-Ambassador Ishmael
Guyana’s Ambassador to Venezuela Odeen Ishmael says that during this year remittances to Latin American and Caribbean countries from the more developed countries will decline by US$4B from last year’s figure.
A reduction in remittances, he wrote, was already evident in 2008 and Guyana was listed as receiving US$414M as against US$423M the previous year.
According to Ishmael “migrants from Latin America and the Caribbean (LAC) living in the more developed countries will send back to their home countries US$64B in 2009.” The Ambassador pointed out, however, that this total represents more than the sum of foreign direct investment and official development aid combined.
In an article titled ‘Remittances to Latin America and the Caribbean decline this year,’ Ishmael said that “as the global economic crisis continues, the flow of remittances is expected to be reduced by about 7 per cent, according to reports emanating from the Inter-American Development Bank (IDB) and other international financial bodies.”
In March, the Inter-American Development Bank (IDB), through its President Luis Moreno announced that remittances to Latin America and the Caribbean will decline this year based on data collected by its Multilateral Investment Fund.
Earlier this month, the Planning Institute of Jamaica noted that inflows to that country for the first quarter of this year were US$414.6M, a 15 per cent drop when compared to the same period last year.
And according to Ishmael, “the IDB has also reported that remittances to LAC, in the fourth quarter of last year declined to $17 billion, 2 per cent less than in the same period in 2007. The Bank also declared that this trend would continue throughout 2009.” Significantly, two years ago, the IDB had optimistically predicted that given the then existing economic and demographic trends in LAC and in the industrialized countries, remittances to LAC would continue to grow and surpass $100B a year by 2010. It is highly unlikely, however, that this prediction will now be fulfilled.
Ishmael also stated that, “a reduction in remittances became noticeable early in 2008, and by the end of the year the $69.6 billion migrants sent home to the region barely increased by less than one per cent over 2007. This slowdown is obviously the result of the economic recession which has brought about job losses in construction, manufacturing and tourism, the sectors attracting the greater proportion of the immigrant labour force.”
The Ambassador also referred to a study on migration and remittances released this month by the Latin American and Caribbean Economic System (SELA). The study reveals that on an average, 65 per cent of migrants remit to their families, amounting to over 20 million people. IDB statistics show that for 2008, of the US$69.6B sent home to the region, the largest beneficiary was Mexico with US$25.1B. Other large recipients were Brazil (US$7.2B), Colombia ($4.8B), Dominican Republic ($3.1B), El Salvador ($3.8B), Guatemala ($4.3B), Peru ($2.9B), Jamaica ($2B), Honduras ($2.7B), Haiti ($1.8B), Nicaragua ($1B). Significantly, Guyana received $414M, down from $423M the year before.
Importantly for some countries, remittances, according to the MIF, amounted to a high proportion of their GDP, and much more so for those with poorer economies. For Guyana it was 36.7 per cent. Haiti recorded 30 per cent, Honduras 21.6 per cent, Guatemala 12.7 per cent, El Salvador 18.3 per cent, Nicaragua 18 per cent and Jamaica 17.9 per cent.
On the wider perspective of LAC, through growing unemployment in immigrant communities and the reduction in earnings, roughly one million people will not send money back to the region this year. The SELA study, mentioned earlier, reports that only 40 per cent of those unemployed will continue to remit, and 25 per cent of these employed will send 10 per cent less of what they typically send to their families. The SELA document goes on to say that about one million households that previously received remittances will not receive any in 2009, while another 4 million will receive 10 per cent less. The countries to be more affected by this situation are Haiti, Honduras, Guyana, Nicaragua and Guatemala.
Additionally, the SELA study explains that immigrants have been affected by increased anti-immigration sentiments and deportations. The US Department of Homeland Security, more than 320,000 people were deported in 2007, with 96 per cent coming from LAC. Deportations increased to 359,000 in 2008, with most being of the “non-criminal” type. Obviously, this heavy flow of deportations has acted to reduce the flow of remittances since they are no longer in the work force in the “source country.” The European Union has also clamped down on Latin American immigration and has also begun to deport “illegals” to their home countries.
Ishmael also noted that with the current economic crisis in the USA and other developed countries, the remittance flow is taking a reverse trend in some countries. “This is because a growing number of families in LAC are now sending money to their unemployed relatives living in those developed countries to help with the payment of their rent and with other expenses such as school fees,” he pointed out in his article.
The issue of declining remittances has been noted by local government officials. During his presentation on the 2009 Budget, Finance Minister Dr Ashni Singh said private transfers were projected to decline by 20.9% this year, which he attributed to lower worker remittances and in-kind transfers given the downturn in the global economy. Meanwhile, last year President Bharrat Jagdeo had also indicated that the inflow of remittances could be affected by massive layoffs in the US as unemployment was going up.
