Remittance's outstanding contribution to GDP rise

Remittance, money earned by Nepalese working overseas, has significantly contributed to the growth of gross domestic products (GDP) of the country. The remittance has surpassed exports as the top contributor to foreign exchange earnings.

Nepal Rastra Bank (NRB) revealed this in a report released on Wednesday. NRB's report on ‘Inflow of Workers’ Remittances: Nepal’s Experiences’ presented at SAARC-Finance seminar on Management of Workers’ Remittances in SAARC Countries said remittance has positioned itself now as the top contributor to foreign exchange earning for last five years.

The remittance had contributed by 11.5 per cent in 2000-01 and 16.8 per cent in 2005-06.

According to the report, the share of remittances in total foreign exchange earnings increased from 36.6 per cent in 2003-04 to 46.7 per cent in 2005-06, whereas the corresponding share of exports dropped to 29.4 per cent in 2005-06 from 34.5 per cent in 2003-04.

The growing remittances have led to a surplus in the current account, thereby strengthening the overall balance of payment position. The share of remittances in total current account soared to 46.7 per cent from 29.8 per cent in the past five years. Growth of 26 per cent in convertible currency reserves of the banking system is also due to increasing remittances.

The report also shows that the inflow of remittances through official channels registered a dramatic rise from Rs 47.53 billion in 2001-02 to Rs 97.68 billion in 2005-06.