Georgetown: In the wake of the coronavirus disease (COVID 19) pandemic, the Caribbean will be affected the most as it will experience its sharpest historical decline in remittances¸ according to the World Bank.
The World Bank projected a global decline of 20 per cent in remittances owing to the coronavirus sweeping the world and the resulting economic slowdown. In Latin America and the Caribbean, this fall is expected to be some 19.3 per cent.
With the coronavirus pandemic, countries around the world have implemented stay-at-home policies. Staying at home and social distancing have been a two-edged sword, reducing the spread of coronavirus but also bringing economies to a halt. There have also been layoffs, including in the United States from where Guyana gets much of its remittances.
The World Bank pointed out that remittances help to ease poverty in low- and middle-income countries, of which Guyana is one. The financial institution also noted that remittances aided in improving access to higher education and reducing child labour in lower income households.
Guyana also faces the risk of remittances being curtailed due to potential sanctions if Guyana does not conclude its elections democratically.
It has been over seven weeks since a credible winner of the 2020 General and Regional Elections is to be declared.
After two declarations from Region Four (Demerara-Mahaica) Returning Officer Clairmont Mingo, which lacked transparency, Opposition Leader Bharrat Jagdeo and caretaker President David Granger had agreed to have the Caribbean Community (Caricom) oversee the recount.
Meanwhile, the World Bank report noted, “The projected fall, which would be the sharpest decline in recent history, is largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country.”
“Remittances to low- and middle-income countries (LMICs) are projected to fall by 19.7 per cent to US$445 billion, representing a loss of a crucial financing lifeline for many vulnerable households,” the report noted.
“A fall in remittances affect families’ ability to spend on these areas as more of their finances will be directed to solve food shortages and immediate livelihoods needs,” the World Bank underscored. “Remittances help families afford food, healthcare, and basic needs. As the World Bank Group implements fast, broad action to support countries, we are working to keep remittance channels open and safeguard the poorest communities’ access to these most basic needs.”
Another risk of the COVID-19 crisis is that it can drive up costs of transferring remittances to the Region owing to operational challenges being faced by service providers. Such challenges include closure of agents and offices, reduced access to cash, foreign exchange and security.
Remittance, the act of overseas-based family members sending home money, plays a big role in the local economy. The Bank of Guyana reported US$327.9 million in remittances for 2018. This amount was US$317.2 million in 2017 and US$264.6 million in 2016.
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