Remittances from Expatriates Continue to Increase despite U.S. Economic Slowdown & September 2001 Attacks
The funds sent back to Mexico by expatriates has continued to increase despite the reduced employment levels in the US service sectors resulting from the US economic slowdown and the Sept. 11 attacks in New York and Washington. In a report published in late May, the Banco de Mexico (central bank) said remittances in January-April were running about 6.7% higher than during the same four-month period in 2001.
The central bank did not offer statistics on total remittances through April. But in an earlier report, the bank said remittances for January-March reached US$2.17 billion, the equivalent of 88% of Mexico's earnings from exports of crude oil for the first quarter of the year.
Furthermore, the remittances helped keep Mexico's balance of payments deficit for the first quarter at US$3.9 billion, compared with US$4.7 billion in January-March, the central bank said.
Remittances have been increasing steadily in the last two years, even with reduced employment in the service-oriented sectors that employ immigrants such as restaurants and hotels. The central bank said remittances approached US$8.9 billion in 2001, despite concerns that the Sept. 11 attacks and the US economic slowdown would reduce the amount of money sent back by expatriates in the US (see SourceMex, 2001-10-24).
Remittances surpassed earnings from tourism in 2001
Last year's remittances surpassed earnings from tourism, which reached US$8.3 billion and amounted to almost three- fourths the US$12.8 billion in earnings from petroleum exports in 2001, said the Banco del Ahorro Nacional y Servicios Financieros (BANSEFI). BANSEFI, created earlier this year to support informal savings cooperatives and credit unions, is seeking to attract up to 8% of the remittances sent back by expatriates (see SourceMex, 2002-02-13).
The total remittances sent to Mexico would be even higher, but excessive commissions charged by banks and other wire-transfer outlets have limited the money sent by expatriates. This led Mexican and US officials to launch a campaign in late May to reduce commission charges by about 50%. The campaign will seek to expand the number of institutions allowed to transfer money between the US and Mexico and create mechanisms for easier transfer of funds.
"It is very significant for us that people who work hard, often for minimum wage, have to pay very, very high commissions. I think that is unfair," said US Treasurer Marin at a joint press conference in Mexico City with Juan Hernandez, Mexico's top official for immigrant affairs.
Hernandez said the cost of commissions, though still high, is beginning to come down because the number of wire- transfer companies has increased to 140. Still, Hernandez and Marin noted that these companies obtain US$2 billion in earnings from wire transfers, which they said is too high.
The Banco de Mexico said 27.7 million transfers were reported in 2001, with Mexicans sending an average of US$321 per transaction. While the vast majority of transactions involved wire transfers, there were also a large number of money orders and personal checks.
A Banco de Mexico survey said the state receiving the largest percentage of remittances was Michoacan, followed by Guanajuato and Jalisco. The three states together received almost 28% of all remittances in 2001. Ironically, these states are among those whose share of remittances decreased between 1995 and 2001, the bank said.
Conversely, the share of remittances has increased for a handful of southern and central states during the period, including Veracruz, Chiapas, Hidalgo, and Mexico state, the survey indicated. …