El Salvador depending on remittances for its economic survival
It is no joke when we say in El Salvador that our main export product is human beings: from the total population of 8.5 million, it is estimated that 3 million live abroad, most of them in the United States, Canada, Australia and Europe.
Having been a migrant myself I know how true another of our jokes can be: no matter where you go, you can find someone from El Salvador, working in the most unusual of places and situations.
You can find us as chefs in diners and restaurants in the US, packing groceries in supermarkets in Canada, dancing in Madonna’s videos, selling crafts in the streets of Sidney or Venice or being part of the whaling team of some boat sailing in the Atlantic.
True to all of these people is they will send part of their salaries back to their families in El Salvador making their remittances the most important income of dollars for the smallest Central American nation, an income that saw a crisis in the past couple of years but that is now coming back in balance.
According to a report from the Salvadoran Central Bank, as of March this year remittances saw the first increase since 2008 and rose 8.7%. This is the first positive rate observed since October 2008.
Remittances totaled $848.4 million in the January-March period, up 0.60 percent from the first quarter of 2009, confirming the improving tendency, the Central Bank’s economic research and statistics department said, according to a note published by Remittances Gateway.
The dollars received by remittances from migrants represent for El Salvador the main source of income, estimated annually at 2.5 billion dollars. The year before the crisis, 2007 established a record in remittances were 3.6 billion dollars were received. But overall, 2007 seemed to be the best year ever for remittances in the world, as numbers in the Philippines, Bangladesh and other Asian countries were also positive.
This makes El Salvador the number 10 country to depend on remittances, and the second of the Central American region (the other being Honduras, in position number eight) to do so. Tajikistan, Tonga and Lesotho would be the top three, according to the Migration and Remittances Factbook 2011 of the Worldbank.
According to this Factbook, the top ten emigration countries in Latin America are Mexico, Colombia, Brazil, El Salvador, Cuba, Ecuador, Peru, the Dominican Republic, Haiti and Jamaica.
The influence of remittances in local economies
This phenomenon of the dependence on remittances is not exclusive to El Salvador and is shared by neighboring countries like Guatemala, Honduras and Nicaragua.
In the particular case of El Salvador, the influence of remittances on its economy has been so large, that the country completely dollarized its economy in 2001.
It is estimated that 22% of households in the country receive remittances and that they are primarily used for consumption and household expenditures.
Government officials have been thinking of ways to better use these remittances and to create programs that could allow families to not only “sit and wait for a cheque” and use it for personal expenses.
But while these decisions are being taken, be it a curse or a blessing, the reality is that remittances are a vital part of our economy and for the time being, and while other problems like internal criminal violence and unemployment are not solved, migration will continue to be on the rise and remittances will continue to be the basis of the economies of many countries.
Tags: El Salvador, migration, remittances