With global remittances projected to decline by about 20 per cent this year, the World Bank has said that the economic crisis and shutdown induced by the COVID-19 pandemic could result in the sector experiencing the sharpest decline seen in recent history.

The entity said the projected fall stems largely from the fall in wages and employment of migrant workers — who tend to be more vulnerable to the impacts during an economic crisis in host countries.

“Remittances are a vital source of income for developing countries. The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group President David Malpass in a release on Wednesday.

They said that with numerous studies indicating the huge benefits that countries reap from remittances, especially in relation to the alleviation of poverty—significant fallouts could affect the spending power and finances of numerous families globally.

“Remittances help families afford food, health care, 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,” Malpass said.

The World Bank also said it has been assisting member states to monitor the flow of remittances through various channels, the costs and convenience of sending money, and regulations to protect financial integrity that affect remittance flows. It is now working with the G20 countries and the global community to reduce remittance costs and improve financial inclusion for the poor.

REGIONAL TRENDS

The World Bank said that for Latin America and the Caribbean, remittance flows into this region grew by 7.3 per cent or US$96 billion in 2019, however, a fall of 19.3 per cent was expected for these countries this year stemming from the effects of the pandemic.

“The average cost of sending US$200 to the region was 5.97 per cent in the first quarter of 2020. Amid the COVID-19 crisis, the costs of transferring remittances to the region could increase — due to operational challenges being faced by remittance service providers (closures of agents and offices, access to cash, foreign exchange, security) and compliance with anti-money laundering and counter-financing of terrorism (AML/CFT) regulations,” the release also said.

Other expected falls in remittance flows across the other World Bank Group regions included: Europe and Central Asia by 27.5 per cent followed by Sub-Saharan Africa by 23.1 per cent, South Asia by 22.1 per cent, the Middle East and North Africa by 19.6 per cent and East Asia and the Pacific by 13 per cent.

— Kellaray Miles