepali travelers or workers going for foreign employment.
The data has left many people worrying as spending by outbound Nepali holidaymakers is soon outpacing the country’s total tourism earnings. The rise in travel payment is higher than the growth of travel earnings. According to the data, the country’s total travel receipt rose by 8 percent to Rs 54.3 percent over the first nine months of FY2018/19.
The rise in travel payment has also sent the service account of the country into deficit. According to the data, the net services account ended into a deficit of Rs 10.9 billion in the review period compared to a deficit of Rs 2.93 billion a year ago.
With income rising, many Nepalis, particularly from middle class, are going abroad on holiday, say observers. Many travel agencies are floating attractive tour packages for countries like Thailand, the Philippines, Malaysia, and Singapore along with several European countries.
While the Nepal Rastra Bank (NRB) has lowered the limit of foreign currency exchange for outbound Nepalis recently, travel payment has continued to rise in recent months.
As part of its efforts to shore up foreign exchange reserve of the country, the central bank in November last year reduced the limit of foreign exchange to US$ 1,500 per passport for Nepali nationals going abroad.
This means Nepalis traveling to a foreign country (other than India), mainly for vacation or personal purposes, will get foreign exchange of up to $1,500 only. Previously, the limit used to be $2,500.
Similarly, such limit for outbound worker has been lowered to $200 from $500. The NRB has also made Permanent Account Number (PAN) mandatory for those who want to get foreign exchange facility of over $5,000 for education, immigration and health purpose.
According to the central bank data, the gross foreign exchange reserves fell to $9.52 billion in mid-April 2019 from $10.08 billion as at mid-July 2018.