Foreign employment and remittance
Nepal has a long history of labor migration, with Nepalese citizens seeking employment opportunities abroad for various reasons. This trend has significantly impacted the country's economy, particularly through remittances. Remittances have alleviated unemployment, reduced poverty, and contributed to the nation's Gross Domestic Product (GDP).Nepal continues to be a significant labor-exporting country, with a substantial portion of its workforce employed abroad. According to the latest data from the World Bank's Migration and Development Brief 2023, remittances to Nepal accounted for approximately 24% of its GDP in 2022, marking a slight increase from previous years. The primary destinations for Nepalese migrant workers remain the Middle Eastern countries, Malaysia, and South Korea.
The Nepal Rastra Bank (NRB) reports that remittances have been growing at an average annual rate of 8% over the past five years. Despite global economic uncertainties, remittance inflows have remained resilient, underscoring their importance to the Nepalese economy.
| Fiscal Year (B.S) | Remittance inflow (in Rs. arab) | Ratio to GDP |
|---|---|---|
| 2072/73 | 665.3 | 29.6 |
| 2073/74 | 695.5 | 26.3 |
| 2074/75 | 755.1 | 24.9 |
| 2075/76 | 879.0 | 25.42 |
| 2076/77 | 875.0 | 22.4 |
| 2077/78 | 961.05 | 22.5 |
Importance of Remittances
1. Contribution to GDPRemittances have a direct and significant impact on Nepal's GDP. The remittance-GDP ratio in Nepal is among the highest globally, reflecting the critical role these funds play in the national economy. The inflow of remittances helps maintain macroeconomic stability by bolstering foreign exchange reserves and supporting the balance of payments.
2. Poverty Reduction
Remittances have been instrumental in reducing poverty in Nepal. The Nepal Living Standards Survey 2022 indicates that the poverty rate has declined to 18.7%, partly due to the inflow of remittances. Households receiving remittances are better equipped to invest in education, healthcare, and housing, contributing to improved living standards and economic security.
3. Employment Opportunities and Economic Security
The foreign employment sector has created numerous job opportunities within Nepal. The demand for services related to labor migration, such as recruitment agencies, medical examinations, orientation and training centers, and money transfer services, has increased. The NRB estimates that the foreign employment sector generates approximately 350,000 jobs annually in Nepal.
4. Revenue for Government and Private Sector
Remittances contribute significantly to government revenue through various taxes and fees, including those levied on recruitment agencies, passport fees, and value-added tax. The private sector also benefits from the remittance economy, with businesses in travel, communication, and financial services thriving due to the demand created by labor migration.
5. Social Impact
Beyond economic contributions, remittances have social implications. They enable households to achieve greater social status, improve their living conditions, and invest in their children's education. The experience and skills gained by migrant workers abroad also contribute to human capital development when they return to Nepal, fostering a more productive and skilled workforce.
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