Remittance at risk for families back home?

El Salvador continues to struggle along with the US because recent remittance payments have dropped. This will become worry some for families here and there loved ones back home. as the recession takes a hold of Latin America as well and spreads.


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INTIPUCA, El Salvador -- For almost two generations, residents of this rural community who emigrated to the United States have sent back tens of millions of dollars to support their families and bring prosperity to their once impoverished town.

Officials of Intipucá, 120 miles east of San Salvador, were so grateful for those remittances that they built a park to honor migrants, with a statue representing the first resident to leave for the United States back in 1967.

''Remittances have transformed Intipucá,'' said Omar Chávez, a town leader and himself the beneficiary of funds sent by his brother Pedro, who has lived in Maryland since 1979. Thanks to those remittances, the Chávez family was able to cover basic needs, like food and clothing, and educate its children.

Now, the slowdown in the growth of remittances caused by the U.S. economic crisis threatens the welfare of residents of this town of 10,000 and towns throughout Latin America and the Caribbean.

The 2008 Inter-American Development Bank survey of remittances from the United States to Latin America shows that remittances, flat for much of last year, might even begin to fall this year.

The survey added that while the total of remittances from the United States to Latin America will probably reach overall levels comparable to those of the past two years, the number of migrants sending remittances may fall by up to 25 percent during 2008, compared with 2006.
Such a slowdown ''would negatively impact the standards of living of millions of families in the region who depend on the remittances migrants send home,'' according to IDB officials.

CLOUDY OUTLOOK

In a report on the outlook of remittance flows from 2008 to 2010, the World Bank said that remittances to Latin America will remain flat next year in the best-case scenario, but that in the worst-case scenario, they will decline to $58 billion from $61 billion.

''The crisis is now in the advanced markets, and it will have an impact in the emerging markets,'' said Massimo Cirasino, a World Bank economist.

Cirasino said that all Latin American governments should be worried about a decrease in the flow of remittances, but that countries with weak economies will be more negatively affected. ''Some countries have a certain leeway,'' he said. ''In a country like Brazil, for example, there will be pressure on politicians to activate programs'' to stimulate the economy. But, he added, ''there are other countries that don't have the financial resources.'' Those countries, Cerasino said, will have to turn to the IDB or other international institutions for help.

In El Salvador, remittances account for 18 percent of the country's gross domestic product. They are the equivalent of 126 percent of El Salvador's total exports and of 242 percent of all direct foreign investment.

Last year, $70 of every $100 of El Salvador's income from abroad came from remittances, while only $5 of every $100 came from traditional agricultural exports, such as coffee and cotton. Back in 1978, $81 of every $100 of income from abroad came from agricultural exports.

Eighty percent of the remittance revenue comes from Salvadorans in the United States. The numerous roadside billboards advertising remittance-related businesses frequently feature stars and stripes or other red, white and blue themes.