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Presented By:
Sumit Maheshwari
Introduction
A Remittance is a transfer of MONEY by a foreign worker to his or her home country.
Significance of Remittance
1. Micro Implication
• Remittances are used for basic subsistence needs such as food, clothing and health care
• Funds are also spent on building or improving housing, buying land and cattle, and durable consumer goods
• It also funds development projects
2. Macro Implication
• Provides foreign currency to national reserve
• Increase national income, finance imports and contribute to balance of payments
• Affect home country real GDP per capita growth positively
Remittance Status in Nepal
According to UNDP ‘Human Development Report 2010’, remittance was the factor behind Nepal’s success in last 40 years.
Remittance has contributed significantly to the reduction of poverty in the last 15 years.
World Bank’s report ‘Migration and Remittance Fact book 2011’ says Nepal is among top 5 countries with remittance amounting to 23 percent of the GDP.
Data's of Remit Inflow
Remittance inflow to Nepal US$ (Billions) (source World Bank)
YEAR REMIT IN US$ BILLIONS
2003 771
2004 823
2005 1,212
2006 1,453
2007 1,734
2008 2,727
2009 2,986
2010 3,513 expected
Problems of Remittance• Harms the tradable sector by appreciating the real
exchange rate
• Reduces labor market participation
• Remittances were also seen to increase dependency
• Create social problem such as marital conflicts and family stress
Continued.
Raises level of Inflation Savings produced by it are frequently directed to
purchase of non-productive assets. Increases Dependency on family members. Country may face economic shocks when remittance
flow is disrupted.
Channels for Remittance Currently, it is estimated that about 60%of the remitted money to
Nepal enters through formal channels.
Formal ChannelsFinancial Institutions, Money exchanges
Informal ChannelsHundi and etc.Self Carry, Friends and familyIn kind
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