No remittance slowdown in Phl – WB

WASHINGTON – The Philippines continued to defy the declining trend in remittances to developing countries, according to the latest edition of the Migration and Development Brief of the World Bank released during the 2017 International Monetary Fund (IMF) – World Bank Group Spring Meetings.

The report showed remittances to developing countries fell for a second consecutive year last year,  a trend not seen in three decades.

Remittances fell 2.4 percent to $429 billion last year from $440 billion, higher than the 1.2 percent contraction in global remittances to $575 billion.

According to the World Bank, remittances to the East Asia and Pacific region declined an estimated 1.2 percent to $126 billion in 2016 amid low oil prices and weak economic growth in the Gulf Cooperation Council (GCC) countries and the Russian Federation. The decline in remittances, when valued in US dollars, was made worse by a weaker Euro, British pound and Russian ruble against the greenback.

As a result, many large remittance-receiving countries saw sharp declines in remittance flows. India, while retaining its top spot as the world’s largest remittance recipient, led the decline with remittance inflows falling 8.9 percent to $62.7 billion.

Remittances to other major receiving countries are also estimated to have fallen - Bangladesh (-11.1 percent), Nigeria (-10 percent), and Egypt (-9.5 percent).

According to the World Bank, the Philippines was an exception to the decline as it posted a 4.9 percent increase in cash remittances from overseas Filipinos.  Remittances reached a record level of $26.9 billion, making it the second fastest growing after Mexico’s 8.8 percent.

For this year, the World Bank expects global remittances increasing 3.3 percent to $444 billion on the back of improved economic outlook. Remittances to the East Asia and Pacific region are seen growing 2.5 percent to $129 billion.

On the other hand, the Bangko Sentral ng Pilipinas  sees cash remittances from overseas Filipinos rising faster at four percent this year amid the continued deployment of skilled Filipino workers abroad. Remittances from 12 million overeases Filipinos help boost private consumption, contributing about 10 percent to the GDP.

Rita Ramalho, acting director of the World Bank’s Global Indicators Group, said remittances are an important source of income for million of families in developing countries.

“As such as weakening of remittance flows can have a serius impact on the ability of families to get health care, education or proper nutrition,” Ramalho added.

The World Bank report said global average cost of sending $200 remained flat at 7.45 percent in the first quarter of 2017, although this was significantly higher than the Sustainable Development Goal (SDG) target of three percent. Sub-Saharan Africa, with an average cost of 9.8 percent, remains the highest-cost region.

A major barrier to reducing remittance costs is de-risking by international banks, when they close the bank accounts of money transfer operators, in order to cope with the high regulatory burden aimed at reducing money laundering and financial crime. This has posed a major challenge to the provision and cost of remittance services to certain regions.

It noted that several high-income countries that are host to many migrants are considering taxation of outward remittances, in part to raise revenue, and in part to discourage undocumented migrants. However, taxes on remittances are difficult to administer and likely to drive the flows underground.

The number of refugees worldwide increased by 1.4 million to 16.5 million with the number of refugees in the 29 European Union countries increasing by 273,000 to 1.6 million between 2015 and 2016.

The World Bank noted the absence of a formal definition of the Global Compact on Migration, and advances a working definition of “an internationally negotiated framework for governments and international organizations to harness the benefits of migration while navigating its challenges.”

It called for regional and bilateral agreements that address migration to develop a normative framework or guidelines for governments and international organizations.

Dilip Ratha, lead author of the Brief and head of the Global Knowledge Partnership on Migration and Development, said migration would almost certainly increase in the future due to large income gaps, widespread youth unemployment, ageing populations in many developed countries, climate change, fragility, and conflict.

“Currently, the global migration architecture is fragmented and undefined. The global community needs to systematically map the current institutional framework, clarify the missions of key organization, and develop normative guidelines by building on existing conventions that address migration,” Ratha said.