Russia’s deepening economic crisis is on the verge of spilling into some of the most remittance-dependent economies in the world.
Migrant workers from the former-Soviet Union send $13 billion home each year from Russia, where they are allowed to work visa-free. But now that money is starting to dry up due to lockdowns in Moscow and St. Petersburg that have halted construction projects and sapped demand for taxis, Bloomberg reported on April 22 this year.
Bloomberg says that according to Eldar Vakhitov, an emerging-market analyst at M&G Investments in London, total remittances from Russia could drop by more than 30%-40% this year.
“The decline in remittances from Russia can’t be compensated,” said Vakhitov. “Instead the countries will have to use their reserves or request additional IMF and bilateral support.”
The ruble has slumped 16% against the dollar this year, more than any of the former-Soviet currencies. That has weakened the value of any money that is still being sent home.
Uzbekistan is probably in the strongest position because it has low debt levels and large currency and gold reserves, according to Vakhitov.
As the poorest of the Former-Soviet republics, Tajikistan is likely to be hardest hit. Yields on the country’s only dollar bond surged above 17% in March as investors grow increasingly concerned about its ability to pay them back.
“Russia’s slowdown is going to spell major problems for Tajikistan and Kyrgyzstan, including liquidity risks in the banking sector and mass unemployment,” said Edward Lemon, a DMGS-Kennan Institute Fellow at the Daniel Morgan Graduate School in Washington, D.C. “They can’t fill the gap. It’s going to be very difficult for them to create sufficient jobs.”
According to Tajik national news agency Khovar, Bloomberg says that Tajikistan in April and May lost 50 percent of income from migrants’ remittances.
Meanwhile Sputnik said on June 3 that Mr. Mark Goihman, chief analytic for TeleTrade, told Rossiyskaya Gazeta (Russian Newspaper) that quite a few drivers have supported the Russian ruble in recent weeks.
The economist called the rising oil quotes that storm the bar of US$40.00 per barrel the main factor.
Besides, the decision of Russia’s Central Bank on volumes of currency interventions will influence the Russian ruble exchange rate, Mr. Goihman said.
