Do you know how Nepalese send money to Nepal from abroad? Nepal is one of the world’s top remittance recipients (as a proportion of GDP). For a small landlocked economy ravaged by a decade-long Maoist insurgency (1996–2006), prolonged political turmoil, a sluggish growth rate, and massive migration of youths seeking jobs abroad, a large inflow of remittances have significant micro and macro implications. This article examines the various aspects of high migration and remittances, including remittance-induced Dutch disease effects and policy laxity to boost Nepal’s investment environment.
While remittances are an essential part of Nepal’s economy, long-term reliance on them should be avoided because it could stifle the development of local industries. Smart remittance policy would optimize current benefits while planning for the day when they are no longer needed.
What Are The Usage And Impact Of Remittance To Remote Households In Nepal?
Remittances have gotten a lot of attention in the international community, partially because of their size and consistency in a positive growth pattern over the last three decades. There is an increasing consensus that money transfers to Nepal are a significant source of external financing. Their availability, if handled properly, could be particularly important for capital-strapped developing countries.
While the literature on how remittances eventually affect economic growth is still quite inconclusive, there appears to be a consensus that sound policies and practices play an essential role in enhancing their effect on development. Since taxes or mandatory remittance provisions have traditionally proven unsuccessful, and in most cases, have driven migrants to use an online money transfer to Nepal and informal channels, governments usually have restricted space to affect the allocation of remittance revenue directly.
How Can We Secure Remittance Flow In Country Like Nepal?
These benefits could be taken advantage of by introducing remittance-linked bank deposits, bonds, and other investment instruments, creating a pool of funds for priority infrastructure projects like bridges, airports, and power plants. Only a glance across Nepal’s southern border reveals how financial instruments can multiply remittance profits.
Another choice for Nepal is for banks to implement remittance-linked bank deposits, which lock a portion of sending money to Nepal online into a higher-yielding account before the workers come home. This has worked well in Sri Lanka, in which the Hatton National Bank’s Adhishtana remittance-linked account encourages customers to send money home and leave it to rise.