The family of Marta Alvarado, a 54-year-old Salvadoran who works as a secretary in a health clinic, subsists thanks to the remittances sent by her three brothers from the US.
“What my brothers send month after month is useful not only to me, but also to my mother and father, who are already elderly. It is useful for them to support themselves, buy their food, clothing and medicine and to improve the house in where we live,” he tells AFP.
The four countries together received almost $42 billion in family remittances in 2023, according to calculations based on official data from central banks and the intergovernmental Central American Monetary Council, a record figure.
“The truth is that receiving remittances has been a blessing for us,” adds Alvarado, a mother of three children.
These shipments even exceed the amounts raised in foreign investment, tourism or exports. They are a key factor in boosting trade and consumption in nations with high poverty rates, according to experts.
Money transfers in record numbers
Remittances to the four countries increased from 19,006 million dollars in 2017 to 41,823 million in 2023.
An increase that is explained by greater emigration to the United States and other countries, analysts highlight.
The exact number of Central Americans living abroad is unknown, especially in the United States, as thousands do so illegally.
According to estimates by international organizations, the figure is around 10 million, a quarter of its population.
“People, not finding opportunities within the country, are forced to leave,” says economist Henry Rodríguez, from the National University of Honduras.
The issue is that the governments of these countries do not seek true development alternatives for their nationals and have already become accustomed to remittances supporting almost half of their populations.
Remittances now represent almost 27% of GDP in Honduras, 26% in Nicaragua, 24% in El Salvador and almost 20% in Guatemala.
They are “and will continue to be the buoyant of the Salvadoran economy for a long time. Without remittances we would have sunk a long time ago,” explains economist Carlos Acevedo, former president of the Central Bank of El Salvador.
“If dollars do not enter, the financial system does not work, nothing works in the country. And remittances are one of the main sources of dollar entry,” he highlighted.
On the other hand, in Central American countries with little emigration, remittances constitute a small portion of their GDP: around 1% in Panama and Costa Rica, and almost 5% in Belize.
“The majority of these remittances are intended for family support, specifically for basic expenses and improving the family’s quality of life,” explains Nicaraguan Strategy and Development expert Noel Estrada.
However, remittances also support dictatorial and extreme leftist regimes on the continent, such as Cuba, Venezuela, Nicaragua and now Colombia with Gustavo Petro.
17-year-old Nicaraguan student Ligia Hurtado is an example of this phenomenon. She receives money sent by two aunts from Spain, which she uses to “guarantee university studies: monthly payments of fees, housing, food and transportation.”
For her part, Salvadoran retiree Emerita Coto, 61, says that her brother sends her $400 every month from New York, money that she uses “to pay for a plot of land” that she acquired “on credit.”
Small business
Multilateral organizations – among them the World Bank, the IDB and ECLAC – promote the productive use of these resources, instead of allocating them only to consumption. For example, they encourage investment in small businesses to support the development of nations with small economies and high poverty rates.
The new Guatemalan president, Bernardo Arévalo, proposes the same thing. “Remittances can contribute more efficiently to breaking the cycle of poverty that motivates migration (…), facilitating their use for development purposes,” he said.
Gustavo Juárez, leader of an association of Guatemalans deported from the United States, agrees. “It would be good for a remittance to be invested in a business or a small undertaking so that they are self-sustaining,” he tells AFP.
In San Salvador, Marta Alvarado’s mother, Ester, 71, plans to open a store with part of the money her children send.
“It’s in plans, but I think that soon she will have that business that can help her have other income,” says Alvarado.
Source: With information from AFP.
