Against all expectations that foreign remittances would suffer a severe hit due to the ongoing pandemic, Nepal has seen a significant rise in remittance inflow in the first month of the fiscal year 2020/21.
According to the Nepal Rastra Bank (NRB), the remittance inflow has increased by 23% to reach a whooping NPR 92.71 billion in the review month (mid-July to mid-August), up by 2% from the previous fiscal.
As per the NRB Spokesperson Gunakar Bhatta, the remittance inflow has increased significantly as Nepalis abroad were compelled to transfer funds home only through the formal channels.
“The returnees have also brought back cash in recent months, while they used to splurge on gifts and other personal items earlier,” he added.
Meanwhile, Senior Economist Chandra Mani Adhikari expressed that the impact of the coronavirus pandemic on remittance is not quite visible yet.
“Thousands of Nepali migrants employed abroad, especially in the Gulf nations, are expected to return, which will take a bite out of the remittance in the coming months for sure,” he said.
On the other hand, Nepal’s trade deficit has declined by 24.93% during the first two months (mid-July to mid-September) of the current FY.
According to the Department of Customs, the country’s imports during the review period have declined by 22.07% to NPR 178.84 billion. Imports, in the same period last fiscal, fell by 1.22%.
According to the Ministry of Industry, Commerce, and Supplies, the notable dip in imports this fiscal was primarily due to the trade restrictions and lockdown measures enforced by the Nepali Government amid the pandemic.
The drop in fossil fuel consumption was considered to be the prime factor for the downfall of the nation’s total imports expenses. The country’s expenses on petroleum products fell almost to one-third due to the travel bans and vehicular movement restrictions during the lockdown.
According to the government records, Nepal spent NPR 8.71 billion on petroleum expenses in the review period in the current fiscal, a drastic fall from NPR 27.14 billion in the review period last year.
In the review period, the shares of fossil fuels in total import value stood at 5%, compared to around 12% in the review period last year.
On the other hand, the exports raised by 10.49% to reach NPR 20.44 billion.
The export of processed soybean oil, yarn, and woolen carpets dominated the export earnings in the two months. Nepal exported processed soybean oil worth NPR 5.47 billion, yarn worth NPR 1.80 billion, and woolen carpets worth NPR 1.32 billion.
Iron and steel products, jute sacks, and readymade garments were some other significant exports that helped Nepal gain significant earnings over the period.
Thus, the imports to exports ratio dropped significantly to 8.75 in the current FY from 12.40 in the last FY.
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