Pricier USD cited for drop in outbound remittances
The Bank of Jamaica (BOJ) says it will be conducting a survey on outbound remittances, admitting that it does not have data on principal senders or the main destinations for funds flowing out of Jamaica.
The outbound flows, which peaked ahead of the recession, have been contracting since 2013 after four years of recovery.
The central bank attributes the decline to faster pace of depreciation of the Jamaican currency in 2009 and again in 2013, which, it states, "would imply that for the same amount of JMD being sent abroad the USD equivalent would be less." The local currency has lost 21 per cent of its value from January 2013 to the end of September 2014.
The BOJ also cites the "slowdown in the growth rate of domestic GDP" which, it says, would also have negatively impacted the pace of outflows in remittances.
The bank notes that, overall, there has a downward trend in remittance outflows between 2008 and 2014. The sharpest fall-off was in 2009 when money sent - US$237.4 million - reflected a contraction of 24 per cent in value compared to the year before; and again in 2013 when outbound remittances fell by about 12 per cent to US$240.5 million.
"The declines observed in 2009 were against the backdrop of the escalating impact of the global financial crisis on Jamaica..." the bank said.
Anecdotally, tuition for students attending school abroad and companies remitting profits to other locations are considered the main sources of outbound remittances.
BOJ said it would be conducting a survey for a more precise reading on the purpose of the foreign flows and where they end up.