Vital remittances to Nepal at risk due to coronavirus outbreak, says Ambassador Pertti Anttinen

Vital remittances to Nepal at risk due to coronavirus outbreak, says Ambassador Pertti Anttinen

Migrant workers’ remittances to their home countries have declined due to the coronavirus crisis. In Nepal, more than half of households depend on remittances from abroad that account for over one quarter of the country's gross domestic product (GDP). We interviewed Pertti Anttinen, Ambassador of Finland to Nepal, on the effects of the coronavirus outbreak on remittances in Nepal.

Pertti Anttinen sits on the edge of the building and smiles at the camera.
Ambassador Pertti Anttinen. Photo: Hanna Päivärinta / Ministry for Foreign Affairs.

How much are remittances flows estimated to have declined in Nepal due to the coronavirus crisis?

Nepal's economy is one of the most remittance-dependent economies in the world.  In 2019, remittances accounted for approximately 26% of the country's GDP, amounting to about USD 8.64 billion. The World Bank estimates that this year remittances to Nepal may fall by 14%, that is, by a total of approximately USD 1.2 billion.

There are no detailed estimates of the number of Nepalese migrant workers abroad. According to the International Organisation for Migration, the total number of Nepalese migrant workers in Malaysia, Qatar, Saudi Arabia, the United Arab Emirates and Kuwait alone is estimated to be around 1.5 million. However, the majority of Nepalese migrant workers, possibly around 3–4 million, are working in India. Exact numbers cannot be presented because of the freedom of movement between the countries. For the time being, the recruitment of new workers abroad has been suspended, and many Nepalese migrant workers’ employment contracts at risk.

How does the decline in remittances show in the everyday lives of the average Nepalese?

Most Nepalese migrant workers come from areas where there are few job opportunities. The United Nations estimate that up to 56% of Nepalese households are at least partly remittance-dependent and that remittances flows play a significant role in preserving households’ financial stability. Families use remittances to support their basic livelihoods, to finance their children's schooling, and partly, for example, to buy land or to invest in small business activities.  

Can the coronavirus crisis make a long-term or even permanent dent in migrant workers’ remittances?

This risk exists. Much depends on the magnitude and long-term impact of the coronavirus epidemic on the world economy and, in particular, on the countries with the largest number of Nepalese migrant workers. However, if the global economy recovers rapidly, the decline in the level of remittances may also be short-lived.

Has the Nepalese Government or the international community responded to the decline in remittances flows and difficulties in sending them? How could the problem be influenced?

The international community has reacted to the coronavirus crisis in many ways. For example, the World Bank has approved a fast-track USD 29 million ‘COVID-19 Emergency Response and Health Systems Preparedness Project’ to Nepal. The European Union's assistance package is about EUR 75 million, including both redirected funding of ongoing programmes and new money. Many other donors, including Finland, have also redirected existing funding within ongoing projects.

Many Nepalese people are expected to return to Nepal, for example from the Gulf region, as job opportunities are decreasing.  This year, between mid-February and the end of March, before international flights were suspended, an estimated 67,000 Nepalese migrant workers managed to return to their country of origin.  In future, it would be very important to find work for the returnees in Nepal, and both the Government of Nepal and the donors should pay particular attention to this matter.