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Figure 1.27. Policy responses to reduce fiscal deficits
bRAVIng tHe PeRfect stoRm
Figure 1.27. Policy responses to reduce fiscal deficits
If your country has the following policies to reduce the fiscal deficit, do you think the benefits justify potential costs? If your country doesn’t have a policy now, please consider it in hypotheticals.
Percent of respondents
Removing fuel subsidies (but facing costs such as higher energy prices for consumers) 44 22 33
Ending support measures for lending (but facing costs such as limited lending to businesses) 42 29 29
Raising tourist tax to increase revenue 38 16 47
Removing remittance incentives (but facing costs such as lower flows through the official channel) 20 30 50
0 10 20 30 40 50 60 70 80 90 100 It can be justified Neutral It can't be justified
Experts also recognize the importance of migration in economic development but voice concerns over the hardships that migrants face. Ninety-eight percent of respondents believe both international and domestic migration is important for economic development. Eighty-one percent of respondents believe the role of re-migration is important for economic recovery from the COVID-19 pandemic, and 44 percent expect the return of migration only within one year but no sooner than 6 months. Experts also believe costs are high for both international and domestic migration. Workplace exploitation, exploitation by travel agents, and lack of labor rights are cited as the top three sources of hardships that migrants face (Figure 1.28). Most experts suggest reskilling and upskilling, bilateral or regional agreements, and labor market reintegration as the top three solutions to promote re-migration and future de-risking.
Many experts, especially those from Bangladesh, voice concerns about the adverse impact of recent policies on official remittance flows. Remittance flows remain a key economic benefit of migration in South Asia and an important source of foreign exchange. Forty percent of respondents believe remittances have increased, and about one-third of respondents believe that the declining use of official channels to send remittances is the main reason for the increasing balance of payment pressure. But many respondents still note issues such as lack of incentives and the fact that many migrants who came back during the pandemic have not yet traveled abroad.
