Kathmandu. The income from foreign employment (remittance) in Nepal’s economy has made a new leap in history. <\/p>\n
Last fiscal year 2082. According to the data of 2018, remittances amounting to Rs 2,120.80 billion have entered the country. The fact that this amount is more than the size of Nepal’s total annual budget shows how crucial the role of remittances is in Nepal’s economy. <\/p>\n
Last year, the government had presented a budget of Rs 1.964 trillion and for the current fiscal year it was Rs 2.124 trillion. Perhaps, the price of sweat of youths who have gone abroad for the first time has surpassed the total spending capacity of the state. <\/p>\n
The change in the nature of Nepali migrant workers in recent period seems to have played a major role in the increase in remittances. In the past, there was a majority of unskilled workers, but now skilled and skilled workers are attracted to Israel, South Korea, Japan and various European countries. The graph of money coming to Nepal has gone up as the remuneration in these countries is comparatively high. In addition, the flexible and incentivized policies adopted by the government and the central bank have also contributed to the decline in the remittance of money through informal means such as hundi. <\/p>\n
The additional 1 percent interest rate on depositing remittances in banks and financial institutions and easy access to mobile banking have brought foreign income into the formal system. <\/p>\n
There are immense possibilities for the state to reap multi-dimensional benefits from such huge remittances. The most important factor is the increase in foreign exchange reserves. <\/p>\n
Remittances have strengthened the foreign exchange reserves, making it easier for Nepal to meet the import of fuel, machinery and other consumer goods. It has acted as a safety net to keep the country’s balance of payment position (BoP) in reserve and prevent a crisis in the economy due to lack of foreign currency. If this money can be diverted not only on imports but also diverted to productive sectors, the state can achieve long-term economic stability. <\/p>\n
Another important area where the state benefits from the remittances is national pride projects and infrastructure development. Currently, the excess liquidity accumulated in the banking system due to remittances can be channelized by the government through development bonds or special energy bonds. <\/p>\n
If this money can be spent on the construction of electricity transmission lines, large hydropower projects and restructuring of public institutions, the industrial capacity of the country will be expanded. There is an opportunity for the state to reduce its debt burden with foreign donor agencies if it can bring foreign income as investment in these mega projects by improving the government’s spending capacity. <\/p>\n
The high-level economic reform advisory task force and other committees formed by the government are also coming to the conclusion that appropriate steps should be taken to properly utilize the remittances. However, the government has failed to shift remittances from consumption-oriented to production-oriented. <\/p>\n
The main challenge and opportunity of the state is to ensure that the energetic youths do not allow the money sent by selling their labor to be limited to consumption only. <\/p>\n
As the central bank is projecting that the flow of remittances will remain high in the coming years as well, it is necessary to apply it to capital formation through instruments such as ‘remittance bonds’ or ‘Nepal Development Bonds’. The central bank’s policy of issuing bonds needs to be implemented as soon as possible. This will play an additional role in building a productive economy. <\/p>\n
The state can derive real and sustainable benefits from it only when remittance money starts contributing to industry and infrastructure development. Experts have also said that on the one hand, it will create employment opportunities in the country and on the other hand, it will help in leading the import-based economy towards self-reliance.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. The income from foreign employment (remittance) in Nepal’s economy has made a new leap in history. Last fiscal year 2082. According to the data of 2018, remittances amounting to Rs 2,120.80 billion have entered the country. The fact that this amount is more than the size of Nepal’s total annual budget shows how crucial […]<\/p>\n","protected":false},"author":16,"featured_media":204125,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45117,45031,45060,45159],"tags":[],"class_list":["post-308803","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bank-finance-en","category-banner-news-en","category-corporate-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/308803","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=308803"}],"version-history":[{"count":1,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/308803\/revisions"}],"predecessor-version":[{"id":308804,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/308803\/revisions\/308804"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/204125"}],"wp:attachment":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=308803"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=308803"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=308803"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}