Nepal receives record-high remittance at Rs.116.02 billion a month

Nepal witnessed a record inflow of remittances in the first month of the current fiscal year

The remittance inflows in the first month of the current Fiscal Year 2023/24 (mid-July to mid-August 2023) have increased by 25.8 per cent to Rs.116.02 billion compared to an increase of 20.3 per cent in the same period the previous year, according to a monthly report published by the Nepal Rastra Bank (NRB) on Sunday. Last year, remittance inflow in the first month stood at Rs. 92.21 billion.

Shrawan (mid-July to mid-August) is the ninth month that continuously witnessed more than Rs. 100 billion remittance inflow. With surging remittances and a reduction in imports of goods owing to the decrease in demand, the economy is now in a comfortable zone in terms of external sector management. However, the overall economy is not free from challenges. In the US Dollar terms, remittance inflows increased 21.5 per cent to 879.8 million in the first month while it had seen an increase of 12.5 per cent in the same period last year. Inflation of the Nepali rupee against the US dollar had also caused the highest growth in the remittance inflow in any months since the country began to receive it.

The growth in the influx of remittance is also by the increased number of Nepali workers in foreign countries.

The number of Nepali workers (institutional and individual-new) taking approval for foreign employment had increased by 75.4 per cent in the first month of the last fiscal.

It has been decreased by 12.1 per cent to 39,152 in the review period. The number of Nepali workers (Renew entry) taking approval for foreign employment decreased by 19.5 per cent to 16,423 in the review period. Likewise, decreased demands in the domestic market had checked the imports. During the first month of 2023/24, merchandise imports decreased by 1.6 per cent to Rs.129.24 billion compared to a decrease of 12.9 per cent a year ago. However, experts have suggested using the increasing remittance in the infrastructure building sector instead of wasting it on the import of luxurious goods.

Foreign currency reserves cross Rs. 1573 bn Meanwhile, the foreign currency reserves have reached Rs. 1573.12 billion by mid-August with an increase of Rs. 34 billion from the previous month. Although the government and the NRB have lifted the control measures in imports and foreign trips, reserves have taken an upward trend. According to the central bank, the current foreign currency reserves are sufficient to cover the imports of goods for 12.5 months and imports of goods and services for 10.3 months. Likewise, the current account has remained at a surplus of Rs.12.99 billion in the review period against a deficit of Rs.15.13 billion in the same period the previous year. This has happened after about 33 months since the current account was in deficit since midNovember 2020.

However, consumer price inflation is still high although it has significantly come down to 7.52 per cent by midAugust this year from 8.26 per cent a year ago.