The remittance boost: How money from abroad is strengthening Nepal’s economy and BoP

KATHMANDU: Nepal’s financial health on the international stage has reached an unprecedented level of strength, providing the country with a massive safety net that could protect the economy for nearly two years. According to the latest “Current Macroeconomic and Financial Situation” report from the Nepal Rastra Bank, the nation’s Balance of Payments (BOP)—which acts like a country’s ledger with the rest of the world—recorded a staggering surplus of Rs 421.89 billion ($2.98 billion) in the first five months of the 2025/26 fiscal year.

To put this in perspective, during the same period last year, the surplus was only about Rs 225 billion. This means the amount of money flowing into Nepal from abroad is now far higher than the money leaving the country. This trend is vital because it determines how easily Nepal can trade with other nations, pay for essential imports, and keep its currency stable.

The Engine Behind the Surplus
The main reason for this financial boom is a massive surge in remittances. Money sent home by Nepalis working abroad jumped by over 35%, reaching Rs 870.31 billion in just five months. At the same time, while Nepal still buys much more than it sells to other countries, exports grew by an impressive 58.2%. This combination of hardworking citizens abroad and a growing export sector has filled the national treasury to record levels.

Because of this influx of foreign currency, Nepal’s foreign exchange reserves have hit a historic peak of Rs 3.20 trillion ($22.13 billion). This is a massive milestone for a country of Nepal’s size. These reserves are essentially the country’s emergency fund in US dollars and other major currencies. Currently, this “savings account” is large enough to cover the country’s entire import bill for 18.2 months. In simpler terms, if Nepal stopped earning a single dollar today, it could still afford to buy fuel, medicine, and food from abroad for over a year and a half.

For the average citizen, a healthy Balance of Payments might seem like a distant academic concept, but it has very real benefits. First, it ensures that there is no shortage of essential goods. When a country runs out of foreign currency, it cannot pay for fuel or electricity from other countries, leading to shortages. With nearly 20 months of cover, Nepal is in a very safe position.

Second, this surplus helps balance foreign trade. In the past, Nepal often worried that its high demand for imports would drain its wealth. Now, the growing reserves provide a cushion that allows the government to invest in larger infrastructure projects without fear of going broke. It also keeps the Nepali Rupee stable, which helps prevent the prices of imported goods from sky-rocketing.

However, experts point out a strange “paradox.” While the country’s bank account is full, domestic investment remains slow. Banks are sitting on a lot of cash, but businesses are still hesitant to take out loans.

Moving forward, the challenge for Nepal will be to move from just “saving” this money to “spending” it on local factories, hydropower, and jobs so that the next generation of Nepalis can find opportunities at home instead of having to send money from abroad. For now, though, the record-breaking surplus provides a level of economic security that Nepal has rarely seen in its history.