Remittance inflow growth only 2.9pc

KATHMANDU, March 17: Remittance inflow growth only 2.9 per cent in the first seven months of the current fiscal year. Nepalis working abroad sent Rs 320.93 billion in the seven-month period between mid-July and mid-February of this financial year, shows the latest macroeconomic report of Nepal Rastra Bank (NRB).

In the same period last fiscal, remittance income had surged by 38.6 per cent to Rs 311.91 billion.

Worse, remittance inflow shrank by 7.8 per cent in the seventh month of the current fiscal year compared to that of the previous month, says the NRB report.Government officials say there is no reason for the remittance inflow to decelerate in this manner, as number of Nepalis leaving the country for employment purpose is continuously increasing and their salary and other benefits are also on the rise.

It is, thus, said those engaged in illegal fund transfer business are using money handed over by Nepalis working abroad to buy gold. This precious yellow metal is then smuggled into the country to avoid taxes, while payments are made to beneficiaries of migrant workers through local agents here. As a result, growth rate of remittance inflow has significantly contracted.

Because of deceleration in remittance inflow, coupled with growth of merchandise imports, and decline in grants, the current account surplus contracted to Rs 11.69 billion in the first seven months, as against surplus of Rs 67.24 billion recorded in the same period last fiscal.In the seven-month period, the government received foreign cash grants of Rs 15.31 billion, compared with Rs 23.39 billion in the same period last fiscal.

Also, merchandise import bill grew by 13.3 per cent to Rs 444.77 billion, while merchandise exports dropped by 5.1 per cent to Rs 50.19 billion. Because of this mismatch, the country’s trade deficit widened by 16.1 per cent to Rs 394.58 billion in the seven-month period.

Among others, expenditure on overseas travel soared by 35.9 per cent to Rs 31.51 billion, while spending on foreign education went up by 16.7 per cent to Rs 9.95 billion in the seven-month period.

As more money started flowing outside the country, the balance of payments (BoP) surplus shrank to Rs 32.80 billion in the first seven months of the current fiscal, as against surplus of Rs 95.78 billion registered in the same period last fiscal.