Remittance growth declines despite rising migration

KATHMANDU: Despite an increasing number of Nepalis going abroad, remittance inflow has slowed down.

According to the latest economic and financial report by Nepal Rastra Bank, remittance inflow in the first six months of this fiscal year stood at Rs 763 billion.

This is only a 4.1% increase compared to the same period last year.

In contrast, last year’s remittance growth rate for the same period was 22.2%. When measured in U.S. dollars, the growth is even lower. By mid-January, remittance inflow in USD increased by just 1.1%, reaching $5.85 billion.

This is a sharp decline from last year’s 19.5% growth. Since exchange rate fluctuations affect Rs figures, USD-based comparisons provide a more accurate reflection of remittance trends.

The declining growth in remittance, despite rising labor migration and overseas study numbers, has raised concerns about funds being diverted through informal channels like hundi or capital flight.

By mid-January, 393,000 Nepalis had obtained new or renewed labor permits for foreign employment, up from 340,330 in the same period last year.

Nepal Rastra Bank’s assistant spokesperson, Dilliram Pokhrel, attributed the slowdown to the already high base of remittance inflows. “With a large existing volume, sustaining high growth is challenging. Further study is needed to draw conclusions,” he said.

In the past three fiscal years alone, nearly 2.5 million Nepalis have left for foreign employment or study. The COVID-19 pandemic caused a slowdown in remittance growth, but it rebounded by 23.17% in FY 2079/80 and 16.49% in FY 2080/81. However, this fiscal year, growth is expected to decline. Last year, Nepal received Rs 1.445 trillion in remittance.

As of mid-January, Nepal’s current account, which tracks the inflow and outflow of funds, shows a surplus of Rs 148 billion.

However, this is lower than last year’s Rs 162 billion surplus, indicating a narrowing gap between money entering and leaving the country.