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Remittances – a plus for Guyana’s economy

Jun 11, 2009 Letters

Dear Editor,
I have been following the debate between Dr. Prem Misir and Mr. Emile Mervin over the last few days.
I note the issues raised by Mr. Mervin; however, his understanding of the concept of remittances is not quite clear.
In his last letter on June 7, 2009, he stated that his allusion to foreign remittances to Guyana was intended to demonstrate to Dr. Misir that his boasts of progress and development were a sham and that remittance is what is really responsible for the economic progress of Guyana today.
Mr. Mervin should note that developing countries like Guyana depend on remittances as one factor in its developmental process and this is not wrong. Remittances into Guyana rose from US$29.2 million at the end of 2000 to US$ 225.9 million at the end of 2006. Remittances account for the second largest source of foreign finance after private capital flows.
Remittances assist many developing countries to reduce the cost of borrowing from international financial institutions.
Other developing countries which see remittances as important for the sustenance of their economy are Middle Eastern countries, Latin American countries, Korea, Philippines, India, Brazil, many Caribbean Islands, etc.

Remittances offer an opportunity for citizen from developing countries who reside and work abroad to contribute to their home country, whether by sending money home to their families or by investing and opening small businesses.
Today, remittances are vital and are recognised in all developing countries as an important flow of foreign currency and a major player in poverty alleviation.
Also significant, is the potential multiplier effect on economic growth and investment.
Remittances are now an important source of income for many developing countries and have significant effects on their economic stability and growth.
Remittances can increase the national gross domestic product (GDP) by a significant percentage. For example, in 2000 the UN reported that remittances increased the GDPs of El Salvador, Jamaica, Jordan, and Nicaragua by 10%. The World Bank reported that in 2004 remittances accounted for approximately 31%, 25%, and 12% of Tongaís, Haitiís, and Nicaraguaís GDP, respectively.
Also, migrants who send money for their relatives through the bank and save provide these financial institutions with funds so as to promote access to credit for entrepreneurs who may or may not be migrants themselves.

Remittances help to send children to school, gain access to health care and provides a source of income for persons desirous of making small local investments which all contribute positively to the economy.
So, Mr. Mervin needs to understand, that it is not wrong for a developing country to receive remittances and utilise it for the benefit of the economy, since the 21st Century introduces new opportunities, and remittances constitute one good opportunity.
Instead, we should focus on avenues to create positive outcomes for the migration source areas.
And, we have to ensure that remittances are used more efficiently towards social development, and in the fight against poverty.
Kimberly James

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