Workers' remittances in the first seven months of the fiscal year swelled 28.5 percent year-on-year, providing a much needed cushion to the country's depleting foreign exchange reserves. During the same period last year, remittance inflows had inched up 1.7 percent.
According to the latest macroeconomic report released by Nepal Rastra Bank, the country's central monetary authority, the money sent back by Nepali migrant workers in different countries totalled Rs515.55 billion during the period mid-July 2018 to mid-February 2019, despite a sharp drop in worker departures.
Industry experts attributed the surge in remittance to the increased use of formal channels by migrant workers to send their earnings home. "The practice of using informal channels like hundi to transfer money has decreased in recent days," said Suman Pokharel, CEO of IME Remit, one of the largest remittance service providers in the country.
Another reason for the rise in remittance inflows, according to experts, is the transfer of funds to Nepal from new labour destinations through formal channels. "Remittance from new labour destinations like South Korea has started coming through formal channels," said Pokharel.
Currently, 35-40 percent of annual remittances enter the country through formal channels, and this proportion is expected to rise in the coming months, making the days even better for the remittance industry, according to Pokharel.
The growth in remittance has happened despite a fall in the number of workers leaving for foreign employment. According to central bank statistics, Nepali migrant worker departures plunged 39.2 percent in the first seven months of the fiscal year, compared to a 4.9 percent drop during the same period last year.
A sharp decline in the number of people leaving for Malaysia, one of the most popular labour destinations for Nepalis, dragged down departure figures.
The government stopped issuing work permits to workers wishing to go to Malaysia following a crackdown against agencies illegally charging hopeful migrants hefty fees under various headings. Before approvals were stopped in mid-May, more than 10,000 workers used to receive work permits for Malaysia every month, as per the statistics of the Foreign Employment Department. Once labour migration to Malaysia resumes, the growth in remittance will be phenomenal, according to Pokharel.