12 January 2026
What has been the trend in the flow of remittances in Nepal historically? Which countries do remittances originate from? How do remittance flows vary across provinces? And how should one understand the significance of remittances to the national economy? This article will address these questions by drawing on a recent study that was based on data from the Nepal Living Standards Surveys of 1995/1996 (NLSS I), 2003/2004 (NLSS II), 2010/2011 (NLSS III), and 2022/23 (NLSS IV), along with the Nepal Rastra Bank’s historical data on remittances and various economic indicators.
Trends of remittance inflows to Nepal
In the past two decades, remittance flow to Nepal has steadily increased from less than NPR 100 billion until 2004 to a record NPR 1.4 trillion (USD 11.4 billion) in 2024 (Figure 1) (the year refers to the ending year of each fiscal cycle here and hereafter).
Figure 1: Amount Remitted to Nepal, 2001 to 2024 (in billion NPR)
The volume of remittances has gone up significantly due to the higher numbers of Nepalis participating in international labour migration and the increase in the quantum of average remittance transferred over time. In 2023, a total of 3.6 million remitters sent money to Nepali households compared to less than half a million back in 1996. Likewise, the proportion of remittance-receiving households went up from 10.8 per cent to 35.6 per cent in the same period (Figure 2).
Figure 2: Percentage of Households Receiving Remittances in Nepal, 1996-2023
The average size of remittances has also significantly increased over the years. In 1996, a Nepali remitter sent home an annual average of NPR 16,227, an amount that had increased to NPR 224,744 by 2023. This is likely due to both an increment in wages overall and the migration of an increasing number of Nepali workers to relatively higher-income destinations.
Table 1: Average Remittance Size per Remitter, 1996-2023
Such was the trend in the past as well. There was a sharp rise in average remittance size between 1996 and 2004, which was associated with the migration of a sizeable number of Nepali migrant workers heading towards the higher-income destinations of the GCC countries by 2004 in a break from the historical tendency of going to India. While nearly all remitters (91.8 per cent) lived in India in 1996, it had declined to 64.4 per cent by 2004, and had gone down further in 2023, albeit to a still-substantial 40.6 per cent. Despite the high number of remitters in India, its share in the volume of remittances transferred to Nepal is much lower (13.9 per cent), indicating the relatively low incomes of migrants there. The 2023 data (NLSS IV) shows the emergence of newer destinations for Nepali migrants with much higher proportions of remittances being transferred from Australia, Japan, and South Korea compared to the past (Table 2).
Source countries of remittances
The NLSS IV shows that the largest volume of remittances continued to be received from India, the top destination of Nepali migrants but only marginally so (Table 2). The Gulf states of Saudi Arabia and Qatar followed closely. Estimates based on the NRB data on total remittances received in Nepal for the year 2022/23 show that Nepal received over USD 1 billion from each of these three countries, while the amounts transferred from Malaysia and the UAE were also close to USD 1 billion each. Similarly, nearly three-quarters of a billion US dollars were sent from Australia while more than USD 500 million was remitted from the USA. Migrant workers based in South Korea and Japan, the two other popular labour destinations of Nepali migrant workers, sent home USD 484 and 422 million, respectively.
Table 2: Bilateral Remittance Flows to Nepal, 2023
How big is the volume of remittance received in Nepal?
An approach commonly used to gauge the magnitude of remittance compares its size with that of the national economy by calculating the remittance-to-gross domestic product (GDP) ratio for the respective year (although this does not measure the exact contribution of remittances to the national economy). In Nepal, the remittance-to-GDP ratio has increased remarkably in the past three decades. While remittances were equivalent to less than 3 per cent of Nepal’s GDP in 2001, the remittance-to-GDP ratio surpassed 11 per cent in 2002, crossed 20 per cent in 2008, and reached a peak of 33 per cent in 2024 (Figure 3).
