February 22, 2008

Overseas remittances drop by $64m


Thursday, February 21, 2008

REMITTANCES from overseas had dropped by $64million last year, says Reserve Bank of Fiji governor Savenaca Narube.

He said the Reserve Bank would like to see lower remittances charges.

The Reserve Bank was exploring alternative ways of sending money to Fiji at a more reasonable charge.

Mr Narube said remittances had shot up since 2001 to a peak of $320m in 2006 to become the second biggest foreign exchange earner next to tourism.

"But last year they declined by about 20 per cent," he said.

Mr Narube said they believed the main reason for the drop was the number of security personnel in the Middle East that had tumbled significantly.

He pointed out another reason was families receiving remittances might have migrated.

The high transaction costs could also be a reason for the drop in remittances, Mr Narube believes.

He said many were resorting to sending money through mail or friends that were visiting the country.

"Those are not captured in the official statistics," he said.

Mr Narube said the exchange rate might also be a contributing factor as the US dollar had weakened against the Fiji dollar.

"All these reasons however may still not fully account for the $64m drop in remittances last year. There may be other technical reason which we are examining.

"These charges to do not appear to reflect the actual cost of remitting funds," he said.

In the current status, Mr Narube said the sender paid a lot of those charges which ultimately result in the receiver getting less Fiji dollars.

"And then at some outlets here in Fiji, the receiver gets slammed by another receiving charge."

He said in some cases, the charges amount to 50 per cent of the amount sent.

Mr Narube said the comparison of the charges internationally shows it cost $US10 to send money from the US to the Phillipines "but cost $US30 to send the same money to the Pacific."

"In my view there is no basis of these high charges."

Mr Narube said the Reserve Bank was in the process of collecting information on those charges and it intended to publish them for general information.

"We are also keen to mount an awareness program to educate people leaving our shores for work overseas and also the Fiji communities abroad on cheaper ways to send money to Fiji."

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