Nepal tops the world in remittance-GDP ratio

Kathmandu, June 19: In terms of remittance to GDP (Gross Domestic Product) ratio, Nepal has topped the world.

The size of the remittance has reached 32 per cent of the Gross Domestic Product (GDP), making Nepal a country that heavily depends on the money sent back home by the migrant workers.

According to the latest report ‘Sending Money Home: Contributing to SDGs, one family at a time’ by the International Fund for Agricultural Development (IFAD), in the last 10 years, Nepal’s reliance on remittance has almost doubled from 17 per cent in 2007.

Nepal received US$ 6.27 billion in 2016, which constitutes almost one third of the GDP, and it is higher than 262 per cent than in 2007.

Top five countries that rely on remittances are Nepal, Tajikistan – 29 per cent, Kyrgyz Republic – 26 per cent, Samoa – 17 per cent and Marshall Islands – 14 per cent.

A decade ago, Tajikistan was the top reliant country with 45 per cent, and Nepal ranked fifth.

The top remittance receiving countries are India, China, the Philippines, Pakistan and Bangladesh with 62.7 billion, 61 billion, 29.9 billion, 19.8 billion and 13.7 billion US dollars respectively.

Two of the world’s largest economies -- India and China -- have a 3.3 per cent and 0.6 per cent remittance to GDP ratio. China received US$ 61 billion in  remittances in 2016, and India $62.74 billion.

The remittance inflow to India was $37.2 billion a decade ago.

In south Asia, the Maldives witnessed a negative trend in remittances. It witnessed 52.7 per cent negative growth in remittance inflow.

The report said that Asia was the highest originating region with 77 million migrants, with 48 million remaining within the region.

“Migrating to neighbouring countries is common, with bi-directional corridors, such as India-Nepal, and one way corridors such as Myanmar to Thailand. The Gulf states are a primary destination for migration workers from the South Asian nations and Indonesia and the Philippines,” reads the report.

In Europe, Moldova has the highest remittance-GDP ratio with 23.5 per cent, and Poland has the lowest reliance on remittance with 1.4 per cent of remittance to GDP.

Haiti has an economy reliant on remittance, with 24.7 per cent to GDP, in Latin America and the Caribbean. Likewise Gambia is a remittance-reliant country in Africa. It has a 22.4 per cent remittance size in comparison to the GDP.

The report says that between 2015 and 2030, an estimated USD 6.5 trillion in remittances will be sent to low and middle income countries, and it will contribute to increased income, better health and nutrition, educational opportunities, improved housing and sanitation, entrepreneurship and reduced inequality.

“Regular remittances lift most families out of the poverty line and help them avoid falling back into ‘poverty traps’,” reads the report.

The IFAD study found that women now comprise about half of all remittance senders (100 million), and more than $100 billion in remittances are available to cover long-term goals, such as education and health, and housing, small assets and other income-generating activities.

Likewise, global remittances to developing countries increased by 51 per cent.