Tap into US dollar remittances

THE GOVERNMENT should consider some recommendations aired at a recent university seminar on the potential of remittances in boosting foreign exchange.

At the virtual event, hosted by UWI's Trade and Economic Development Unit on January 24, economists disclosed statistics suggesting these repatriated payments could play a meaningful role and proposed a range of strategies to tap into them.

According to Dr Dilip Rath, a lead economist and economic adviser at an agency of the World Bank, remittances are so substantial that they sometimes eclipse total foreign direct investment and development aid received by lower and middle-income countries.

In these countries, this source of inflow can be as high as US$685 billion.

He urged this region to adopt creative strategies to access these flows from Caribbean diaspora individuals. He noted that Donald Trump’s anti-immigrant stance is unlikely to affect repatriation savings levels and might even increase inflows if people choose to return home with funds or remain where they are employed.

“Diaspora bonds could be a very potent way of raising the level of financing in the Caribbean region,” he said, noting people who send back money must first save it, whether in bank accounts or under the mattress.

“So, if Jamaica, or Guyana or Barbados...wants to tap into the savings that their migrants have in the US, we could issue a diaspora bond. Face value could be US$500, US$1,000 or US$2,000 and people who have US$1,000 or US$2,000 in their chequing account can buy that bond and the interest rate can be as high as four or five per cent in dollar terms.”

Additionally, he urged governments to reduce the cost of sending remittances and not to limit the ways in which this money can be spent.

Data presented by another economist, Dr Regan Deonanan, from the UWI, St Augustine, Department of Economics, suggested TT can do much better when it comes to how much dependence is placed on these flows.

According to him, the country receives only one per cent of GDP in remittances, or US$162 million on average, and this is one of the lowest rates among Caricom nations.

Prof Roger Hosein, also of the UWI Department of Economics, suggested accessing remittances might be “low-hanging fruit.”

He observed that the current situation equates with remittances of around US$131 per capita, while the Caribbean average is US$594, and estimated TT could receive as much as US$647 million if the right policies are adopted.

The idea of taking advantage of these kinds of transfers isn’t new.

And as recently as 2023, Finance Minister Colm Imbert announced a not entirely unrelated intention, “to move aggressively to develop strategies to increase the repatriation of foreign exchange earned overseas by local and foreign businesses.”

It’s not much of a stretch to consider individuals, too, who migrated abroad.

That’s something the government should do, given that every little counts in the current forex stress.