From Evidence to Policy Supporting Nepal’s Trade Integration Strategy : Trade Imbalances and Remittances

Portugal, Alberto ; Zildzovic, Emir

World Bank, Washington, DC

关键词: trade deficit;    remittances;    saving rates;    taxation;    subsidies;   

RP-ID  :  106828

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Nepal's trade balance in goods andservices has been in deficit for many years. The largedeficit has not resulted in a substantial accumulation ofnet foreign liabilities, as it has been largely financedwith workers' remittances from abroad. Indeed,remittances are the largest component of the currentaccount. This report aims at addressing the followingquestions: what are the underlying drivers of the tradeimbalances and their relative contributions to the deficit(e.g. domestic private expenditure fueled by remittancesversus public expenditures, relative prices, etc.)? What arethe paths to be expected for the trade balance and thecurrent account in the medium run, based on reasonableforecast assumptions for the main identified determinants?What are the implications of high remittances for thecompetitiveness in the short and long-run?How can Nepalmaximize the positive impact of remittances in the economy?The authors assess the impact of remittances on Nepal'sreal exchange rate and attempt to distinguish between theirshort and long term impact. To conclude, efforts to increasesavings and improve the allocation of remittances shouldalso be accomplished through improvements in the overallinvestment climate and the business environment.