Tuesday, 15 June 2010

UGANDA: WB reports more declining remittances

The World Bank has cautioned developing countries that they risk facing continued financing gaps due to the slow recovery in foreign remittances. The bank said in its Global Economic Prospects 2010 (GEP), released on Thursday that remittances to developing countries is forecasted to recover modestly from $454 billion in2009 to $771 billion by 2012, which still stands below the 2007 $1.2 trillion.

Declining remittances
“Overall, remittances to developing countries is projected to stand at $210 billion in 2010, declining to $180 billion in 2011—down from an estimated $352 billion in 2009,” the GEP reads in part.

The GEP also says over the next 20 years, the fight against poverty could slow down because governments will be forced to cut productive and human capital investments due to lower development aid and reduced tax revenues. “If bilateral aid declines as it has in the past, this will affect long-term growth in developing countries—potentially increasing the number of the poor by as much as 26 million in 2020,” the prospectus says.

Europe’s debt crisis
The bank further stressed in the GEP, that global economic recovery continues to advance, but Europe’s debt crisis has created new hurdles on the road to sustainable medium term growth.

According to the report, while the impact of the European debt crisis has so far been contained, prolonged rising sovereign debt could make credit more expensive and curtail investment in developing countries. “Demand stimulus in high-income countries is increasingly part of the problem instead of the solution,” said Mr Hans Timmer, director of the Prospects Group at the World Bank. Source

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