Nepal’s economy has long been propped up by remittances, but here’s the twist—while more Nepalis are leaving the country to work abroad than ever before, the money they’re sending back is shrinking. In Kartik, remittances amounted to $830 million. Sounds hefty, right? But stack it up against $1.08 billion in Asoj, $940 million in Bhadra, and $1.02 billion in Shrawan, and you see the decline. Why the drop? Festivals like Dashain and Tihar saw a surge in funds during Asoj, leaving Kartik in a slump. But this isn’t just a festival hangover; it’s part of a worrying trend. The growth rate of remittances hit its lowest point in 28 months—just 9.1% in Kartik compared to a whopping 27.6% last Mangsir.

This article dives into the numbers, the reasons behind this puzzling paradox, and what it means for Nepal’s economy and everyday households. It’s more than just numbers on a chart. It’s about the choices Nepalis abroad are making, the pressures of inflation, and a growing realization that we might be leaning too heavily on remittances to keep the economy afloat. 

Let’s unpack what’s really going on and why it matters for all of us.

A Closer Look At the Numbers

In Kartik, Nepal got $830 million in remittances. Sounds like a lot, right? But compare that to $1.08 billion in Asoj, $940 million in Bhadra, and $1.02 billion in Shrawan. That’s a steep drop. Many Nepalis abroad sent extra money during Asoj for Dashain and Tihar celebrations, but after the festival season, the flow slowed way down. And this isn’t just a one-time blip; remittance growth has been losing steam for a while now.

The growth rate of remittances in Nepali rupees was only 9.1% in Kartik. That’s the lowest in 28 months. Compare that to 27.6% in Mangsir last year, and it’s clear we’re not keeping up.

What’s Causing the Slowdown?

While remittances are down, the number of Nepalis going abroad to work is at an all-time high. Last year alone, 741,000 Nepalis got permits to work abroad. That’s huge! So, why isn’t all this manpower translating into more dollars flowing back?

One reason could be timing. Many Nepalis abroad sent big chunks of money in Asoj for festivals, leaving less to send in Kartik. But there’s more to it than that. Over the first four months of this fiscal year, Nepal received $3.87 billion in remittances, only 7.5% more than the $3.6 billion during the same period last year. Given how many more people are working abroad, that’s a pretty small increase.

What could be causing this slowdown? Let’s break it down:

1. Inflation
   Prices are rising everywhere, not just in Nepal. Nepalis abroad are spending more on their own living expenses, leaving less to send back home.
2. Changing Priorities
   Some might be saving more or investing in their host countries instead of sending money to Nepal.
3. Exchange Rates
   A weaker Nepali rupee usually means more rupees for the same dollar amount. But this year, the rupee has been relatively stable, so the boost isn’t as big.

Why It Matters

Nepal’s economy leans heavily on remittances. They fund education, healthcare, and daily expenses for millions of families, while also keeping our foreign exchange reserves robust. By mid-August 2024, remittances had pushed forex reserves to $15.58 billion—enough to cover over 16 months of imports.

But this reliance is a double-edged sword. The slowdown in remittance growth is a wake-up call. If this trend continues:

• Economic Stability Could Wobble: A significant drop in remittances would put pressure on forex reserves, weakening Nepal’s ability to import essential goods.
• Rural Livelihoods Could Suffer: Many families depend on remittances for survival. A decline could lead to reduced spending, affecting the broader economy.
• Long-Term Growth Might Stagnate: Most remittance money goes into consumption, not productive investments. This limits its potential to create jobs or drive sustainable economic growth.

What Needs to Change?

To navigate this slowdown and reduce overreliance, Nepal needs bold, forward-thinking strategies:

1. Incentivize Productive Investments
   Encourage families to channel remittance money into sectors like small businesses, agriculture, or industries that can generate jobs and fuel innovation.
2. Promote Financial Literacy
   Equip families with the knowledge to save and invest wisely, ensuring that remittance money builds long-term wealth rather than just covering immediate needs.
3. Negotiate Better Labor Agreements
   Secure fair wages and improved working conditions for Nepali workers abroad. This would stabilize remittance inflows and protect the rights of our labor force.
4. Leverage Innovative Programs
   Expand initiatives like giving migrant workers access to IPOs or enrolling them in social security schemes. These steps help integrate remittance money into Nepal’s broader economic framework.

Final Thoughts

The slowdown in remittance inflow growth is a signal we can’t ignore. While remittances have been Nepal’s economic lifeline, they shouldn’t become a crutch. By diversifying our economy and making smarter use of these funds, we can transform this challenge into an opportunity.

The numbers may look worrying now, but with the right policies and actions, Nepal can secure a future where remittances fuel growth and innovation rather than just patching up the gaps. It’s time to act before the slowdown turns into a crisis.

For now, we can only hope the next set of numbers brings better news.