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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Tuesday, December 13, 2005

Better management of migrant remittances can reduce poverty

Daily Mirror: 06/12/2005" By Kelum Bandara

International migrants and their remittances to back home can bring in substantial welfare gains and reduce poverty if the flow of migrants and transfer of remittances are properly managed, said Senior World Bank Economist Dilip Ratha citing the World Bank report ‘Global Economic Report (GEP) for 2006.

Addressing the function to mark ‘Special Launch Event’ of the report in Sri Lanka, the senior economist highlighted the number of migrants had now reached 200 million worldwide and still continue to increase.

He said remittances are an important source of income for Sri Lanka. “Migration happens mainly from South to North, and therefore remittances flow from the rich countries to the poor. India, China, Mexico, France and others were the top recipients of remittances. Migrations benefit economy at large. Evidence shows it also reduces poverty,” he said.

He said remittances are spent on areas like education and health and it was a positive effect of migrations.

It was pointed out migrants tend to rise at a time of crisis like natural disaster or conflict, and had given lifeline to countries facing political crisis. “They may augment countries’ ability to access foreign capital,” he added.

Referring to the downsides of the process, he said large remittance flows could lead to currency appreciation leaving adverse effects on exports.

Misuse of them for finance laundering and terrorist- financing is also cited by him as a negative effect of migrations. However, he said such evidence for the latter is hardly found.

Central Bank Director Economic Research Dr. Nandasiri Thenuwara said service sector should be liberalized to end the brain drain by setting up the seed for human power houses for people of high-level calibre in the country.

Dr. Thenuwara said the brain drain was a result such people migrating to other countries, and that ‘human power houses’ should be set up in the country to end this trend.

He said migration takes place for various purposes like getting education and health services, commercial and natural reasons.

“Services should be liberalized in the country. Today, a large number of students go abroad for education. If such education services are not provided here, it will be similar to import education,” he said.

Referring to the oil price hikes, he said the country imports 30 million barrels of oil at a cost of 60 dollars per barrel, and the total amount was roughly equal to the entire remittances.

Lead Economist and Manager Global Trends Development Prospects Group Hans Timmer said the GDP continues to grow rapidly in the developing countries.

The report says GDP growth in South Asia is estimated at 6.9 percent in 2005, up from 6.8 in 2004. For 2006, it is expected to slow to 6.4 percent. This year’s performance reflects stable growth of about seven percent in India, and 6.6 percent growth in Pakistan.

The overall impact of earthquake in Pakistan is expected to have a small impact on the economy, despite its catastrophic human consequences. World Bank Country Director Peter Harrold and Senior Consultant and Economist Dr. Harsha de Silva also spoke.

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