Remittances to Caribbean top US$61B last year – represent more than 10 per cent of many economies including Guyana’s

Remittances to Latin America and the Caribbean (LAC) showed a slight increase in 2012 with respect to the previous year, according to the latest report on remittances by the Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank Group. Remittances to Guyana were pegged at US$469.3 million for last year, representing more than 10 per cent of the country’s Gross Domestic Product.

The “Remittances to Latin America and the Caribbean in 2012: Differing Behaviour among Sub-regions”, said that the region received a total of US$61.3 billion in remittances last year. This amount represents a year-on-year increase of US$300 million, a 0.6 per cent increase from 2011. After a historic high of nearly US$65 billion in 2008, and a 15 per cent drop owing to the financial crisis in 2009, money transfers to the region have stabilised.
Remittances inflow trends varied among countries in Latin America and the Caribbean. While remittances to South American countries and Mexico decreased by 1.1 per cent and 1.6 per cent, respectively, the countries in the Caribbean displayed modest growth and Central American nations experienced a significant increase of 6.5 per cent in the total remittances received. This increase helped offset decreases in bigger countries, allowing for the region as a whole to end the year with slight growth.
Critical financial support
“The latest data show that migrants continue to provide critical financial support to millions of households across the region,” said MIF General Manager Nancy Lee. “The development impact of remittances can be much greater if families have the option to save some of these flows rather than convert them all into cash upon receipt. The new MIF Remittance and Savings programme will help identify innovative and commercially-viable business models that work for both financial institutions and families.”
The economic uncertainty and sluggish labour market in Europe continue to affect the amount of money migrants in Spain are able to send back home, while the improvements in the labour market in the United States largely explain increases in remittances to certain countries, particularly in Central America.
The value of the money transferred home in 2012 varied from country to country, depending on exchange rates and inflation levels in each country. In Brazil, for instance, the US$1.9 billion sent in 2012 represents a one per cent increase in nominal terms with respect to 2011, but when expressed in local currency terms and adjusted for inflation, the amount represents a 12 per cent yearly increase. In other countries, the dollars sent home decreased in value once received, such as in Colombia, where remittance values expressed in local currency terms showed an eight per cent drop.
Mexico remains the largest remittance recipient with US$22.4 billion, followed by Guatemala, with US$4.8 billion, and Colombia receiving US$4 billion, while El Salvador and The Dominican Republic received U$3.9 and US$3.2 billion respectively.
Important source of foreign inflows
Remittance flows continue to represent an important source of foreign inflows in many of the countries in the region, and constitute more than 10 per cent of the gross domestic product in several countries, including Haiti, Guyana, Honduras, El Salvador, Nicaragua, Jamaica, and Guatemala. These flows also represent an important source of income for the millions of families in the region that receive the transfers to cover basic needs and invest in education, health, housing, and small businesses.
The Multilateral Investment Fund started analysing remittances in 2000 to gauge their volume and economic impact in Latin America and the Caribbean. Its work promoted greater competition among service providers, which led to dramatic reductions in the costs of transferring money to millions of families in the region. Recently, the MIF launched a Remittances and Savings Programme, seeking to increase the access and use of formal savings products, among remittance sending and receiving households in the region.