Tuesday, 14 May 2013 19:42

Remittances sent home by emigrant workers exceed foreign investments

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Remittances are playing an important role in the Lithuanian economy, contributing to economic growth and to the livelihoods of many Lithuanian families. Since many EU countries opened their labor markets to Lithuanian workers, the financial inflows to the country have grown to almost 1.2 billion euros per year, the Lithuanian central bank said in 2012.

Remittances are now worth almost one quarter of after-tax wages bill in Lithuania or 3.8 per cent of country’s GDP.

Actually, Lithuanians living or temporary working outside the home-country sent in 2011 more money home to their families than the country received through the foreign direct investments, which amounted to 1.05 billion euros same year and even less - 649 million euros - in 2012.

More than three-quarters of the total is thought to be from Britain, where the majority of Lithuanian migrants moved following the expansion of the EU in 2004. Other contributing countries were the U.S., Ireland, Sweden, Spain and others.

Remittances are especially important in times of economic downturn. In the midst of the 2008 financial crisis, money sent from overseas provided to many Lithuanian families a sort of stability and certainty. On the macroeconomic level, it also helped to maintain consumption, provide the necessary capital for private sector and withstand pressure for the currency, the litas, devaluation.

Remittances are not a new phenomenon to Lithuania, being a normal concomitant to migration which has long been a part of history of the Lithuanian nation. Lithuania was heavily dependent on remittances received from its emigrants during the period of the First Republic of Lithuania in 1918-1940.


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