Nepal cannot keep exporting its young people as its main growth strategy
Remittances now exceed the national budget. That is a measure of failure at home as much as success abroad.
Last fiscal year Nepalis working abroad sent home Rs 2.36 trillion, about $16.2bn and a rise of 37.1%. The sum is larger than the Rs 1.96 trillion budget the government had to spend, a fact we set out in Remittances outran the national budget. One analysis puts remittances at about 36% of GDP.
These numbers are usually presented as good news, and in one sense they are. The money keeps households fed, children in school and the balance of payments in surplus. Foreign exchange reserves reached $25.31bn by mid-July, enough for about 23 months of merchandise imports. A country that once worried about paying for fuel now has a comfortable cushion.
But the cushion is made of absence.
The scale of departure
The Department of Foreign Employment issued 792,302 labour approvals last year. Of these, 406,519 were for people leaving for work, and 385,783 for workers returning to jobs they already held. The year before set a record of 839,266. Five destinations, the United Arab Emirates, Malaysia, Qatar, Saudi Arabia and Kuwait, account for about four in five approvals.
The costs are real. A recent analysis in The Annapurna Express listed contract substitution, wage theft and unsafe workplaces abroad, and a reintegration system so weak that many returnees leave again. Families and villages absorb the demographic strain.
None of this means migration should be stopped or discouraged. People who leave are making a rational choice, and the right to seek work abroad is not the state's to ration. The argument is narrower: a country that relies on migration as its main source of income has stopped trying to create work at home.
What the money does not do
Remittances are spent, mostly on consumption and imports. Last year imports rose 16.2% to Rs 2.1 trillion while exports were Rs 315bn. Bank deposits grew 13.9%, swollen by remittance money, while lending to the private sector grew only 6.5%. The money arrives, sits in banks and finds few productive borrowers.
Meanwhile the state, which has the resources, does not build. The government spent 46.79% of last year's capital budget. Growth was 3.85%. The new budget promises 1.5 million jobs over five years, about 300,000 a year. Even if met, that is fewer than the number who left for first-time jobs abroad last year.
What a different strategy requires
The first requirement is for the government to spend its own capital budget. Roads, irrigation, power distribution and industrial land create jobs directly and make private investment viable. A government that cannot spend half its development allocation has no standing to complain that young people leave.
The second is to make it easier to employ people. Labour rules, land acquisition, permits and tax administration all raise the cost of hiring in Nepal relative to the cost of buying a plane ticket.
The third is to treat migrants as investors rather than as a revenue stream. Returnees bring savings and skills. A writer in The Annapurna Express argued recently for reintegration support that begins before workers come home. Pairing that with simple, safe vehicles for diaspora savings, rather than unregulated cooperatives, would turn some consumption into capital.
The fourth is honesty in how success is measured. A record remittance year should prompt questions, not celebration: how many of those who left would have stayed for a decent job at home, and what would it take to offer one?
The money from abroad has bought Nepal time. It should be used to build an economy that its young people do not need to leave.
How this story was made: researched and written by The Standard’s desk with AI assistance, from the published reporting and official data credited below, and checked against those sources. Our standards.
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