“Informal economic activities such as gold smuggling are less prevalent due to Covid-19, so formal transfers have increased,” explains Executive Director of Nepal Rastra Bank Gunakar Bhatta.
“Expenditure on consumer goods like electronics have perhaps also decreased given the crisis with a preference for savings and more cash-based transfers. Formal transfers have also been better managed in countries like South Korea in the recent years with more branches of banks abroad which has contributed to remittance formalisation.”
The impact on bilateral flows, however, remains unclear due to lack of disaggregated data on remittance. The impact of the pandemic has not been uniform across countries, and subsequently, recoveries of economies and deployment of workers have also been uneven. Since 2017/18, Nepal’s Central Bureau of Statistics has stopped releasing data on bilateral flows of remittances.
That year, the USA, India, Saudi Arabia, Malaysia and Qatar were the five top sources of remittances to Nepal. The impact of the pandemic on these countries varies significantly which would in turn impact remittances differently.
A slight ray of hope had started to emerge before the current lockdown with a steady recovery of workers deployment overseas. While countries like Malaysia and South Korea were not allowing new workers, demand in Saudi Arabia, Qatar and the UAE was picking up.
With the second wave, however, foreign employment has once more come to a screeching halt. The government has stopped flights and the issuance of labour approvals. On the destination country side, too, Nepal is included in the ban list by an increasing number of countries, such as most recently by Malaysia, Japan, Kuwait, and the UAE.