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Global remittance market could sink $ 100 billion this year

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Should we pause foreign aid to pay for the cost of the pandemic? Description video: Ian Collins begins his show asking whether the Government should pause foreign aid to pay for the cost of the coronavirus pandemic.\n\n\”We’re all aware the […]

Should we pause foreign aid to pay for the cost of the pandemic?

Description video:
Ian Collins begins his show asking whether the Government should pause foreign aid to pay for the cost of the coronavirus pandemic.\n\n\”We’re all aware the crazy areas where this money is being spent over the years. The £5m that went to the Ethiopian music industry namely to help their version of the Spice Girls. I’m not making that up. That actually happened.\n\n\”There has been industrial size wastage.\n\n\”We live under a constant urban myth. It comes under the banner ‘first world problems’. The idea any problem we have in this country could never be as bad as what somebody might have in another.\n\n\”That’s nonsense and it has to stop.\”

Global remittance market could sink $ 100 billion this year

Slower economic growth expectations prompted Citi to lower its forecasts for global remittances, saying it increased credit rating risk for small emerging market economies and would raise their borrowing costs.

Global remittance market could sink $ 100 billion this year

In a worst-case scenario, remittances could fall by $ 100 billion, Citi said in a note to customers, more than doubling its baseline downturn scenario that was previously indicated at $ 68 billion in 2020. According to experts, in mid-April, the amount of wage transfers by migrant workers home could be reduced by about $ 28 billion this year..

This will pose the biggest challenges for countries with little financial capacity to mitigate the impact of falling remittances, which will increasingly force them to spend large sums to support their economies. This increases the risk that they will not be able to meet all of their debt obligations..

«Decline in remittances could have a negative impact on sovereign debt ratings of small developing countries (emerging market countries)», – writes Dana Peterson from Citi in a note to customers.

«Tajikistan and Sri Lanka are at heightened risk of sovereign default as inbound remittances account for a significant proportion of their own GDP», – she added.

This largely depends on the countries and sectors in which immigrants and migrants have worked. Migrant workers in the United States who originally came from Latin America and Asia were at greater risk of losing their jobs, Citi said, and will therefore send less money home..

In April, the World Bank calculated that remittances around the world were set to fall by $ 142 billion in 2020, the sharpest drop on record..