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Nepal’s remittance-dependent economy braces for upheaval

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A Nepali worker carries coal to fuel a bricks oven at a brick factory in Chhampi village on the outskirts of Kathmandu. AFP

Nepal’s remittance-dependent economy braces for upheaval

The decision of the Nepali government to stop issuing permits to migrant workers will have significant consequences for the country, where economic activities are driven by remittances, experts say.

While some analysts support the government’s move to end confusion among migrant labourers, others are worried about its ramifications on the economy.

“There had been a slowdown in the issuance of labour permits for individuals as well for agencies even before the government decision to stop issuing permits,” said Umesh Basnet, chief of Foreign Employment Office.

According to him, workers heading to Malaysia and the United Arab Emirates rushed to his office fearing that they might not be able to leave the country and lose their jobs overseas. Even on Friday, the day the government’s decision came to force, nearly 400 migrant workers had queued up at the Foreign Employment Office, Tahachal in Kathmandu.

“The government’s decision to stop labour migration for some time is realistic,” said Arjun Kharel, a labour migration researcher at the Centre for the Study of Labour and Mobility, a think tank. “The government has made a good move by halting the issuance of labour permits rather than leaving migrant workers in confusion.”

Nepal’s foreign employment sector, already feeling the pinch of the Covid-19 outbreak since the government stopped workers going to South Korea in February, braces for more agony with workers’ departure completely halted for an indefinite period since Friday. This is the first time in over two decades that the government imposed such a blanket ban on Nepali workers leaving abroad.

“There’s not much that the government can do as countries that host Nepali labourers are also placing travel restrictions on foreigners even as they reel under an economic slowdown due to Covid-19” added Kharel.

All the major labour destination countries, which include Malaysia, South Korea and Gulf countries like Qatar, Saudi Arabia, Kuwait, the UAE, have reported cases of coronavirus and have been scrambling to control its spread.

Earlier, this week Qatar imposed a temporary ban on travellers coming from 14 countries, including Nepal. The temporary suspension has already affected thousands of Nepali workers awaiting their departures.

On Saturday, Saudi Arabia, another major destination for Nepali workers, suspended all international flights to the kingdom for two weeks to contain the spread of the new coronavirus.

All these restrictions not only hurt Nepali migrant workers’ income, but also the country’s remittance-dependent economy as a whole, according to experts. Although the effect of the pandemic on the flow of remittances is yet to be seen, the bans and restrictions are likely to soon show their impacts on the money workers send home.

“The inflow of remittances over the last seven months is at par with the amount received during the same period last year,” said Gunakar Bhatta, spokesperson for Nepal Rastra Bank. “But no one knows how the figures will look like in the coming days or months.”

During the last fiscal, the country received Rs879 billion ($7.4 billion) in remittances (around 25 per cent equivalent of the Rs3.46 trillion-worth gross domestic product) from workers abroad, according to the central bank.

Before the ban was implemented, hundreds of Nepalis left the country every day to work in the Gulf and in Malaysia. The money they send not only reduces pressure on the government to create employment opportunities in the country, it also helps families meet their consumption expenses. It is also the single-largest source of foreign exchange required to finance import of essential goods and services.

THE KATHMANDU POST/ASIA NEWS NETWORK

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