Despite a notable rise in remittance inflow this fiscal year, Nepal is spending more foreign currency on imports and overseas education. According to recent data, the country received Rs 1.19trn in remittances in the first nine months of the current fiscal year—a 10 percent increase compared to the same period last year.
However, the outflow of foreign currency has been even greater, primarily due to a surge in imports and spending on foreign education. Nepal’s total imports rose by 12.2 percent during this period, reaching Rs 1.39trn. Last year, imports had declined by 2.8 percent in the same timeframe.
Imports from India, China, and other countries increased by 7.7 percent, 14.4 percent, and 24.9 percent respectively. The major import items included raw soybean oil, rice, vehicles and spare parts, edible oil, and sponge iron. Meanwhile, imports of petroleum products, crude palm oil, aircraft parts, chemical fertilizers, and paper declined.
On the export front, the country earned Rs 188.2bn from goods exports—a 65.2 percent rise. While this indicates a slight improvement in foreign currency earnings through exports, the trade deficit remains significant. The trade deficit increased by 6.4 percent to Rs 1.21trn.
Another major drain on foreign currency is overseas education. In the first nine months of this fiscal year alone, Nepal spent Rs 103.84bn on education abroad, accounting for 60.94 percent of the total travel-related expenditure. The amount is a steep rise from Rs 95.85bn in the same period last year, and nearly Rs 15bn was spent in just one month (mid-February to mid-March).
Travel expenditure under the services account rose by 19 percent to Rs 170.39bn during this period, with education-related expenses comprising the largest share.
Economists have raised concerns about this trend. Economist Dilliraj Khanal said while remittance helps in the short term, its long-term impact is questionable if it is not utilized productively. He warned that relying heavily on foreign employment while failing to create domestic opportunities is making productive land idle and hindering national development. “If foreign employment stops due to global instability, it could have disastrous consequences,” he cautioned.
Despite these concerns, the rise in remittance has contributed to improved foreign exchange reserves and banking liquidity. By mid-April, Nepal’s foreign exchange reserves had increased by 18.9 percent to Rs 2.43trn, sufficient to cover 17.1 months of merchandise imports and 14.2 months of goods and services imports, according to the Nepal Rastra Bank.
The overall balance of payments remained positive, with a surplus of Rs 346.23bn. The current account also posted a surplus of Rs 210.22bn, compared to Rs 179.83bn in the same period last year. Additionally, foreign direct investment (equity only) reached Rs 8.96bn, up from Rs 6.49bn last year.
Meanwhile, consumer inflation eased, providing some relief to the public. According to central bank data, point-to-point inflation in mid-April stood at 3.39 percent, down from 4.61 percent a year ago. Prices of food and beverages, spices, and fish and meat decreased, contributing to overall price stabilization. However, prices of ghee and oil, fruits, pulses and legumes, and non-alcoholic beverages went up. In the non-food category, annual inflation in miscellaneous goods and services rose by 8.69 percent, clothing and footwear by 7.01 percent, alcoholic beverages by 6.07 percent, household furnishings by 5.59 percent, and tobacco products by 4.83 percent.
