Thursday, October 29, 2020

Remittance may drop significantly, warns World Bank again

 Though, the central bank is upbeat about the remittance inflow, World Bank estimates that Nepali migrant workers are going to send home only $7.39 billion in 2020, down by 12 per cent from pre-coronavirus levels in 2019.

“In 2019, Nepali migrant workers sent home $8.25 billion back, the World Bank Migration and Development Brief released today reads. “The virus-related global slowdown and travel restrictions will also affect migratory movements, and this is likely to keep remittances subdued even in 2021.”

The Brief reads that tepid economic growth and employment levels in countries hosting migrants, weak oil prices and depreciation of the currencies of remittance-source countries against the US dollar were all factors behind the decline. 

The central bank however claims that Nepal might not see negative growth in remittance earnings in 2020, but the growth momentum might not last in 2021 as the global economy gets battered by the second wave of the Covid-19 pandemic.

According to the central bank, the remittance inflow continue to grow, against all the odds in the global job providing countries. The remittances inflow between mid-July and mid-September increased by 8.1 per cent to Rs 165.73 billion in 2020 compared to a decrease of 0.6 per cent in the same period of a year ago. “There has been a better-than-expected growth in remittance sent by Nepali migrant workers as of September but the uncertainty is rising due to Covid-19 pandemic the next year might see drop in the remittance inflow,” the central bank claimed.

The remittance inflow swelled, despite the spread of coronavirus, because of diversion of remittance to the formal banking channel from informal hundi, due to the Covid-19 created disturbances. The Nepali migrant workers also sent cash instead of goods due to global lockdown, according to the central bank.

The government imposed lockdown across the country on March 24, which continued for 4 months. The central bank – in April – released a survey claiming that the remittance inflow will drop by over 15 per cent in the last fiscal year 2019-20 that ends in mid-July. Likewise the World Bank also had projected remittances to go down by 14 per cent, whereas the Central Bureau of Statistics (CBS) also projected a reduction of Rs 163 billion – or over 18 per cent – in remittance inflow due to coronavirus pandemic. 

The number of Nepali migrant workers – institutional and individual-new and legalized – taking approval for foreign employment plunged by 99.2 per cent in April, according to the macro-economic report of the central bank. “Likewise, the number of Nepali migrant workers – renew entry – taking approval for foreign employment decreased by 86.5 per cent.”

The World Bank has also warned that the stock of international migrants is likely to decline for the first time in recent history as new migration has slowed and return migration has increased. “Return migration has been reported in all parts of the world following the lifting of national lockdowns which left many migrant workers stranded in host countries,” the World Bank Brief reads, adding that rising unemployment in the face of tighter visa restrictions on migrants and refugees is likely to result in a further increase in return migration.

Thus, the remittances growth is expected to slow down not only in Nepal, but almost all countries are going to see a decline in the amount they receive as transfers from their migrant workers abroad, the World Bank’s Brief reads. “In India and Sri Lanka, remittances are projected to fall by about 9 per cent in 2020 to $76 billion and $6.7 billion, respectively.”

But in Pakistan, remittances will grow at about 9 per cent, totalling about $24 billion. In Bangladesh, remittances are projected to grow at about 8 per cent to around $20 billion.

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