Nepal had recorded a strong 47 percent growth in remittance inflow in the previous fiscal year. As remittance drives consumption and serves as the mainstay of the Nepali economy, slowdown in its receipt is feared to adversely affect the market and economy as whole.[break]
The central bank officials attributed the slowed remittances inflow to a new trend, whereby workers are sending less money back home than the past. They said this trend has emerged particularly in the aftermath of bad experiences that the workers have had in the recent global economic slowdown.
However, experts and remitters cautioned that the low remittances growth was due mainly to growing hundis -- the informal channel that has mushroomed in the current political transition -- and increased transfers through them.
“Nepal is receiving more remittances than what the official figure suggests. But worrying fact is, more people are opting to transfer their earnings through hundi,” said Chandra Dhakal of Nepal Remitters Association (NRA).
NRA, which says some 35 percent of the total remitted money still enters the country through informal channel and are not recorded in the official data, believes that Nepal´s remittance inflow crossed over Rs 356 billion in 2009/10.
Experts agreed with remitters. They even opined that the growing use of hundi was not due to any difference in cost of transaction, but largely due to lack of awareness and also due to lack of faith in the formal system.
Rising volume of money transferred through hundi, on the other hand, reflects the growing demand of outward transfer of money, say remitters, referring to capital flight, and suggests the government and financial regulators to step up their vigilance.
Apart from rising informal transfers, manpower agents also said that a large number of manpower agencies also hold workers´ money to pay commission to overseas agents that help them get the job orders.
“Because the government does not allow payment to such agents from here, the agents hold workers income to settle their commission accounts. This too is another major factor behind disproportionate growth in labor export and remittances inflow,” said Gyan Prasad Gaire, vice-president of Nepal Association of Foreign Employment Agencies.
He said the lack of practice of maintaining records on how many workers quit jobs and returned home too had contributed in the mismatch.
The government record shows 294,094 Nepalis left for overseas jobs in 2009/10, but it has no data on how many workers returned home during the year.
Related story
Current account in deficit as remittances growth slows
_20191222200001.jpg)
