Nepal’s economy is in the precarious position of being dependent on remittances for its foreign exchange (FX) reserves, and on imports for much of its food, fuel, and consumer goods. This delicate balance was thrown off by the arrival of Covid-19, which disrupted supply chains and saw remittances dry up as borders closed and overseas workers lost their jobs.
Remittances account for up to 30% of Nepal’s gross domestic product, representing $9bn. Prithvi Pande, chairman of Nepal Investment Bank, says the country’s dependence on remittances is one of the biggest risks to its economy. This is compounded by the use of informal channels, through which equivalent sums are sent back to Nepal each year.
