NEFPORT ISSUE 42 – SEPTEMBER 2020
REMITTANCE REMITTANCE Since decades, Nepali households have had at least one member away from home for work or study, depicting a pattern of migration of the country.83 The 2014 Population Monograph, published by the Central Bureau of Statistics, even estimated that five million or almost 20 percent of the population lived and worked in foreign countries. Likewise, a 2018 report issued by the Ministry of Labor and Employment showed that 85 percent of the labor migrants from Nepal went to the seven countries in the Gulf region. In 2019, Nepal received about USD 8.1 billion (NPR 972.16 billion) in remittances as per the World Bank data, representing over onefourth of the country’s GDP. Thus, remittance is, undoubtedly, a lifeline for migrant families in Nepal. In light of this, during the initial days of the nationwide lockdown and amidst growing COVID-19 cases in the country, anticipation about the loss in remittance was widespread. However, after a sharp drop in April 2020, noticeable improvement was seen. With countries working hard to bounce back from the slump, demand for workers, especially in oil-producing nations, might resume. With this, an increase in remittance inflows can be expected. Nepal likely to witness highest remittance contraction in developing Asia: In March/April
2020 alone, the remittance coming into Nepal declined by 132.35 percent in comparison to previous months February/March 2020.84 Now, according to a new report released by the Asian Development Bank (ADB), Nepal appears on the top in the list of the countries that may face most losses in remittance due to the COVID-19 pandemic among developing Asian economies. Remittance is predicted to fall by 28.7 percent under worstcase scenario. Following Nepal, the projected loss of remittance is 27.9 percent in Tajikistan, 27.8 percent in
Bangladesh, 26.8 percent in Pakistan and 25.2 percent in the Kyrgyz Republic (as depicted in the figure below).85 Under a baseline scenario, the economies will resume its economic activities within six months. But, the worst-case scenario assumes that the control of COVID-19 pandemic domestically and the resumption of economic activities will take a year’s time. The same report assumes that under the worst-case scenario, remittance receipts to Asia will fall by USD 54.25 billion (NPR 6.51 trillion), and by sub-region South Asia will record the largest fall i.e. by USD
28.6 billion (NPR 3.43 trillion).86 The Nepal Rastra Bank (NRB), however, does not agree with this contraction as it believes that China’s demand for oil will create jobs in Gulf countries. Nevertheless, ADB has also suggested that the governments in the affected regions can help manage the impact of COVID-19 on remittance by extending temporary social services to assist stranded and returning migrants; providing income support to poor remittance-recipient families; and designing policies to help migrants return to their jobs, or be employed in their home countries.87
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