Nepal loses billions of dollars through illegal capital outflow!

A recently released UN Report has placed Nepal in the sixth position among Least Developed Countries (LDCs) exporting funds illegally. The report titled "Illicit Financial Flows from the Least Developed Countries: 1990-2008" has exposed the extent of the illegal capital outflow due to Nepal's weak financial system. According to the report, US$ 9.1 billion (Rs 657.93 billion) in capital was siphoned out of the country during the period 1990- 2008.

On an average, US$ 480.4 million (Rs 34.73 billion) went out of the country annually. The illegal outward flood of capital from Nepal has increased so much that it has outpaced the official development assistance (ODA) that Nepal receives. For every dollar that enters Nepal as development assistance, 1.1 dollar exits Nepal through illegal means. The main means of outflow is said to be the hundi system. The outflow during 1990-2008 amounting to Rs 657.93 billion is equivalent to 8.07 percent of Nepal's Gross Domestic Product (GDP) for the period.While the UNDP report shows capital flight till 2008, it is believed that outflow of capital has intensified in the last two years. The full report can be read here