Remittances to Central America and the Caribbean rebound

Migrant workers from Central America
and the Caribbean were able to send home more money to their families during
the first months of 2010, compared to the same time last year, the
International Fund for Agricultural Development (IFAD) said.

“After a year of extreme hardship
because of the ongoing economic challenges resulting from the financial crisis,
migrant workers are beginning to send more money home,” said Kevin Cleaver,
associate vice-president of IFAD, a
specialised agency of the United Nations dedicated to eradicating poverty and
hunger in rural areas of developing countries.

Data
released by central banks in the region showed
strong increases in remittances in Honduras, El Salvador and Guatemala
for the first time since the onset of the crisis.

Data released up to February indicated
a similar trend for Jamaica and Nicaragua.

However, not all countries in the
Caribbean and Central American region posted an increase.

Mexico in particular continues to
be hit hardest by the crisis, experiencing an almost 16 per cent decline in
remittances in 2009 and a similar decline during the first two months of 2010.

Remittances from  Cayman, mainly to Jamaica, were hit by a controversial
new remittance fee that is charged to money transfer companies but not banks.

IFAD maintains that remittances are
essential to many economies in the region. The Central American and Caribbean
countries received almost US$16 billion in remittances during 2009, representing
between 11 and 16 per cent of GDP for many nations.

Up to 40 per cent of these cash
flows go directly to the rural areas where remittances are most important to
families’ livelihoods, the organisation said.

Rural families have been hit hard
in the past by the drop in remittances. The growth in remittances in February
and March for the five countries could be the first indication of an upward
trend of important revenue streams.

“There’s now been four consecutive
months of growth in remittances to Jamaica,” said Josefina Stubbs, IFAD’s Director of Latin America
and the Caribbean Division.
“We believe it indicates that Jamaica
will likely be the first country in the region to begin a recovery from the
decline in remittances over the past year.”

Remittances are vital to the
Jamaican economy, representing approximately 15 per cent of GDP last year – the
equivalent of $660 per person living in Jamaica. This makes it particularly
significant that Jamaicans living abroad sent home 7.4 per cent more money to
their families this February than at the same time last year.

In particular, remittances from the
United States, which account for 62 per cent of remittances to the country,
rose strongly.

“Because of the importance of
remittances to the families that receive them, especially in rural areas,
IFAD’s multi-donor Financing Facility for Remittances (FFR) provides grants to
organisations seeking to maximise the impact of these funds,” said Pedro De
Vasconcelos, IFAD’s Programme coordinator, Financing Facility for Remittances,
Technical Advisory Division.

Together with the Inter-American
Development Bank, the FFR is funding one such project in the region.

“The initiative, which is being
implemented by the Jamaica National Building Society, will allow residents in
the targeted communities to gain easier access to a range of financial services,”
added Mr. De Vasconcelos.

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