Remittance in Nepal: Percent of GDP, Inflow Trend & Source Countries

In fiscal year (FY) 2024/25 (mid-July 2024 to mid-July 2025, roughly BS 2081/82) Nepal received about Rs 1,723 billion in workers' remittances, according to Nepal Rastra Bank (NRB), the country's central bank. In US-dollar terms that was roughly USD 12.6 billion. This was an increase of about 19 percent in rupee terms over FY 2023/24, when inflows were about Rs 1,445 billion (roughly USD 10.9 billion).

Measured against the size of the economy, remittance is exceptionally large for Nepal. NRB data put remittance at close to 28-29 percent of gross domestic product (GDP) in FY 2024/25, one of the highest ratios in the world. The World Bank's separate personal-remittances series, which uses a slightly different definition, recorded Nepal at about 26-27 percent of GDP for 2023. Either way, remittance is worth roughly a quarter to a third of everything Nepal produces in a year.

The Nepali term commonly used for remittance is 'vipreshan' (विप्रेषण). In everyday economic terms it means the money that Nepalis working abroad send back to their families, and it is by far the most important flow of foreign currency into the country. Because the ratio is so high, changes in remittance move Nepal's whole external economy, from the exchange rate to import capacity.

Remittance to Nepal has grown almost every year for two decades, though the pace is uneven. In the years after the 2015 earthquake and again after the COVID-19 pandemic, inflows rebounded sharply as labour migration resumed. The strongest recent surge came in FY 2023/24 and FY 2024/25, driven by record numbers of labour permits, a shift toward higher-earning destinations, and NRB incentives that pushed workers to send money through formal banking and money-transfer channels rather than informal 'hundi' networks.

The table below shows recent annual inflows in Nepali rupees, as reported in NRB's Current Macroeconomic and Financial Situation reports. Figures are rounded; readers should treat the most recent year as provisional until NRB publishes final annual data.

Growth has slowed at times when Gulf economies cut hiring or when the rupee strengthened against the currencies workers earn. Analysts also warn that remittance is exposed to shocks in West Asia (the Gulf) and Malaysia, where most Nepali workers are concentrated, so a single regional downturn or conflict can dent inflows quickly.

Most of Nepal's remittance originates from a small group of labour destinations. The Gulf Cooperation Council states, chiefly Saudi Arabia, Qatar, the United Arab Emirates (UAE) and Kuwait, together with Malaysia, account for the bulk of formal inflows. NRB estimates that around 40-42 percent of remittance comes from Gulf-region countries, with Saudi Arabia, Qatar and the UAE alone contributing roughly a third of the total.

The United States, the United Kingdom, South Korea, Japan and Australia are also significant and rising sources, reflecting Nepali students, skilled workers and the diaspora sending money home. India remains important too, but because of the open border and the widespread use of informal channels, India-sourced remittance is harder to measure precisely and is often understated in official data.

The mix of source countries has been shifting. Traditional Gulf and Malaysian labour markets still dominate, but destinations such as Romania, Croatia, Poland and other European Union countries, plus structured schemes for South Korea (the EPS programme) and Japan, are growing. These newer markets tend to pay higher wages, which is one reason total remittance kept rising even in years when the number of workers going abroad plateaued.

Remittance is the financial mirror of Nepal's foreign-employment system. To work abroad legally (except in India, where the open border means no permit is required), a Nepali must obtain a labour permit, popularly called 'shram swikriti', through the Department of Foreign Employment under the Ministry of Labour, Employment and Social Security. These permits, together with NRB's balance-of-payments data, are the two main official sources for tracking the sector.

In FY 2024/25 the Department issued more than 800,000 labour permits (new plus renewed), among the highest annual totals on record, at an average of well over 2,000 workers departing per day. The UAE, Saudi Arabia and Qatar received the largest single shares of new permits, followed by Kuwait, Malaysia and a growing tail of European destinations. Estimates suggest that on the order of 3-4 million Nepalis are working abroad at any given time, a large fraction of the working-age population.

Because so many households depend on a member working overseas, foreign employment shapes not just the economy but also demographics, agriculture (labour shortages in villages) and social life. It also carries costs: recruitment-agency fees, debt taken to fund migration, workplace risks and, in some cases, deaths of migrant workers, all of which are recurring policy concerns in Nepal.

The cost of sending money home matters because every rupee lost to fees is a rupee that does not reach a Nepali household. United Nations Sustainable Development Goal (SDG) target 10.c aims to reduce the average cost of sending remittances to less than 3 percent of the amount transferred, and to eliminate corridors where the cost exceeds 5 percent.

Nepal has moved relatively close to this target compared with the global average. The International Organization for Migration (IOM) and World Bank data have put the cost of sending money to Nepal at roughly 3-4 percent in recent years, helped by high adoption of formal and digital transfer channels. By contrast, the global average cost of remittances was still around 6-6.5 percent in early 2025, well above the SDG goal, with cash-based transfers costing more than digital ones.

Keeping costs low, and steering workers away from informal 'hundi' channels toward banks and licensed money-transfer operators, is a deliberate policy of NRB and the government. Lower costs and formalisation both increase the share of earnings that shows up in official reserves, which is why remittance-channel policy is treated as part of macroeconomic management, not just consumer protection.

Remittance dwarfs every other source of foreign exchange for Nepal. In a typical recent year, net foreign direct investment (FDI) has been on the order of a few tens of billions of rupees, while official development assistance (ODA, foreign aid and loans) is larger but still far smaller than remittance. Remittance at roughly Rs 1,700 billion a year is many times the size of FDI and ODA combined.

This imbalance is unusual and carries both benefits and risks. On the positive side, remittance is stable household income that funds consumption, education, health and small investment, and it does not create the external debt that foreign loans do. On the negative side, an economy so reliant on exported labour and imported goods can become structurally dependent: consumption and imports rise with remittance, but domestic production and exports lag, and the country has attracted comparatively little productive foreign investment.

Economists and NRB itself repeatedly note that the challenge is to channel remittance from consumption and real-estate speculation toward productive investment, and to make Nepal a more attractive place for FDI so that the external economy is not resting almost entirely on one pillar.

Remittance is the main reason Nepal has been able to build record foreign-exchange (forex) reserves and run a surplus in its balance of payments (BoP) in recent years. Nepal runs a large trade deficit because it imports far more than it exports; remittance is the inflow that offsets that gap. When remittance is strong, the current account and the overall BoP swing into surplus and reserves rise; when it weakens, reserves come under pressure.

By mid-July 2025, at the end of FY 2024/25, NRB reported gross foreign-exchange reserves of about Rs 2,677 billion (roughly USD 19.5 billion), a record high and up sharply from a year earlier. NRB estimated these reserves were sufficient to cover well over a year of merchandise imports and more than a year of combined goods-and-services imports, a comfortable buffer by international standards. The current account and BoP were both in surplus, reversing the reserve squeeze of 2021/22.

This makes remittance central to macroeconomic stability, not just to family budgets. It supports the fixed peg of the Nepali rupee to the Indian rupee, funds essential imports such as fuel and medicines, and gives NRB room to manage liquidity. It also explains why any threat to remittance, from a Gulf slowdown to conflict in West Asia, is treated as a national economic-security issue in Nepal.