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Capturing information on remittances and other flows – a fact-finding in Europe

Capturing information on remittances and other flows – a fact-finding in Europe. Violetta Damia. International Technical Meeting on Measuring Migrant Remittances. 24 - 25 January 2005. Overview. General considerations Definitions (BPM5) Fact-finding exercise

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Capturing information on remittances and other flows – a fact-finding in Europe

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  1. Capturing information on remittances and other flows – a fact-finding in Europe Violetta Damia International Technical Meeting on Measuring Migrant Remittances 24 - 25 January 2005

  2. Overview • General considerations • Definitions (BPM5) • Fact-finding exercise • Results – Methodological issues • Results – Magnitude of flows • Main conclusions • Questions?

  3. General considerations Workers’ remittances: • 2nd largest source of external finance for developing countries • size relevant to GDP vs. low volatility shown • conceptual framework given by IMF BoP Manual (5th edition)

  4. Overview • General considerations • Definitions (BPM5) • Fact-finding exercise • Results – Methodological issues • Results – Magnitude of flows • Main conclusions • Questions?

  5. Definitions (BPM5) Compensation of employees:the earnings of border, seasonal, and other workers paid by an employer resident in one economy to employees resident in other economies paid in kind and/or in cash – recordedunder current account / income Workers’ remittances:the remittances of funds to families abroad by residents (living in the host economy for 12 months or more) recorded undercurrent account / current transfers Migrants’ transfers:the net worth of migrants at the time of migration (cash and goods transferred) – recorded undercapital account / capital transfers

  6. Overview • General considerations • Definitions (BPM5) • Fact-finding exercise • Results – Methodological issues • Results – Magnitude of flows • Main conclusions • Questions?

  7. Fact-finding exercise (WG-ES) EU Member States were requested to send available information on • Compensation of employees, • Workers remittances, and • Migrant transfers with the objective to assess the magnitude of flows at the European level • data and metadata • if available, with geographical allocation

  8. Overview • General considerations • Definitions (BPM5) • Fact-finding exercise • Results – Methodological issues • Results – Magnitude of flows • Main conclusions • Questions?

  9. Results: Meth. Issues (1) Compensation of employees: The information reported is • partly collected by settlement systems, tax and social security systems and the resident credit institutions • partly estimated based on the previous years, number of foreign workers, average wages, social contributions and census

  10. Results: Meth. Issues (2) Compensation of employees: Main caveats: • high thresholds • diversity of methods to transfer money • 1-year-rule : difficult to apply in practice difficulty to differentiate between compensation of employees and workers’ remittances

  11. Results: Meth. Issues (3) Workers’ remittances: The information reported is • mainly collected by settlement systems, by banks and post offices, through household surveys, from foreign exchange reports • difficult to estimate

  12. Results: Meth. Issues (4) Workers’ remittances: Main caveats: • high thresholds • diversity of methods of money transfers • the presence of illegal foreign workers • 1-year-rule : difficult to apply in practice

  13. Results: Meth. Issues (5) Workers’ remittances: The most difficult to measure • difficulty for most countries to monitor the flows separately hence migrants transfers are recorded under workers’ remittances • the estimations are based on number of migrants and the average assets transferred

  14. Overview • General considerations • Definitions (BPM5) • Fact-finding exercise • Results – Methodological issues • Results – Magnitude of flows • Main conclusions • Questions?

  15. Results: Magnitude of flows (1)

  16. Results: Magnitude of flows (2) Compensation of employees: • mainly EU25: temporal, seasonal and border workers • American continent (especially the debit side) Workers’ remittances: • mainly EU25 • debit side: balanced distribution worldwide Migrant transfers: • even distribution of low level flows: underestimation?

  17. Overview • General considerations • Definitions (BPM5) • Fact-finding exercise • Results – Methodological issues • Results – Magnitude of flows • Main conclusions • Questions?

  18. Main conclusions • need to fill the recording gaps so as to have a more concrete measurement • review thresholds applied • importance to follow harmonised methods to ensure comparability (based on BPM5) • further improvement of BPM5 in terms of definitions • encouragement for the utilisation of formal channels by reducing transfers’ costs • increase quality of information (underestimations) • development of estimation methods for capturing reality (e.g. refinement of households surveys)

  19. Questions?

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