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Remittances to poor countries to see sharpest decline in recent history, this year – World Bank
It is no secret that many poor, working-class families across Guyana largely find remittances from their friends and family members abroad helpful in shoring up their livelihoods, especially in times of economic hardship.
World Bank Group President, David Malpass
But those poor families are going to feel the squeeze this year, if the World Bank’s projections are any indication.
The Bank has projected that there will be a sharp decline in remittances to countries all over the world, as nations struggle to cope with the compounding issues of COVID-19 and the oil price collapse.
The Bank recorded a total of US$554B in remittances going to low and middle income countries in 2019, and it sees that dropping by 19.7 percent this year to US$445B. With respect to the Latin America and Caribbean region, the Bank said that the reduction will be 19.3 percent.
“The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group President, David Malpass.
Guyana’s development partners said in a report published days ago that the projected fall, set to be the sharpest in recent history, would be attributed primarily to the debilitating wages and employment statuses of migrant workers, as they are more at risk of these unfortunate circumstances during an economic crisis in a host country.
Even more worrying is that the Bank said that the importance of remittances as a source of income will be more pronounced in this season, since foreign direct investment (FDI) to the same poor countries is expected to see a sharp tumble of more than 35 percent in 2020.
It could also get more difficult and expensive for workers to send money back home, as the Bank said that remittance service providers face operational challenges such as closures of agents and offices, access to cash, foreign exchange and security, and compliance issues with AMLCFT regulations.
The institution pointed out that remittances, found to alleviate poverty, improve nutritional outcomes and reduce child labour, are a crucial lifeline for poor countries.
“This time, however, the pandemic has affected all countries, creating additional uncertainties,” the report stated.
Due to this, the Bank’s Global Director of Social Protection and Jobs Global Practice, Michal Rutkowski, underscored the need for effective social protection systems to keep the livelihoods of the poor and vulnerable populace stable, in both developing and advanced economies.
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