Global Remittances
2014
SUBJECT: GLOBAL REMITTANCES
The International Monetary Fund (IMF) defines remittances as international transfers of funds sent by migrant workers from the country where they are working (source country) to people, typically their family members, in the country from which they originated (receiving country).
Remittances represent household income from foreign economies arising mainly from the temporary or permanent movement of people to those economies. Remittances are mainly derived from two items in the balance of payments framework: income earned by workers in economies where they are not resident (or from nonresident employers) and transfers from residents of one economy to residents of another.
1. Where are remittances across borders included within the balance of payment? Are they current or financial account components?
Remittances represent an inflow for developing countries, sometimes greater than financial aids. Developed countries such as US, from which remittances are sent, classify migrant remittances as current transfers in the current account. International transfers of money by private individuals, such as workers’ remittances, appear in the current account of the balance of payments as unilateral transfers. Remittances are increasingly becoming an important means of helping to fund the current account deficits of economies with balance of payments problems.
Remittances may also include capital assets, which migrants take with them to host countries or bring back to home countries; these values are generally reported under the capital accounts of balance of payment. Migrants’ capital transfers are not transactions between two parties but other transfers of money that can arise from the migration of individuals from one economy to another; these would be included in the capital account.
There is an economic and accounting relationship within the BOP between the current account, of which remittances are a part, and the financial
SUBJECT: GLOBAL REMITTANCES
The International Monetary Fund (IMF) defines remittances as international transfers of funds sent by migrant workers from the country where they are working (source country) to people, typically their family members, in the country from which they originated (receiving country).
Remittances represent household income from foreign economies arising mainly from the temporary or permanent movement of people to those economies. Remittances are mainly derived from two items in the balance of payments framework: income earned by workers in economies where they are not resident (or from nonresident employers) and transfers from residents of one economy to residents of another.
1. Where are remittances across borders included within the balance of payment? Are they current or financial account components?
Remittances represent an inflow for developing countries, sometimes greater than financial aids. Developed countries such as US, from which remittances are sent, classify migrant remittances as current transfers in the current account. International transfers of money by private individuals, such as workers’ remittances, appear in the current account of the balance of payments as unilateral transfers. Remittances are increasingly becoming an important means of helping to fund the current account deficits of economies with balance of payments problems.
Remittances may also include capital assets, which migrants take with them to host countries or bring back to home countries; these values are generally reported under the capital accounts of balance of payment. Migrants’ capital transfers are not transactions between two parties but other transfers of money that can arise from the migration of individuals from one economy to another; these would be included in the capital account.
There is an economic and accounting relationship within the BOP between the current account, of which remittances are a part, and the financial
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