KATHMANDU, Aug 26: The number of people going abroad to work fell last year, pushing the growth rate of remittance inflow down in Fiscal Year 2015/16.
Unveiling the ‘Current Macroeconomic and Financial Situation of Nepal (Based on the Annual Data of 2015/16)’ report on Friday, Nepal Rastra Bank (NRB) said remittance flow into the country went up 7.7 percent to Rs 665.06 billion Fiscal Year 2015/16, compared to a growth of 13.6 percent during Fiscal Year 2014/15.
Remittance is now equal to 29.6 percent of the total gross domestic product (GDP) of the country. The ratio of remittance to GDP was 29.1 percent in the last fiscal year, according to the report.
Experts attribute economic the fall in the growth rate of remittances to slowdown in labor-receiving countries like Saudi Arabia, and a general decline in the number of workers flying abroad for employment from Nepal.
According to the report -- which compiled data from the Department of Foreign Employment (DoFE), the number of Nepalis leaving for foreign employment, based on final approval, decreased 18.4 percent in the review year.
418,713 acquired work permits from DoFE in the last fiscal year, down from 512,887 in the previous year.
In May 2016, the World Bank, in its report entitled ‘Remittances at Risk’ as part of its Nepal Development Update, said that contraction in the outflow of migrant workers has persisted since April 2015 following the earthquakes. The report linked migrant workers’ choice to stay back at home to rebuild and a slowdown in the labor-receiving countries for the decline in the number of migrant workers going abroad.
“Two factors are affecting this trend: (i) in the aftermath of the earthquakes, potential migrants are increasingly choosing to stay at home to support their families with rebuilding homes and livelihoods, and (ii) a weaker demand for worker from commodity-exporting host countries where low commodity prices have dented their incomes and weakened their fiscal balances,” the World Bank report said. The World Bank report took the decline in the number of workers as a sign of potential slowdown in remittances to Nepal.
“The prolonged contraction in departure of migrant workers is an early sign of a potential slowdown in remittances to Nepal. A potential slowdown of remittances poses a significant near-term risk to Nepal because of its outsized role in the Nepalese economy,” the World Bank report warned.
Average annual inflation at 9.9%
The ‘Current Macroeconomic and Financial Situation of Nepal (Based on the Annual Data of 2015/16)’ report unveiled by Nepal Rastra Bank (NRB) on Friday shows that the average annual inflation stood at 9.9 percent, slightly below double-digits. Inflation rose beyond the 8.5-percent target set by the central bank in its monetary policy for Fiscal Year 2015/16.
Year-on-year inflation, as measured through consumer price index (CPI), stayed at 10.4 percent in mid-July 2016 compared to that of 7.6 percent a year ago.
The central bank failed to rein in inflation last fiscal year as its monetary instruments alone were not adequate to control inflationary pressures resulting from the demand side while the Tarai turmoil and unofficial economic blockade imposed by India caused massive supply disruptions.