During the second quarter of this year, Cayman saw a drop of more than 40%, or $26.6 million, in the amount of money being sent overseas in remittances.
A quarterly remittances report, released by the Cayman Islands Monetary Authority in August, shows that during April, May and June, $37.9 million was remitted from Cayman, 41% less than the $64.5 million that was remitted during the same period in 2019.
“In terms of the decrease, I believe the broad reason was the COVID-19 pandemic,” said Horace Hines, the general manager of JN Money Transfer. “However, more specifically, the decrease can be attributed to the government’s decision not to declare money remittance services as an essential service.”
Between March and June, the government implemented alternating hard and soft curfews, which restricted the movement and operation of people and businesses not deemed essential.
Hines said that for about six weeks, the government refused to designate money-remittance services as essential, which inevitably led to people being unable to send funds overseas.
“There was also the closure of the domestic market, which meant sectors that employed most of our clients, such as tourism, construction and even domestic helpers, were left without work,” said Hines. “The other side of the equation is that COVID-19 also impacted the economic markets in countries which received remittances.”
Finance Minister Roy McTaggart told the Cayman Compass a number of factor led to the decline in overseas remittances in the second quarter.
He said, “Obviously, the effects of COVID and the fact that money remittance companies were closed for a good portion of the period would have severely constrained the ability of foreign nationals working here to remit money overseas, back to their families in Jamaica and the Philippines and, to a lesser extent, Nicaragua and Honduras.
“Secondly, at the closedown and subsequent to that time period as well, you had a couple of thousand foreign workers who actually left our borders to return home because they were made redundant and no longer had a job. That would also have significantly affected the remittances.”
The minister said the remittance figures in the next two quarters will show if the second quarter decline was an “aberration” in terms of the amount of funds remitted abroad or whether there will be a longer-term drop in overseas money transfers.
Hines told the Compass that the global remittance industry was expected to drop at least 20%. And while Cayman’s 41% might seem grim, he believes it could have been worse.
“Had people not been allowed to dip into their savings by way of accessing their pension, Cayman’s remittance numbers could have been even worse,” he said. “The June figures should reflect that general uptick in the amount of remittances.”
CIMA’s report shows that Jamaica, Honduras and the Philippines remain the top three destinations for remittance funds from Cayman, receiving $23.9 million, $5.9 million and $2.4 million, respectively.
“While we continue to try to figure out the new normal in this post-COVID-19 world, we’ve seen where people have become more circumspect when sending money,” said Hines.
“People are now thinking about a rainy-day fund, which means asking themselves, ‘How much do I need to send, versus how much I can send.”
There was also a drop in the amount of remittances coming into Cayman, from just over $2 million in the second quarter in 2019 to $1.17 million during the same period this year.