National 4 (Spotlight Weekly)

‘Remittance Has Been The Only Hope To Rescue The Economy’

—Dr. Bishwambher Pyakuryal

Dr. Bishwambher Pyakuryal is a renowned economist. Dr. Pyakuryal is also the president of Nepal Economic Association. He spoke to SPOTLIGHT on the impact of remittance on national economy. Excerpts:

To what extent has the remittance contributed to national economy?

There is no question that remittance has been the only hope to rescue the economy from low level equilibrium trap. However, very few independent scholars have explored such potential area at a limited scale. It is anticipated that in the current FY, the revenue will fall short of Rs 3 billion. Since internal borrowing is being diverted to finance regular expenditure and maintain the matching fund for operationalizing external assistance, remittance can be the viable alternative to balance the gap between national savings and investment requirement. Furthermore, remittance has been one of the highest earning sources of foreign exchange earnings to contribute significantly to the rural income and growth of nonagricultural sector.

How has been the growth of this sector in the last couple of years?

It is in increasing trend. Data reveals that in 1997, Nepalese working out of the country including India contributed nearly Rs 69 billion to Nepalís economy (Foreign Labor Migration and the Remittance Economy of Nepal). Similarly, in 1999/2000, when the annual budget was proposed at Rs 78 billion, the total annual remittance remained at Rs 78 billion. There is significant growth of migrant labors in the Gulf nearing little over 200,000. East Asia has provided wonderful opportunity as well.

It is said that remittances by foreign employment is at best a short-term phenomena and that it cannot sustain economy in the long run. Do you agree?

It could be made a long-run sustained phenomenon provided that government has long-run vision to institutionalize foreign employment regime. Foreign Employment Bank needs to be established to streamline the remittance through official channels. Relatively privileged citizens are found to have been getting better jobs in East Asia since such jobs demand more money. The poor are destined to accept less economic and difficult jobs in the Gulf and in India as going there demands little initial financial requirement. The government should have the built-in system to sharing information about job opportunity abroad. Appropriate training and implementable incentive schemes at the local level should follow this up.

How has remittance helped in rural and urban economy?

At urban sector, remittance can ultimately contribute to the growth of per capita income. At rural sector, the income is basically used to purchase land and build houses. A proper counseling is needed to assist rural folks to alternatively use their savings in more productive sector. This has ultimately helped in other countries of the world to accelerating economic activities by increasing demand at a national level.

Do you think the present government policies are adequate and proper regarding foreign employment? If not, what more can be done?

The government has not yet realized the beauty of foreign employment and the benefits from remittance. In the home front, a workable modus operandi to activate foreign employment opportunities should be developed which demands formulation of Acts and implementing rules. Similarly, the missions abroad should execute economic diplomacy to exploring foreign markets and diversify our services.

How do you see the future of this sector?

I guess, my response to your several questions above clearly justifies the bright future of remittance economy in Nepal.

What percent of total remittances are transmitted through†proper banking channels? What can be done to expand this net?

It was reported that in 2001/02 approximately Rs 16 billion came through banking channels. Creation of official channel to regularize the remittance provides us extremely good prospect to significantly increase the revenue. For example, it was reported in the media some time ago that only after two months of operationalization of International Money Exchange, US $200,000 was transferred to Nepal from Nepalese workers working in Malaysia.