Country's foreign exchange reserve depleted by Rs64 billion in the last fiscal year compared to the preceding year, according to the central bank.

Prithvi Man Shrestha

Police arrested five migrant workers on May 23 at the Tribhuvan International Airport for illegally carrying the US dollar as they were preparing to fly for Cyprus. Shova Ghale, Kristina Magar, Rishi Phal, Lakpa Dolma Sherpa and Shanta Bahadur Tamang each had carried the US dollar in cash beyond the limit set by the Nepal Ratra Bank and they also had not received the cash from the banks.

At that time, a migrant worker could receive a maximum of $500 for going abroad. But police seized $1,500 each from Lakpa and Kristina, $2,200 from Shova, $3,600 from Rishi and $3,500 from Shanta Bahadur. After arresting them, the police handed them over to the Department of Revenue Investigation, which has been entrusted with investigating and filing the case on foreign exchange misappropriation.

During its investigation, the department found that they had carried the US dollar on behalf of the recruiting agency, Om Shree Mahashakti Employment Private Limited, which was sending five migrant workers to Cyprus. "During the interrogation, all five claimed that the manpower agency had asked them to carry the cash and give the amount to someone in Cyprus," said an investigation officer at the department. The department also interrogated the proprietor of the recruiting agency, Radha Budhathoki, who accepted that she gave the US dollar to the departing migrant workers. But she defended herself, saying that she and her family members are frequent travellers and her daughter is an air hostess in an international airline and receives a salary in foreign currency. She had stated during the interrogation that the amount was sent through the migrant workers to pay the loan that she had taken during her earlier stay there.

Despite her defence, department officials say sending the US dollar outside the country through the informal channel and carrying foreign currency beyond the limit is illegal and punishable by the law. "We are preparing to file a case against her on foreign exchange misappropriation at the court shortly," a department official said. This is a representative case of how foreign exchange facility meant for migrant workers can be misused. Nepal Rastra Bank officials said they had learnt about such tendency long before this particular incident took place. So, by issuing a circular on January 22, the central bank reduced the foreign exchange facility against the passport for the migrant workers to $200 from $500.

During an interaction organised by the Society of Economic Journalists in Kathmandu in August, Deputy Governor of the central bank Chintamani Siwakoti said the facility had been reduced after finding that the provision was being misused by the recruiting agencies. "Representatives of the recruiting agencies were found to have been collecting migrant workers' passports and taken out the US dollar for themselves to invest abroad," Siwakoti told during the interaction. "Migrant workers usually don't need the US dollar as they are provided food and accommodation facility by the employers in the Gulf."

Nepal has a law that prohibits its citizens from investing abroad. But it has been an open secret that Nepali business people have invested abroad. Sarita Bhatta Adhikari, chief of foreign exchange management department at Nepal Rastra Bank, also reiterated that the misuse of foreign exchange facility by the recruiting agencies had prompted the central bank to reduce the ceiling of foreign exchange facility for the migrant workers. "Another reason is depleting foreign exchange reserve. So, the central bank in November last year reduced the foreign exchange facility for Nepalis travelling abroad to $1,500 from $2,500."

Amid surging imports against diminishing exports and remittance, foreign exchange reserve in the country is on a downward spiral. According to Nepal Rastra Bank, gross foreign exchange reserves decreased by Rs64 billion in the last fiscal year compared to the preceding year. In mid-July this year, the country's foreign exchange reserves stood at Rs1.03 trillion, down from Rs1.10 trillion in mid-July 2018.

Adequate foreign exchange is necessary not only to import necessary goods for the country but also to assure foreign investors that they would be able to repatriate their profit from Nepal. But office bearers of Nepal Association of Foreign Employment Agency, a representative body of recruiting agencies, expressed ignorance about any recruiting agency involved in sending foreign exchange abroad illegally.

Rohan Gurung, president of the association, told the Post that he believed that no recruiting agency had been engaged in such illegal practices. "If anyone is involved in such illicit activities, the government and central bank should investigate and take action including the scrapping of the registration," he said.

Published on: 11 September 2019 | The Kathmandu Post