Eastern European workers sent home €15.7bn in 2004

Citizens working abroad sent home almost $20 billion (€15

Citizens working abroad sent home almost $20 billion (€15.7 billion) to countries in Eastern Europe in 2004, according to the latest update from the European Bank for Reconstruction and Development (EBRD).

The London-based lender said tens of billions of dollars flow into the ex-communist states of central Europe, the Balkans and the former Soviet Union each year. These worker remittances help to reduce poverty and stimulate small businesses, according to the EBRD's findings.

In an update to its latest transition report on the region's economy, the EBRD said the remitted funds approached $20 billion in 2004. The real figures are, however, likely to be much higher as many remittances are sent via informal channels, the bank said in a report yesterday.

It pointed out that in a third of the countries, such transfers dwarf foreign direct investment (FDI) flows.

READ MORE

The report did not break out the countries that are the biggest sources of remittances.

"One of the biggest changes brought about by transition has been the increase in opportunities for individuals to live and work abroad," the EBRD said.

"Although remittances mostly fund consumption, a small but nevertheless important amount finances investment and enterprise creation... For some countries remittance flows are larger and more stable than FDI and may therefore serve as a more important and reliable form of finance."

Separate studies have shown remittances from migrant workers can cut poverty rates, boost spending on health and education and help developing countries cope with higher energy prices.

The World Bank estimates developing countries received $167 billion in remittances last year - more than twice as much as all other development aid combined. The real figure could be 50 per cent higher, the bank says.