Remittances help alleviate poverty and inflation in Latin America

MIAMI (HPD) — Sarah Salgado is a single mother of three little ones. She left Nicaragua almost secretly and since she arrived in the United States three years ago she sends money, clothes, medicine and food to her parents and siblings in her country of origin.

She has been doing it since she got her first job as an assistant in a restaurant and she continues to do it now that, although she already has her own business, her income has been affected by inflation.

“It’s not easy to command, but when it’s with love, it’s not sacrifice,” Salgado, 35, told The Associated Press. “Life here is difficult, but we have the freedom to work, change jobs or do several jobs at the same time,” the woman said in a telephone interview from her mobile home in Pahokee, Florida, about 145 kilometers northwest of Miami.

Salgado is an example of what millions of Latin American immigrants living in the United States do to help their families. Remittances sent from abroad are key to Latin America and represent an extra source of income for low- and medium-income households, since they contribute to meeting basic needs, alleviating poverty, improving nutrition, and access to health and education.

In the first nine months of 2022 -the latest information available regarding the same period of the previous year- remittances to the region grew by 9.3% to close to 142 billion dollars, the highest increase worldwide compared to other regions, according to the World Bank (WB). The greatest growth, 45%, occurred in Nicaragua, followed by Guatemala, with a 20% increase in remittances received; Mexico, with 15%, and Colombia, with 9%.

That growth, however, would be less than the 26% recorded for all of 2021, a record that had not been seen for a decade. For next year, the World Bank predicts that the growth of remittances will slow down to 4.7%, half of this year, mainly due to the drop in US economic activity..

“Remittances are of key importance in sustaining consumption in receiving countries,” José Manuel Salazar-Xirinachs, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), told HPD. “Its evolution is fundamentally relevant, especially in those countries of the region that are most dependent on this flow,” he said. As an example, he mentioned Central America and Haiti, which have the lowest per capita income.

In some low- and middle-income countries, remittance flows are greater than the amount of money from foreign direct investment and official development assistance, according to ECLAC. They represent about 24% of the Gross Domestic Product (GDP) in Haiti and around 20% in El Salvador and Honduras.

In Guatemala they are the largest contribution to GDP, almost 20%, followed by exports and foreign investment, said Guillermo Díaz, a researcher at the Rafael Landívar University. There families receive between 550 and 600 dollars per month. For some six million families -out of a total of 17 million that receive remittances- that money is their main source of income.

In Mexico, 25% of households receive remittances, that is, one in four. In Nicaragua, half, according to the Inter-American Dialogue, a Washington research center. The money that arrives from abroad is equivalent to 60% of the income of the receiving households and, on average, it is 15% of the income of those who send it.

Salgado fled his country in fear of his life and crossed the US-Mexico border with his three children, ages seven, five, and one, in 2019. Upon arriving in Florida, he requested asylum and obtained a work permit. He worked in restaurants and supermarkets and during the pandemic he was left on the street until they offered him to live in the warehouse of a house, with a bed for the four of them. She is now a partner in a credit counseling company and sells jewelry online.

Since she lives in a mobile home, she pays a reduced rent and it is enough to send between 50 and 200 dollars every week or 15 days to her relatives, depending on their needs.

With that money, her parents and three siblings pay for electricity and water and buy food. His 70-year-old mother is sick with Parkinson’s; his father, 72, is a carpenter and barely has a job. One of his brothers drives a taxi, the other doesn’t work.

“People are bankrupt, prices are super high, there is no work, they survive however they can,” he said, referring to his relatives in Nicaragua.

In general, the immigrants who send remittances from the United States are people who earn about $30,000 a year and the amount of the remittances varies according to their cost of living, explained Manuel Orozco, director of the Migration, Remittances and Development Program of the Inter-American Dialogue. .

In the case of Mexicans and Central Americans, the majority of those who send money are men and women aged 39 or younger who work in construction and the service sector, in restaurants or cleaning houses. South Americans who help their families with money, on the other hand, tend to be somewhat older and have more qualified jobs with higher incomes.

Sonia Arias, 57, is one of the South Americans who sends remittances to her family. She has lived in Charlotte, North Carolina, for a year and a half, from where she regularly sends money to her native Ecuador to support her son. She works two jobs: one as a take-out bagger and another, in the afternoons and evenings, as an assistant to a senior citizen.

On average, she sends about 1,000 dollars a month with which she covers the living expenses of her 17-year-old son Kenneth, who lives in Quito. The remittances from Arias pay the monthly pension of the school where the adolescent studies, the bills for electricity, water, telephone and transportation, and housing.

“Ecuadorians believe that it is paradise to live and work in the United States, but the reality is that one comes here to sacrifice, to suffer,” she reflected in a conversation with HPD. “Every day you have to get up early and spend a lot of time on the bus and the train to get to work. There is no time for anything other than work, ”added the woman who lives legally in the United States.

To prevent his son from spending money without control, the remittances are received by his cousin, who manages the expenses and is in charge of making the payments. The woman plans to take her child to the United States later through regular migration.


HPD journalists Gonzalo Solano, from Quito; and Sonia Pérez, from Guatemala City, contributed to this note.

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