Why in news?
Global remittances are projected to experience their sharpest decline in recent times — 20% — owing to migrants losing jobs and wages because of the COVID-19 pandemic, the World Bank Group said in a report.
This is in stark contrast to 2019 when they grew by 6.1%.
In India, remittances for 2020 are projected to fall by 23% to $64 billion.
- Remittances are crucial in low- and middle-income countries, financing household and family expenses — such as on higher education.
- The Bank worried that as studies have shown that higher remittances improve nutritional outcomes by increasing investments in higher education, a fall in these remittances puts these outcomes at risk.
- This is especially true at a time when households were tackling food shortages and financing livelihood needs.
- Remittance costs for some channels in South Asia are below 3%, the SDG (Sustainable Development Goal) target.
Way forward recommended
Quick actions that make it easier to send and receive remittances can provide much-needed support to the lives of migrants and their families.
These include treating remittance services as essential and making them more accessible to migrants.
- The World Bank (WB) is an international organization which provides facilities related to “finance, advice and research to developing nations” in order to bolster their economic development.
- It provides loans and grants to the governments of poorer countries for the purpose of pursuing capital projects.
- It comprises two institutions: The International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA).
- The World Bank is a component of the World Bank Group.
World Bank Group
The World Bank Group is an extended family of five international organizations, and the parent organization of the World Bank, the collective name given to the first two listed organizations, the IBRD and the IDA:
- International Bank for Reconstruction and Development (IBRD)
- International Development Association (IDA)
- International Finance Corporation (IFC)
- Multilateral Investment Guarantee Agency (MIGA)
- International Centre for Settlement of Investment Disputes (ICSID)
- With 189 member countries, the World Bank Group is a unique global partnership: five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.
- The Bank Group works with country governments, the private sector, civil society organizations, regional development banks, think tanks, and other international institutions on issues ranging from climate change, conflict, and food security to education, agriculture, finance, and trade.
Introduction to the 5 organizations of World Bank Group
The International Bank for Reconstruction and Development
The International Bank for Reconstruction and Development (IBRD) lends to governments of middle-income and creditworthy low-income countries.
The International Development Association
The International Development Association (IDA) provides interest-free loans — called credits — and grants to governments of the poorest countries. It is called the soft loan window of the World Bank. Together, IBRD and IDA make up the World Bank.
The International Finance Corporation
The International Finance Corporation (IFC) is the largest global development institution focused exclusively on the private sector. It helps developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments.
The Multilateral Investment Guarantee Agency
The Multilateral Investment Guarantee Agency (MIGA) was created in 1988 to promote foreign direct investment into developing countries to support economic growth, reduce poverty, and improve people’s lives. MIGA fulfils this mandate by offering political risk insurance (guarantees) to investors and lenders.
The International Centre for Settlement of Investment Disputes
The International Centre for Settlement of Investment Disputes (ICSID) provides international facilities for conciliation and arbitration of investment disputes.