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DOCKING NEPAL’S ECONOMIC ANALYSIS
REMITTANCE REMITTANCE Nepal has traditionally been dependent on agriculture for livelihood. But, after 1990, increased access to passports opened up new avenues for Nepalis to work in different parts of the world - from the Middle East to Southeast Asia and beyond. Young men also left in the 2000s due to the Maoist People’s War. Fast forward to the 2015 earthquake, when the nation trembled and millions of people lost their homes and livelihood, migration became a new standard pattern of behavior for earning money and rebuilding their homes. Labor migration has, thus, been going on for years. Foreign employment has not only served as a backbone for addressing Nepal’s unemployment issues for years but has also contributed significantly to the country’s economy in the form of remittances. Remittance is, in fact, the primary source of financing the country’s large import bills. The majority of the households in Nepal are dependent on the remittance income for their livelihoods. Remittance has served as a vital keystone, supporting more than half of the country’s GDP, revenue growth and liquidity for Nepal. In this regards, the review period depicts a glaring picture of the remittance economy of Nepal and the state of Nepali migrants in different parts of the world amidst the coronavirus pandemic. It sheds light on several challenges and hardships endured by the migrants indicating an alarming situation for those stranded around the world. Additionally, World Bank reports have estimated a 14% decline in remittance inflows in FY2020/21, which is expected to further hamper the consumption pattern of the households dependent on the remittance income and severely impact the overall consumption in the country. Nepal to experience a 14% plunge in remittance in FY 2020/21: According
to the World Bank’s Migration and Development Brief202 published on 8 April 2019, remittance inflow had risen to NPR 879.3 billion(USD 7.8 billion) in 2018, equivalent to 28% of its Gross Domestic Product (GDP), making Nepal the highest recipient of remittances among South Asian countries. However, due to the current economic slowdown and travel restrictions, it is expected to
drop by a whopping 14% in 2020 (which roughly translates to NPR 145 billion or USD 1.24 billion based on an exchange rate of USD 1 = NPR 120)203, and is further likely to be subdued until 2021. Along the same lines, a study titled ‘Rapid Assessment of Socio-Economic Impact of COVID-19 in Nepal’ by Institute for Integrated Development Studies (IIDS) suggests that the fall in remittance is likely to range between
15-20% this fiscal year.204The officials of Nepal Rastra Bank are also of the view that the projections are accurate since the entire foreign employment business has halted since March 12.205 Lockdowns, travel bans and social distancing have had unprecedented effects on labor migration resulting in loss of employment, wages and health insurance coverage as well. Workers’ remittance inflows declined by 4% based in the first
