Remittances: how much influence do they have on the Dominican Republic’s economic recovery?

According to the Central Bank, for the first time they exceed US$10 billion in annualized terms.

According to the International Monetary Fund (IMF), contributing to the Dominican Republic maintaining a favorable external position with prospects of obtaining a lower current account deficit in 2021, around 1.6%.

According to the Central Bank, remittances are recognized as having a real impact on family finances and on the increase in domestic demand, since those who receive these resources use them mainly to consume food and other basic products.

In general, the lowest income segments are the ones that receive the largest amount of remittances from the diaspora.

The data, analyzed in detail, offer relevant information beyond just giving the cold number. It establishes where and by what means remittances arrive, as well as the approximate amount. The Central Bank report also details the exact amount arriving from the United States, which is the main sender.

Of the US$5,263.1 million reported in family remittances in the first six months of this year, US$4,473.6 million was from the United States (85%), representing a net increase of US$1,519.9 million compared to US$2,953.7 million in the same period of 2020, for 51.5%. From Spain, the second country in terms of shipments, US$363.2 million arrived in the first half of 2021 and US$239.8 million in January-June last year. The data are calculated based on the percentages published by the Central Bank in its report cut to June.

Haiti and Italy (0.9%), with US$47.4 million each, are in third place from where Dominicans send more remittances to their families. The rest of the countries, for this year, sent US$331.6 million, or 6.3%.

According to Central Bank data, of the US$869.8 million in remittances during June, approximately US$739.3 million were sent from the United States, while US$60 million were sent from Spain. From Haiti and Italy came US$7.8 million and from the rest about US$54.8 million.

By province, the statistics state that the National District receives around 33.5% of remittances, which means that in June they were US$291.4 million. With 14.6%, Santiago is the second province for the amount received in the reference month, equivalent to US$127 million. Next is Santo Domingo (8.1%) with US$70.5 million, followed by Duarte with US$51.3 million, for 5.9%. La Vega received US$33.9 million in remittances in June, equivalent to 3.9% for the month. Peravia and Puerto Plata, with US$29.6 million and US$26.1 million, respectively, are the next most important provinces in terms of the amount received. Both are equivalent to 6.4%.

The data establishes that the rest of the Northern region received 14% of the remittances in June, or US$12.1 million. In the East it was US$63.5 million, or 7.3%, while the rest of the South totaled US$55.7 million, equivalent to 6.4%.

Which way?
Financial institutions and remittance companies have been competing for this market for many years. US$148.3 million was channeled through banks in June 2020, while in this month of 2021 it was US$158.3 million. The majority, according to the data, continues to flow through traditional remittance companies. With 79.9%, US$589.6 million arrived through this channel in June 2020 and US$711.5 million in the same month of this year, for a total of 81.8%.

As highlighted by the Central Bank, the US$869.8 million that entered as remittances in June exceeded by US$131.9 million those registered in June 2020. “It is good to highlight that, compared to June 2019, the year prior to the pandemic, remittances in June 2021 exhibited a growth of 48.2%, some US$282.8 million more,” says the entity, which indicates that US$1,788.2 million more arrived in the first semester than in January-June 2020.

The institution stresses that, undoubtedly, the improvement of economic conditions in the United States is one of the main factors that continues to influence the behavior of remittances, since 85.0% of the flows in January-June came from that country, where more than two million people of Dominican origin reside, according to the Census Bureau of that nation.

A study by the Economic Commission for Latin America and the Caribbean (ECLAC), entitled “Promoting investment of family remittances in value chains: case studies of El Salvador, Guatemala and the Dominican Republic,” indicates that flows to countries in the region would end 2020 at US$33.95 billion, a growth of 8% over 2019.

“Although this increase is contrary to a scenario of significant reduction that had been anticipated at the beginning of 2020 due to the covid-19 pandemic, remittance flows to the subregion generally showed less dynamism than in previous years, except in the case of

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