MercoPress. South Atlantic News Agency

Migrant workers remittances reach 53.6 billion US dollars

Migrant workers from Latin America and the Caribbean sent home 53.6 billion to their families last year, a 17% increase over 2004 according to a survey released Thursday by the Inter-American Development Bank.

The survey also shows that for the third consecutive year remittances to the region exceeded the combined flows of direct foreign investment and overseas economic aid.

IDB President Luis Alberto Moreno said that while remittances have great potential to promote investment, job creation and capital accumulation in the region, they are not a panacea.

"Given the opportunities and risks that remittances generate, as well as the expected persistence of these flows due to demographic and economic trends of host and source countries, development institutions such as the IDB and the international community as a whole, have the responsibility of trying to maximize the positive aspects of migrations and contain their costs."

The IDB and the IMF believe that one of the most effective ways to achieve such goals is to expand access to the formal financial system, particularly in Latin America, so migrants and their families may have more options available to multiply the economic impact of their money.

"If remittances contribute to building a broad-based culture of thrift, creating opportunities of growth and employment for all, they will also succeed in reducing the costs that migrations entail for countries in our region," Moreno added.

The surge in remittances reflects the fact that rates of economic migration outstrip world population growth by a ratio of four to one. The bank said the trend ?in a week when the US Senate is considering legislation that would allow as many as 400,000 new workers to come to the US legally a year? also underlines the need for reform of migration law.

"The shift in international trade, investment and communications has required the world's political and economic system to adapt new rules and mechanisms to meet modern realities" said Donald Terry, head of the bank's multilateral investment fund. "The same needs to be done for the migrant labourers who have become such an integral part of the world's labour markets."

An estimated 25 to 27 million Latin Americans are living and working overseas, 22 million of them in the developed markets of North America, Europe and Japan. Mr Terry said migrant workers from the region now made up more than 20% of the labour force in Spain's capital Madrid. In United States Latin American and Caribbean represent an average 12% of the labour force.

Improvements in techniques used to monitor the flows of remittances in part accounted for the sharp rise last year. Many migrants continue to use informal channels, and the total could be more than the 53.6 billion US dollars.

Countries nearest the US have seen the biggest flows, with Mexico drawing over 20 billion of foreign exchange earnings from remittances. The five countries of Central America and the Dominican Republic received 11 billion. Brazil figures with 6 billion; Colombia, 4 billion and the four Andean countries total 9 billion US dollars.

The IDB is continuing its efforts to force down transmission costs of remittances. Commission costs now amount to about 5% of the total, less than half the levels of five years ago.