[World Bank] says money-transfer restrictions hurt anti-poverty efforts

from Xinhua

The World Bank said here Monday that the over-regulation of the financial markets due to fears of terrorist funding and money-laundering has drastically affected the remittances of funds from migrant workers to poor and needy people in their countries of origin.

In a report released here, the World Bank argues that restrictions in the remittances of funds from migrant workers over fears that they would fuel money laundering or could be used for terror funding are "an over-reaction to an otherwise smaller problem."

"The fears over money laundering and terrorist financing are an over-reaction to an otherwise smaller problem affecting the lives of very poor people. These regulations governing remittances can be avoided," said Dilip Ratha, lead author of the World Bank Report.

The annual Global Economic Prospects 2006 report was released in Nairobi Monday, focusing fully on the potential benefits that poor countries can derive from effectively addressing policy constraints to enable them use migrant remittances effectively.

"Huge remittances could cause huge appreciation to the currencies. We need to ask ourselves, how do we measure the remittances, what effects do they have on social programs," Ratha told economists gathered here for the launch of the report.

The World Bank says countries need to put in place policy directions to enable them track down the inflows from the migrant workers, which they can use as collateral to access international financial markets and bolster the fight against poverty.

Central Bank of Kenya (CBK) Governor Andrew Mullei welcomed the findings of the World Bank study, which he said had brought to the fore issues which African economists ought to know, noting that it has helped the country's economy to grow.

Kenya records 700 million U.S. dollars worth financial inflows from the migrant workers, mainly from Europe and the United States, but the CBK says the country has no policies to help in tracking down the amounts coming in from migrant workers.

"It is not easy," Mullei admitted, pointing to the difficulty of effectively accounting for the funds remitted by migrant workers. "You need a policy environment. The government has been looking at ways of improving the inflows," the CBK Chief said.