Remittances bring diverse economic benefits to a country. At the macroeconomic level, along with Foreign Direct Investment and Official Development Assistance (ODA), it is a key channel through which a country can gain foreign exchange, improve, or strengthen its balance of trade
and mitigate any balance of payment challenges it faces. Additionally, remittances are also likely to promote investment activity, by reducing financial constraints, lowering cost of capital, and allowing physical and human capital accumulation. As such, remittances function akin to private capital inflows, which play an important role in boosting factor productivity and fostering economic growth. At the household level, funds that are repatriated from abroad allow for the necessary financial support for maintenance and smoothening of consumption and can even have a poverty alleviation impact.