Remittance Projections Could Have Serious Implications

PAM Deputy Leader - Shawn Richards

PAM Deputy Leader – Shawn Richards

Basseterre, St.Kitts – Nevis
November 05, 2009

A number of local remittances services within the federation have predicted a projected reduction in the flow of overseas remittances to St Kitts and Nevis, Deputy Leader of the Peoples Action Movement, Shawn Richards has predicted that this can have serious implication for the federation. He stressed that this is as a result of the current downturn in the United States economy. However the Inter-American Development Bank (IADB) has produced a report which has lay claim to suggests that the impact of remittances on the economies of Latin America and the Caribbean could decline to its lowest levels in a decade.

The IADB’s Multilateral Investment Fund (MIF) which undertook the remittance forecast had projected in its report that while remittances to countries in the hemisphere could increase by US$1bn from the last year’s US$66bn, higher inflation levels were likely to reduce the real value of those remittances by around 1.7 per cent this year.

The Multilateral Investment Fund (MIF) projections came in the wake of disclosures by sources close to both Money Gram and Western Union that remittances have already declined over the corresponding period last year.

A source close to one of the company in speaking to this media house on the condition of anomity last Friday said that their company had already seen a reduction in remittances to St Kitts and Nevis. Meanwhile, Minister of Finance, Dr the Hon Timothy Harris in a previous interview had stated that reports from several banks have indicated that’s several nationals living and residing abroad have reduced decrease sending money to the federation significantly while monies being sent abroad to relatives and friends have increase tremendously. “We are seeing more persons living overseas have been contacting their local banks here to retrieve money rather than sending money home to be banked,” Minister Harris said.

“At the moment remittances through our company are roughly at the same levels as they were last year around this time. Frankly, we had anticipated that there would have been an increase in the remittance levels by this time,” the source said.

With remittances believed to be serving as an income subsidy for around 60 per cent of Kittitians and Nevisians, a sharp drop in remittance inflows will significantly reduce spending power.

Among CARICOM countries remittances account for around 43 per cent of Guyana’s Gross Domestic Product, the highest in the region, while Haiti is next with remittances accounting for 35 per cent of GDP while 18 per cent of the GDP of Jamaica is accounted for by remittances. Across the hemisphere remittances in 2007 accounted for 1/3 more than foreign direct investments and more than ten times the amount of official development said.

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