Washington -- Latin American and Caribbean
immigrants working in the United States and elsewhere abroad
will send an estimated $50 billion to their home countries
in 2005, reports the Inter-American Development Bank (IDB).
In an October 17 statement, the IDB said,
however, that these money transfers (known as remittances)
sent by immigrants largely bypass the financial systems
of their home countries, limiting their development impact.
Because of this, the IDB said it will support
the "leveraging" of remittances to Latin America
and the Caribbean to generate "concrete progress"
for the region and its inhabitants. Leveraging refers to
using a small amount of funds to attract other funds, including
loans, grants and equity investments.
The IDB's new president, Luis Alberto Moreno,
said during an October 14-16 summit of Ibero-American heads
of state and government in Salamanca, Spain, that his institution
will support a variety of programs to create "more
and better possibilities for millions of families across
the region who receive remittances to get more out of their
resources." The programs supporting those who receive
remittances, he added, will give "future generations
of workers better opportunities in their own countries."
By improving the region's banking and credit
systems, Moreno said, the remittances can be leveraged for
more efficient use and to "obtain a multiplier effect
The challenge, said Moreno, is to link remittances
with the banking systems in Latin America and the Caribbean
to provide a better life for immigrants working abroad and
their families back home.
The need to make better use of remittances
was reiterated by U.S. Treasury Secretary John Snow in March
25 U.S. congressional testimony. Snow said a major problem
faced by immigrants in sending remittances home is that
often they pay high fees to transfer the funds.
Once the funds arrive at their destinations,
said Snow, the limited access of recipients to financial
services -- or their lack of knowledge about such services
-- often restricts their options for saving or investing
the funds in such areas as education expenses or small business
"Thus, tremendous potential for remittance
flows to contribute to economic growth and development is
lost," Snow said.
Because of the growing role that remittances
play in the world economy, the Bush administration is working
to lower the costs of sending remittances. This effort began
in 2001 with the U.S.-Mexico Partnership for Prosperity,
which has resulted in a significant reduction in the cost
of remittances from the United States to Mexico.
The effort continued at the 2004 Special
Summit of the Americas in Monterrey, Mexico, where President
Bush and the other leaders of Western Hemisphere nations
set a 2008 goal of cutting the cost of sending a remittance
by 50 percent. More information on the Summit
of the Americas is available on the State Department
Washington File Staff Writer