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Reverse Remittances: More Mexicans Sending Money to U.S.

Frontera NorteSur, News Report, Staff Posted: Jul 17, 2009

For decades, money sent home by Mexicans working in the United States has been a key pillar of the Mexican economy. Now, scattered reports are surfacing of Mexicans sending money to support relatives in the United States hard hit by the economic crisis north of the border. Latinos, especially immigrants, are suffering a disproportionate share of the joblessness that is officially rising to engulf close to 10 percent of the overall U.S. population.

According to Chihuahua state tourism department official Demetrio Sotomayor Cuellar, a 21 percent decrease over last year in the number of paisanos (Mexican immigrants traveling home for visits) crossing the Chihuahua border from June 26 to July 14 led officials to investigate the visitor drop. In the course of the probe, Sotomayor said, officials ran across unusual reports in the hands of Mexicos Interior Ministry.

Much to their surprise, officials learned that some Mexicans were financially sustaining their migrant relatives in the United States. This was something that was never seen before and now it is, Sotomayor said. Family members who are employed in Mexico are sending money to those relatives who are unemployed in the United States.

Nonetheless, it is difficult to know whether money flowing northward to unemployed Mexican immigrants constitutes a significant stream of revenue not only for migrant households but also for U.S. tax revenues that finance services used by native-born U.S. citizens. The federal Interior Minister has not made public the reports cited by Sotomayor, and Mexicos National Institute of Statistics, Geography and Informatics has not started systematically compiling data on transfers on money to migrants in the U.S.

Confronted with a growing unemployment problem at home, most Mexicans would seem hard-pressed to send large amounts of money to El Norte. However, alternative sources of cash are still readily available in Mexico. Pawn shops, payday-type lenders and loan sharks of all shapes and sizes are popping up everywhere; in Guadalajara, a 24-hour pawn shop is even open for business.

One thing is certain: the sharp decrease in remittances sent from the United States is hitting many Mexican households. The reduced remittance flow implies serious implications for the ability of Mexico's federal government, which is heavily dependent on a 15 percent sales tax, to support social

The central Bank of Mexico recently reported a record drop of 19.9 percent in remittances received in Mexico during the month of May. From January to May, remittances slid 11.2 percent in comparison with the same period last year, according to the International Monetary Fund.

An analysis by the Spanish-owned bank BBVA Bancomer estimated that migrant dollars arriving to Mexico could go down by as much as $4 billion this year, reducing the countrys annual remittance income from about $25.1 billion in 2008 to slightly more than $21 billion in 2009.

Other estimates put the expected remittance total in the $22-23 billion range for 2009.

Reduced remittance revenues impact some areas of Mexico more than others.

In the first three months of 2009, 26 of Mexicos 32 states captured fewer remittances. The states of Chiapas, Veracruz, Guanajuato and Mexico experienced the greatest plunge in migrant dollars. On the other hand, a handful of states actually saw increases in remittances. Entities experiencing a positive upturn included Aguascalientes, Baja California Sur, Coahuila, Colima, Jalisco, and Nayarit.

The third largest receptor of remittances after India and China, Mexico is far from alone in groping with the remittance crisis. The World Bank estimated this month that global migrant remittances, which totaled $328 billion in 2008, could fall to $304 billion in 2009. Certain nations are even more dependent than Mexico on money earned by nationals working abroad. Tajikistan, Lesotho, Guyana, Moldova, and Honduras are among countries where migrant remittances represent one-quarter or more of the Gross Domestic Product.

Not all the news from the remittance front is negative. South Asia is expected to receive more income this year than last from migrants working in the Persian Gulf region.

Additional sources: El Universal, July 15, 2009. Article by Jose Manuel Arteaga. El Diario de Juarez, July 14, 2009. Article by Horacio Carrasco. La Jornada, July 4 and 14, 2009. Articles by Roberto Gonzalez Amador, the Economist Intelligence Unit, and the Notimex, DPA and Reuters news agencies. La Tribuna de la Bahia/Agencia Reforma, July 2, 2009. Article by Ernesto Sarabia.

Frontera NorteSur (FNS): on-line, U.S.-Mexico border news Center for Latin American and Border Studies New Mexico State University Las Cruces, New Mexico

For a free electronic subscription email fnsnews@nmsu.edu

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