16th September 2025, Kathmandu
Nepal’s remittance sector has begun the new fiscal year 2025/26 (mid-July to mid-August 2025) with a remarkable surge.
Encouraging Remittance Inflows
The latest report from the Nepal Rastra Bank (NRB) shows that NPR 177.41 billion in remittances flowed into the country, marking a year-on-year increase of 29.9 percent. This strong performance underscores the critical importance of remittances to Nepal’s economy, providing essential support for household consumption, foreign exchange reserves, and overall economic stability. The growth in remittances is a clear sign of the continued resilience of Nepalis working abroad and their commitment to supporting their families.
Key Drivers of the Remittance Surge
The impressive growth in remittance inflows can be attributed to several key factors. Firstly, there has been a significant increase in the number of Nepalis seeking foreign employment. The NRB report indicates that 44,466 new labor approvals were issued during the review month, a notable jump from the 36,928 approvals in the same period last year. This strong pipeline of migrant workers ensures a steady and growing flow of income into the country.
Secondly, stable overseas job markets in key destinations like the Gulf countries, Malaysia, and South Korea continue to demand Nepali workers, particularly in the construction, manufacturing, and service sectors. These jobs provide a consistent source of income that is sent back home. Additionally, a favorable exchange rate for the U.S. dollar has boosted the value of remittances in Nepali rupee terms, encouraging workers to send more money home.
Finally, the increasing use of formal banking and digital remittance channels has played a crucial role. This trend has not only improved the reporting and accuracy of the official data but has also reduced the reliance on informal, often riskier, transfer methods.
Broader Economic Impact
Remittances are a vital component of Nepal’s economy, accounting for nearly one-fourth of the country’s GDP. The current surge has a multifaceted impact:
Household Consumption: A significant portion of remittance money is used for daily household expenses, including food, education, healthcare, and housing. This inflow directly improves the quality of life for millions of Nepali families and plays a major role in poverty reduction.
Foreign Exchange Reserves: The robust inflow of foreign currency strengthens Nepal’s balance of payments and contributes to a healthy foreign exchange reserve. With current reserves at NPR 2,806.04 billion (approximately USD 20.03 billion), which can cover 16.6 months of imports, the country is in a strong position to manage its external sector and maintain the stability of the Nepalese rupee.
Economic Stability: Remittances provide a powerful buffer against economic shocks. By injecting foreign currency into the economy, they help stabilize the exchange rate and ensure a steady supply of funds for imports, which is crucial for a country that is heavily dependent on foreign goods. While a large portion of the funds goes to consumption, a steady inflow can also create opportunities for investment in real estate, small businesses, and savings instruments.
Challenges and Outlook
Despite the positive trend, there are challenges that policymakers must address. The heavy reliance on remittances can make Nepal’s economy vulnerable to global labor market shocks and economic downturns in host countries. Therefore, there is an urgent need to create more domestic employment opportunities to reduce the outward migration of young, skilled workers.
Policymakers should also focus on enhancing the skills of migrant workers to help them secure higher-paying jobs abroad, which would further increase remittance inflows. At the same time, efforts should be made to channel these funds into more productive sectors of the domestic economy, such as agriculture, manufacturing, and entrepreneurship, to ensure sustainable long-term growth.
Looking ahead, if the current trends in labor approvals and overseas job markets continue, Nepal is on track to surpass its remittance receipts from the previous fiscal year. However, global economic uncertainties and geopolitical tensions could pose risks to this positive outlook. For millions of Nepali families, the sustained growth in remittance income offers immediate relief and a glimmer of hope for a more secure financial future.
For More: Encouraging Remittance Inflows