Remittances to Latin America and the Caribbean will continue to grow in coming years and will surpass $100 billion a year by 2010, according to the Inter-American Development Bank’s Multilateral Investment Fund (MIF).
“Given present economic and demographic trends in Latin America and the Caribbean and in industrialized countries, remittances will continue to grow in volume over the next few years to more than $100 billion a year by 2010,”
MIF Manager Donald F. Terry told a news conference on the eve of the annual meeting of the IDB Board of Governors.
However, according to Terry, this growth is not a cause for celebration for the IDB and the MIF, because it reflects the fact that the region cannot generate sufficient income opportunities to prevent millions of people from migrating.
Nevertheless, he said, remittances will continue to flow and already exceed both foreign direct investment and overseas aid to Latin America and the Caribbean, helping millions of families to escape poverty.
“The challenge for the countries in this region, and for institutions such as the IDB and the MIF, is to find ways so these flows may have a greater development impact by offering migrants and their families more options to get more out of their money,” Terry stated.
The IDB and the MIF support programs to expand the economic impact of remittances by encouraging financial institutions to handle these flows so that people who send or receive money transfers may build credit histories and gain access to services such as savings accounts, insurance, pensions and business and housing loans.
The MIF will also support a new program launched by the International Fund for Agricultural Development (IFAD), which will establish a $10 million facility to finance projects to cut the cost of making money transfers to remote rural areas around the world.
Latin American and Caribbean countries last year received some $62.3 billion from its migrants, mostly in North America, Europe and Asia. The total was 14% higher than the amount for 2005, said Terry.
At $23 billion, Mexico was by far the top recipient of remittances, followed by Brazil ($7.4 billion) and Colombia ($4.6 billion).
Several countries received slightly more or less than $3 billion: Guatemala, El Salvador, the Dominican Republic, Ecuador and Peru.
For 2007, Terry concluded, the MIF expects remittances to Latin America and the Caribbean to rise to around $72 billion.