According to a report prepared by the Migration and Remittances Team in the World Bank, officially recorded remittances to India in by its diaspora in 2013 was about USD 70 billion—the largest of such remittances in the world. Overall, remittances to developing countries are estimated at USD 404 billion in 2013, up 3.5 percent compared with 2012. Growth in remittance flows to developing countries is expected to accelerate to an annual average of 8.4 percent over the next three years, raising flows to USD 436 billion in 2014 and USD 516 billion in 2016.

India remains the largest recipient of officially recorded remittances in the world, and received about USD70 billion in remittances in 2013. Other large recipients include China (USD60 billion), the Philippines (USD25 billion), Mexico (USD22 billion), Nigeria (USD21 billion), and Egypt (USD17 billion) (figure 3). Revised estimates suggest that remittances as a share of GDP were 52 percent in Tajikistan, 31 percent in the Kyrgyz Republic, and 25 percent in both Nepal and Moldova. Remittances to many smaller developing countries tend to be equivalent to a larger share of their respective GDP.

Remittances in 2013 to India were equivalent to 15 percent of exports, and covered 12 percent of imports. Comparisons with key foreign exchange earners are similarly striking. In 2013, remittances to India exceeded earnings from IT services, and inflows to Egypt were larger than earnings from the Suez Canal. During the same year, remittances to Bangladesh were equivalent to 84 percent of garment exports, and inflows to Nigeria amounted to about 22 percent of receipts from petroleum exports.

Growth in remittances to the South Asia region (SAR) has slowed, rising by 2.3 percent in 2013 compared with the very rapid increases of the previous three years. This was driven by a modest increase in India of only 1.7 percent in 2013, and a decline in Bangladesh of -2.4 percent. The depreciation of the Indian rupee during 2013 appears to have attracted inflows through a surge in the deposits of non-resident Indians rather than remittances. In Bangladesh, the fall in remittances stems from a combination of factors, including fewer migrants finding jobs in the GCC countries, more migrants returning from GCC countries due to difficulties in resolving legal status, and the appreciation of the Bangladeshi taka against the US dollar. Still, some rebound is projected in the coming years, and remittances continue to play an important role in underpinning the balance of payments. Pakistan continued to register robust growth in remittances – its dependence on remittances, which are now nearly three times the level of international reserves, remains high.

Nigeria is currently in the process of implementing a diaspora bond.10 In the past, India and Israel have successfully issued diaspora bonds to raise external financing. Ethiopia, Kenya, Nepal and the Philippines have also experimented with some forms of diaspora bonds with varying success. A key requirement for issuing diaspora bonds is registration at the US SEC, which has discouraged many interested countries from issuing such bonds. Another key requirement is gauging the diaspora’s trust in the government’s ability to invest the funds appropriately.