a boat with migrants in the Mediterranean Sea
While acknowledging the long-term potential benefits of migration globally, the analysis emphasized that institutional constraints and integration hurdles can lead to significant short-term fiscal costs for less developed nations.
The study pointed out that emerging markets and developing economies, often the primary recipients of refugee flows, face more acute integration challenges and skill mismatches due to broader limitations in institutional capacity.
Unlike advanced economies where working-age immigrants often provide a net fiscal boost, the influx of refugees can strain public finances in the short term.
Refugees tend to have lower labor force participation rates and may be pushed into informal employment with limited fiscal contributions due to cultural, legal, and structural barriers.
The IMF noted that while overcoming these barriers and facilitating the full economic participation of refugees could drastically reduce assistance costs in low- and middle-income countries (by an estimated 75 percent), the initial fiscal burden of hosting large refugee populations remains substantial for many developing nations.
In contrast, the IMF analysis indicated that working-age immigrants, especially those with higher skills, generally have a more favorable net fiscal impact for advanced economies than native-born populations. This is attributed to their higher labor force participation and tax contributions.
The global perspective suggests that the fiscal impact of migration is heavily influenced by the migrants' age, skills, and the host economy's ability to integrate them.
Highly educated and younger migrants tend to exert downward pressure on budget deficits over their lifetimes.
Moreover, the IMF highlighted that over generations, immigration can lead to more pronounced fiscal benefits as integration improves and subsequent generations contribute to economic growth and higher tax revenues.
During the second ministerial meeting of the Khartoum Process Egypt hosted last week, Egyptian Minister of Foreign Affairs Badr Abdelatty reaffirmed that addressing migration — particularly irregular migration — requires a comprehensive approach grounded in equitable cooperation, practical solidarity, and respect for human dignity.
In October 2024, Egypt launched a national action plan (2024-2026) that centers on safeguarding vulnerable groups from exploitation by smugglers.
The plan seeks to prevent and penalize irregular migration brokers through stringent measures while enhancing the capabilities of governmental agencies responsible for its implementation.
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