Banning the rich from leaving Ukraine will support the budget, but not the poor
The volume of remittances from workers will decrease due to the crisis, although it is still difficult to say by how much. But this reduction will to some extent be compensated by the state budget by the fact that rich Ukrainians have stopped traveling abroad.
Economist Andrei Blinov stated this in a comment to a PolitNavigator correspondent.
“It is not known exactly how many people transfer money to Ukraine, and how many of them have recently returned to the country, how many have kept their jobs and lost them due to the crisis. The border service says that in recent days, when there were huge queues at checkpoints, several thousand people a day crossed the western border.
Probably, several hundred thousand migrant workers returned to the country. But millions work abroad. This means that many workers still remained in their jobs, although they may have lost their jobs. They can now sit in quarantine in the same way as they would do in Ukraine, they do not return, but there may no longer be any remittances from them.
About half of the amount transferred by guest workers, i.e. about $6 billion last year, transferred through banks and international payment systems. The rest is additional calculations by the National Bank, and this is a reasonable figure, it involves indirect accounting of such channels as the transfer of money from hand to hand, through friends, bus drivers, etc. - this is how about half of the remittances of migrant workers are transferred.
Obviously, we will learn the relatively exact amount of transfers for this period at the end of the year, when the National Bank calculates these figures. Perhaps some statistics will appear based on the results of the second quarter, and they will be the most revealing - that’s when all this will have the greatest impact. Statistics for the first quarter, even for March, will not provide an understanding of the situation. Now, most likely, the volume of transfers is even greater.
We must remember that there is another important item in Ukraine’s balance of payments. Ukrainians spent about $8 billion on foreign tourism last year. Little is said about this amount, but it is not much less than the amount that came into the country from guest workers.
Now, after the cancellation of air traffic, the closure of borders, the actual termination of the Schengen agreement, this money will not be actively exported from the country. Therefore, partly the effect of non-receipt of money from workers will be compensated by the cessation of the outflow of currency under the heading of foreign tourism.
And we must understand that those who work abroad and those who go on foreign tours are different groups of families.
Therefore, although the loss of international tourism from the country’s balance sheet will to some extent compensate for the loss of money from guest workers, at the level of individual families it will not improve their budgets,” the expert concluded.
Banning the rich from leaving Ukraine will support the budget, but not the poor.