MONEY TRANSFERS RECEIVED FROM ABROAD BY THE HOUSEHOLDS IN ARMENIA IN 2005
Source: Central Bank of Armenia web-site ()
ArmRadio.am
17.08.2006 12:32
The inflow of money transfers from abroad into Armenia via banking
system during 2003-2005 totaled to 580 mln USD annually or about 15.5%
of GDP.
According to some experts’ assessment, the estimation of the total
volume of money transfers (including non-bank transfers) needs to
be adjusted up by 20-30% to account for alternative routes of money
receipts.
It is very important to realize that complete information (covering not
only bank transfers) will significantly contribute to the efficiency
of economic policy implementation. With this in mind, as well as
considering the growth pattern of transfers and the pressure they
exert on the foreign exchange market, the Central Bank of Armenia
(CBA) initiated the conduct of a survey to estimate the total volume
of transfers to Armenia. The survey was carried out by "Alpha-Plus"
consulting company during February-April 2006 and was financed by the
World Bank. The questionnaire was designed by the CBA and reviewed by
Alpha-Plus. The CBA’s External Sector Statistics Division of Statistics
Department has analyzed the data and prepared the final study.
The survey covers three basic dimensions: 2000 households receiving
money transfers, 2000 respondents sending money transfers from Moscow,
and several organizations engaged in providing money transfer services
in Armenia.
The major objective of the survey was to estimate the volume of money
transfers received by the Armenian households in 2005. The transfers
are defined to include not only money sent by relatives, friends
of the recipients, but also transfers of compensations received
by seasonal workers abroad. Other objectives were to disclose the
main routes of money inflow into Armenia, as well as the geographic
coverage, seasonality, sustainability, spending structure, and other
characteristics of money transfers. Remittance senders’ profile and
motives were also studied.
According to the results of the survey, in 2005 the Armenian households
received money transfers in the amount of about 940 mln USD. On average
37% of households are transfer recipients who receive around 1,434
USD per annum. The average transfer size is about 353 USD (which
contrasts to 692 USD in banking transfers).
The seasonal distribution of transfers suggests that the bulk of
money transfers are received in December – about 13% of total (the
respective number according to banks’ reports is 12%). The second
largest volume of transfers is received in August – 9.5% – coinciding
again with the data reported by banks – 10.6%.
78% of money transfers received by the Armenian households is mediated
by banks which is rather high proportion. Most of the respondents
indicated that banking transfers are preferred because they provide
swiftness of transfers and reliability. The second popular mode
of transfers is sending cash through some people or organizations,
which represents 12.5% of total transfers.
Money transfers mostly originate from Russia (72.2% of total),
followed by the USA (14.3%). Other major sources are Germany, Greece,
and Ukraine (5.2% combined). USA-originated money transfers are mostly
made through specialized organizations providing this service.
30.6% of money transfers are sent by seasonal workers, while 69.4%
are sent by non-residents.
Over half of money transferers are employed in construction (36%)
and trade (20%) industries. Other industries include transportation
and communication (mostly drivers) – 4% and other services (auto body
shop workers, programmers, etc.) – 5.6%.
Regarding sustainability of transfer flows, 84.5% of respondents
informed that they believed they would continue receiving money
transfers. 6.2% of respondents could not comment, and 9.3% of
respondents answered that they would stop receiving money from
abroad. For 54% of this latter category the reason is that the money
transferer moves back to Armenia.
For the recipient households the amount of money transfers on average
makes up 47.8% of their income. This proportion holds around the same
for both urban and rural population.
The average income of the recipient households is about 4,500 USD
per annum.
For those living in Yerevan the corresponding amount is 3,400 USD,
for other urban households – 4,900 USD, and for households living
in rural areas – 5,100 USD (per capita income is 71 USD, 71 USD,
and 90 USD respectively).
The average recipient household spends 76% of total money transfers
on current consumption, 6.1% – on education, 1.2% – on the purchase
of real estate, 2.0% on investing in business activity, and saves 1.1%.
The analysis of Moscow respondents’ responses revealed that they
sent to Armenia as much as 27% of their income, which is quite a
high share, indicative of close relationship between the tranferer
and the recipient.
67% of Moscow respondents disclosed that the volume of money transfers
they send will increase over time. 31% of respondents informed that the
amount of transfer and their income are not correlated. This result
corresponds to the fact that many of those sending money to their
parents setup permanent residence in Moscow with their families,
therefore the increase in their income will not affect the amount
transferred, but rather on their own spending behavior. Probably,
that is the reason why the answer "the amount of money transfer will
not change" dominates in the answers of the respondents sending money
to their parents.
The analysis attempted also to reveal the respondents’ ties with
Armenia.
28% of respondents rejected the idea of ever returning to Armenia. 25%
of respondents mentioned that if paid 300-600 USD per month they would
consider coming back home. Another question asking if won 50,000
USD how would this money spent, 36% of respondents indicated their
willingness to return, 12% of respondents would send part of this
money to Armenia, 7% of respondents would buy housing in Armenia.
Below are presented the conclusions on the sustainability based on
the responses to other questions related to this point:
· since, as mentioned above, 72% of money transfers are originated
in Russia, from sustainablility perspective it becomes crucial to
possess updated information on the economic developments of Russia;
· other conclusions which need further testing are: – 78% of total
transfers are regular, 84.1% of Moscow-originated transfers are also
sent periodically allowing to categorize them as sustainable; – 63.6%
of money recipients are sent the transfers more than 3 times per year
evidencing close ties between the transferer and the recipient; – only
a small share of money transfers is saved therefore suggesting their
sustainability. Usually the households tend to save more when they
expect that the transfers will discontinue; – 84.5% of respondents
expected that transfer inflows are sustainable; – the main motive of
transferers is altruism confirming that transfer flows are stable and
continuous; – 90.5% of Moscow respondents also believe that they will
continue sending money; – only 5.6% of recipients receive money from
relatives living abroad for more than 15 years, suggesting strong
ties with the transferers living abroad less than 15 years; – over
75% of recipients receive money from family members, mostly from a
son/daughter or from the head of the family; – 65% of money sent from
Moscow is intended for family members (24%) and parents (41%). As long
as parents are less inclined to leave their home country the money
transfers received by this group may be considered as sustainable.
These conclusions help us to assess the overall sustainability of
money transfers into Armenia based on factors, such as the degree
of economic development, the profiles of money recipients and money
transferers, the proximity between these two groups, as well as the
share of seasonal workers in total number of money transferers and
factors affecting working seasonally abroad.
In summary, this study is the first in Armenia large-scale analysis
in the field due to its coverage and scale. The survey contains very
valuable information policy makers too. It will be complemented by
another survey to be conducted in September-November 2006 in Los
Angeles, USA among money transferers.
The reliability of the study results will certainly increase if more
surveys are conducted on a continual basis at least for a couple of
years to come.
This will allow to estimate and forecast the trends in the volumes
of money transfers in Armenia.
–Boundary_(ID_ZwVnlmsE2Vn8xx0UiV9fLg)–