Figure 3: Remittances as Percentage of Nepal’s GDP, 1993–2024
Similarly, a review of the convertible foreign exchange earnings of Nepal in the last six decades shows that remittances have consistently been the most important source of convertible foreign exchange in the last two decades, making over half of the total earnings every year since 2005 and it has been about two-thirds since 2021 (Figure 4).
Figure 4: Contribution of Remittances in Total Convertible Foreign Exchange Earnings, 1961–2024 (%)
The significance of remittances for Nepal’s convertible foreign exchange earnings declined from the late 1970s to the early 2000s, with increases in earnings from tourism and the volume of foreign aid that had begun trickling into Nepal with the start of ‘international development’ programmes in the 1950s (Figure 5). The scenario changed in the mid-2000s with remittances gradually overtaking the other three major sources of foreign exchange—foreign aid, tourism and exports. In 2023, remittances, with a contribution of NPR 1 trillion worth of convertible foreign exchange, far overshadowed inflows from foreign aid (NPR 153.2 billion), exports (NPR 82.4 billion), and tourism (NPR 57.9 billion). As such, according to the Nepal Rastra Bank, there is a very strong relationship between the size of remittances received and the surge in the volume of total international reserves of Nepal in the last two decades, from USD 1.5 billion in 2004 (with convertible foreign exchange of USD 1.3 billion) to USD 16.5 billion in 2024 (with convertible foreign exchange of USD 10.5 billion).
Figure 5: Convertible Foreign Exchange Incomes from Remittances, Tourism, Foreign Aid and Exports, 1961–2024 (%)
Remittances at the province level
While remittances have been received by a significant proportion of households in each province of Nepal, discrepancies exist at the provincial level in terms of the volume of remittances received and the average amount of transfer per remitter. The relatively wealthier provinces—Bagmati, Gandaki, and Koshi—receive significantly higher amounts of remittances compared to the relatively poorer ones—Karnali, Sudurpaschim, and Madhesh. In 2023, households in Gandaki, Koshi, and Bagmati received the largest amounts on average, about NPR 400,000 or more, while those in Sudurpaschim, Karnali, and Madhesh averaged about half of that.
Table 3: Remittance-Receiving Households by Province, 2023
Per remitter transfer in the first three provinces was also significantly higher, compared to the latter three (Figure 6). The main reason was the discrepancy in the location of remitters: while the lower remittance-receiving provinces had a large proportion of remitters in India, those from the higher remittance-receiving provinces were spread across countries other than India. However, even in India, migrants from the poorer provinces seemed to be employed at lower-wage jobs, and thus remitting smaller amounts of remittances compared to India-based migrants from Bagmati and Koshi.
Figure 6: Average Size of Remittance per Remitter by Province, 2023 (NPR)
Conclusion
A historical overview of remittance flow to Nepal shows its dominant position in the national economy in much of the period from 1960 to 2024, serving as the primary source of precious foreign exchange earnings. As growth in Nepal’s other economic sectors, such as agriculture, tourism, and manufacturing as well as overall exports, has become slow or stagnant, the prominence of remittance has grown over time, ballooning to an equivalent of a third of the country’s GDP in 2024. The remittance-dependent economy, however, has become a cause of concern. There is fear about the sustainability of remittances and the possible collapse of Nepal’s economy if remittance flow slows down or halts due to various reasons, such as a decrease in labour demand from abroad and the permanent settlement of migrants in foreign countries (where such opportunities are available).
While these concerns are valid, remittances have historically been a reliable source of foreign exchange and have helped relieve economic shocks, especially to mitigate external pressure, during times of crisis, such as the recent COVID-19-induced global economic crisis. Despite this somewhat optimistic trend, Nepal nevertheless needs to diversify its economy and design and implement policies and programmes to attain this objective. Among other approaches, such an intervention should ensure that migrants from poorer provinces have greater access to higher-income countries, thereby helping to address the province-level imbalance evident at present.
