Where has all foreign currency income from service sector gone?

The central bank has suspected 'informalisation' of service sector income and keeping a keen eye on the data of service sector income -- for the month of Kartik (October-November, the fourth month of the current fiscal year) -- as the foreign currency income in the current doesnot match the steady increase in tourist arrivals recently.

"The service sector income does not match the steady increase in tourists arrivals," said central bank governor Dr Yubraj Khatiwada.

"We are eagerly waiting for the current fiscal year's fourth month's data that would lead us to some conclusion," he said, adding that the country has witnessed a steady growth of tourist arrivals in the last few months.

Annual figures in the last eleven years have never been as high as after 1999, Nepal received the highest tourist arrivals at 412,446 by air in the 11 months of 2010, according to Nepal Tourism Board (NTB).

Some tourism entrepreneurs also agree that the year 2010 will set yet another record arrivals surpassing the 1999 records.

However, Madhav Ohm Shrestha, executive director of Hotel Association of Nepal (HAN) said that there is a lack of quality tourists, though the arrivals post a steady growth.
"The service sector income could not match the increasing arrivals, only if the hotels have lowered the room rates or average stay of tourists has gone down," the governor opined.

But according to Shrestha, neither the hotels have lowered the room-rates nor the average stay -- that is at an average of 11.30-day -- of tourists has come down," he said, adding that one reason could be that the number of paying guests is also increasing.

"Had the tourist arrivals figure and service sector income matched, the current account would have already been surplus helping to ease Balance of Payment (BoP) deficit," Khatiwada said.

The current account has registered a deficit of Rs 2.17 billion in the first three months of the current fiscal year due to increase in trade deficit and a considerable growth of transfer income -- particularly grants, remittances and pension.

The overall BoP has recorded a deficit of Rs 6.88 billion during the first three months of current fiscal year, the central bank data reveals.