Kathmandu, October 25: Inflow of remittance has witnessed a decline for the first time in four years. And such fall has occurred a little before the festival season when people abroad tend to send money back home.
According to the ‘Current Macroeconomic and Financial Situation of Nepal (Based on Two Months’ Data of 2019/20’) released recently by Nepal Rastra Bank (NRB), the money transfer of Nepali workers from abroad fell 0.3% in to Rs 153.73 billion in the first two months (from mid-July to mid-September) of the current fiscal year compared to the same period of the last fiscal year – FY2018/19. Nepal had received a total of Rs 154.2 billion in remittances in the first two months of the last fiscal year.
The central bank suspects the lacklustre growth in the outflow of migrant workers in the recent month may have caused the fall in remittance. There has been a halt in the supply of Nepali migrant workers to Malaysia, which hosts the highest number of such workers, for almost one year and a half year.
Remittance companies’ also ascribe the fall in the number of workers abroad to the decline in remittance inflow. For a remittance-driven economy like Nepal, a drop in the amount of money sent back by migrant workers could trigger serious economic anomalies.
Meanwhile, the country’s trade deficit went down by 3.1 per cent to Rs 211 billion in the two months of 2019-20 fiscal year. While merchandise exports rose by 25.9 per cent to Rs 18.5 billion in the two months of this fiscal compared to an increase of eight per cent in the corresponding period of previous fiscal, merchandise imports decreased 1.2 per cent to Rs 229.50 billion in the review period.
Similarly, the balance of payments (BoP) remained at a surplus of Rs 8.83 billion in the review period compared to the same period of the previous year. Based on the imports of two months of current fiscal, the foreign exchange reserves of the banking sector is sufficient to cover prospective merchandise imports of 9.6 months, and merchandise and services imports of 8.4 months, as per NRB.
However, year-on-year consumer price inflation stood at 6.16 per cent in mid-September against 3.86 per cent a year ago. Food and beverage inflation stood at 6.51 per cent, whereas non-food and service inflation remained 5.89 per cent in the review month.
