BASSETERRE, St. Kitts, November 4th 2009 (PAM Secretariat) – Following a projected reduction in the flow of remittances to St. Kitts and Nevis, Deputy Leader of the People’s Action Movement, Shawn Richards has predicted that this could have serious implication for the Federation.
Richards said that this is as a result of the current downturn in the United States economy. However, the Inter-American Development Bank (IDB) has produced a report which lays claim to suggest that the impact of remittances on the economies of Latin America and the Caribbean could decline to its lowest levels in a decade.
The IDB’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$1B from the last year’s US$66B, higher inflation levels were likely to reduce the real value of those remittances by around 1.7 percent this year.
The 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 companies 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 had stated that reports from a number of banks indicated that several nationals residing abroad have significantly reduced sending money to the Federation, while monies being sent abroad to relatives and friends have increased 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 percent of Kittitians and Nevisians, a sharp drop in remittance inflows will significantly reduce spending power.
Among CARICOM countries, remittances account for around 43 percent of Guyana’s Gross Domestic Product, the highest in the region, followed by with 35 percent of GDP and Jamaica 18 percent of GDP. 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.
