A study by Nepal Rastra Bank reveals that while remittances have boosted consumption in the country, they have concurrently led to a decline in the agriculture and productive sectors. The study shows that Nepal’s non-performing loan (NPL) ratio increased from 1.3 percent in 2022 to 4.62 percent by July 2025. To maintain financial discipline, the central bank has been advised to introduce advanced technology and establish a non-performing loan management company.
May 5, Kathmandu – Research indicates that remittances are shifting the economy away from production-oriented activities. Due to remittance inflows, many individuals are moving away from agriculture and other productive employment, the study highlights. The research conducted by Director Rajan Krishna Pant of Nepal Rastra Bank, titled “Economic Stability and the Nation: Achievements and Future Directions,” underscores remittances’ contribution to the reduction in production.
According to the study, Nepal’s long-term average economic growth rate is 4.3 percent. Although growth rates were higher during the 1980s and 1990s, conflicts and other issues in recent decades have caused fluctuations. The current growth rate is primarily driven by the services sector and remittances, the report notes. However, it emphasizes that this growth is largely consumption-driven rather than production-based.
