Most Barbadians, as do the majority of Caribbean nationals, have relatives living and working overseas.
It has long been the norm for these individuals to send money back home regularly to ease their loved ones’ financial burdens, and often to boost their own savings in anticipation of eventually returning to their homelands.
Officially, such funds, or, according to the Inter-American Development Bank, these “international money transfers made by expatriate workers to their home countries”, are called remittances.
In recent years economists and migration experts have been increasing their research on international remittances and much of their attention has been on Latin America and the Caribbean.
This is partly based on the view that with Caribbean nationals in places like the United States and England having lost their jobs and in some cases their homes, the expectation was that their ability to remit money home would be severely curtailed.
On the other hand, another suggestion was that with Barbados and other countries in the region still in recession, nationals in the diaspora would be keener to lend their families a helping hand.
The World Bank is one of the respected authorities on information about remittances and last month it reported that “international migrants from developing countries are expected to send US$436 billion in remittances to their home countries this year, despite more deportations from some host countries”.
The information was contained in the latest Migration And Development Brief.
“Remittance flows to countries in Latin America and the Caribbean region grew slightly by 1.9 per cent in 2013 to reach US$61 billion. Following a 13-month decline, remittance flows to the region began recovering in the second half of 2013. However, remittances to Mexico, the largest remittance-recipient country in the region, contracted in 2013,” the World Bank reported.
“The positive impetus from the US economic recovery was partly offset by removals of migrants from the US. The economic slowdown and unemployment in Spain and Italy, which are also large destinations of Latin American migrants, contributed to the slowdown in remittances to the region. In the medium term, improving employment conditions in the US point to stronger growth in remittances, which are expected to reach US$81 billion by 2016.”
Putting it all into context while partly answering the question about the importance of remittances to economies in hard and prosperous times, the World Bank added that “remittances remain a key source of external resource flows for developing countries, far exceeding official development assistance and more stable than private debt and portfolio equity flows”.
It also said, “for many developing countries, remittances are an important source of foreign exchange, surpassing earnings from major exports, and covering a substantial portion of imports”.
The importance of remittances on both the micro and macro-economic levels was also emphasised by the Inter-American Development Bank.
“Every year Latin American and Caribbean migrants make about 250 million separate money transfers to their home countries. While the average amount sent is around $300, taken in total these remittances by far outstrip all sources of foreign aid to the region. In several countries they constitute more than ten per cent of GDP,” it said.
While the remittances sent to Barbados are not in the league of larger Latin America and Caribbean countries like Mexico and Jamaica, previous Central Bank of Barbados research said the contribution could not be discounted.
A 2006 Central Bank research department publication entitled Creating Awareness About Workers’ Remittances Flows To Barbados: A Note said between 1987 and 2004 “workers’ remittance flows to Barbados have grown steadily, representing the third largest source of foreign exchange earnings in the current account”. It called remittances an “overlooked’ source of foreign exchange earnings to the Barbadian economy”.
According to the World Bank, remittances coming into Barbados were $277. 3 million (2007), $202.3 million (2008), $229 million (2009), $163.7 million (2010 and 2011), and $168.6 million (2012).