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NEPAL ECONOMIC FORUM
DOCKING NEPAL’S ECONOMIC ANALYSIS
REMITTANCE REMITTANCE Nepal witnessed an increase in remittance inflow despite a drastic reduction in the number of workers taking new and renewing approvals for foreign employment. Meanwhile, digital remittance services have also started in the country through agreements between international and national stakeholders. Increase in remittance inflow despite decreased labor outflow:
Remittance inflow increased by 16.5% to NPR 729.02 billion (USD 6.05 billion) in the first nine months of the current Fiscal Year (FY) 2021,109 whereas the number of workers taking approval for foreign employment slumped by 66.7% in the same time period.110 Similarly, the number of Nepali workers renewing approvals for foreign employment also plunged to55.7%in the first nine months of FY 2021.111 The increase in remittance inflow has been attributed to foreign workers being compelled to send money to Nepal via legal and formal channels.112 Notice by Nepal Rastra Bank (NRB) to exchange fourth edition Qatari
Riyal banknotes: The NRB issued a
public notice on April 20, 2021, asking the concerned Banks and Financial Institutions (BFIs) and individuals to exchange the fourth edition of Qatari Riyal banknotes. The Qatari currency, which the government considers as one of the convertible currencies, was to be returned to the central bank by May 10, 2021. This comes on the back of the Qatari government’s decision to not take back its currencies issued before 2020. Qatar is one of the major sources of remittance in Nepal. From 2019 up until the first 8 months of the FY2021, 39,392 individuals emigrated from Nepal to Qatar for employment.113 In the FY2020, Nepal received remittance worth NPR 53.93 billion (USD 0.447 billion) from Qatar, accounting
for 17.7% of the total remittance into the country.114 Commencement of remittance services:
digital
Digital remittance services have been initiated in Nepal through agreements between various international and national stakeholders. Nepal Investment Bank Limited (NIBL) and Digital Wallet Corp (DWC) have entered an agreement for remittance services to facilitate remittance services from Japan to Nepal.115 Meanwhile, MoneyGram International, Inc and eSewa Money Transfer Pvt Ltd have entered a partnership that will allow MoneyGram customers around the globe to remit money to Nepal directly into the beneficiaries’ bank accounts or their eSewa wallets.116
“ OUTLOOK The number of workers renewing permits or taking new foreign labor approvals dropped sharply in the first nine months of the current FY2021. Despite this, the remittance inflow into the country has seen an uptick owing primarily due to increased use of formal remitting channels and the returning migrants repatriating a majority of their savings. While strong remittances have supported private consumption and poverty reduction, and increased government revenues, it has led to an appreciation in the exchange rate and consequently, the erosion of the export competitiveness of the country. These have, in turn, led to the continuity of the problems of higher imports and a higher balance of payment deficit, long term problems which Nepal has not been able to resolve.
