5. Consequently, Baltics have among the highest remittance-
to-GDP ratios among EU-10 and in the EU as a whole
5
6. 6
Lithuania’s remittance inflows affected most by the crisis;
Latvia’s the least; but in all three remittances more stable
than FDI.
Sources: Eurostat, IMF
Balance of Payments
Database, Central Banks of
EE, LV and LT
7. Remittance flows often mirror migration flows
7
Russia and the EU are the
main sources of remittances
to the Baltics
Some source countries are
common (e.g. Russia, USA,
UK)
Not exposed to the weakest
EU economies
Note: data in table include
formal remittance flows only
(source: World Bank)
8. Costs of remitting funds seem to be high –
an issue for further exploration
8
Source: World
Bank
10. Why interest in diaspora bonds?
10
Remittances are a way of tapping into diaspora income
flows on a regular basis, while issuance of foreign
currency-denominated bonds to diaspora is a way of
tapping into diaspora’s wealth, i.e. savings.
Empirical analysis shows that migrant (diaspora) savings
are several times higher than annual remittance flows
11. What is the rationale for diaspora-
targeted financing instruments
12. Two successful issuances of diaspora bonds:
Israel and India
12
Israel India
$25 billion issued in total $11 billion issued in total
Annual issuance since 1951 Opportunistic issuance in 1991, 1998 and 2000
Development-oriented borrowings Balance-of-payments support
Large though declining patriotic discount Small patriotic discount, if any
Fixed, floating-rate bonds and notes Fixed-rate bonds
Maturities from 1 to 20 years with bullet
repayment
Five year with bullet maturity
Distribution by Development Corporation for
Israel
Distribution by State Bank of India and
international banks
Targeted toward but not limited to diaspora Limited to diaspora
Nonnegotiable Non-negotiable
Source: Ratha and Kethar 2009. World Bank.
13. Remittance-backed securities – another
instrument to utilize remittance flows
13
Main benefits for commercial banks are:
(i) increased market access
(ii) prolonged debt maturity
(iii) lower cost of debt (because of higher
investment rating)
“Innovative Financing for Development”,
World Bank 2009
14. Global Knowledge Partnership on Migration
and Development (KNOMAD)
14
World Bank initiative for an open and multidisciplinary platform to generate
and exchange information on migration and development
The KNOMAD initiative is currently in
inception phase and will be launched at
the IMF/WB Spring Meetings 2013 More information:
http://blogs.worldbank.org/peoplemove/ and
www.KNOMAD.org
