Even as local remittance services continue to project a reduction in the flow of overseas remittances to Guyana as a consequence of the current downturn in the United States economy, the Inter-American Development Bank (IDB) has produced a report which suggests that the impact of remittances on the economies of Latin America and the Caribbean could decline to its lowest levels in a decade.

The remittance forecast undertaken by the IDB’s Multilateral Investment Fund (MIF) and published earlier this month projects that while remittances to countries in the hemisphere could increase by US$1bn from the last year’s US$66bn, higher inflation levels were likely to reduce the real value of those remittances by around 1.7 per cent this year.

The MIF projections come in the wake of disclosures by some local remittance services that remittances have already declined over the corresponding period last year.

Several weeks ago Deo Persaud, Chief of the Neal and Massy Group of Companies, the parent company of Moneygram told Stabroek Business that the company had already seen a reduction in remittances to Guyana. More recently President of the Georgetown Chamber of Commerce and Industry Chandradat Chintamani said that the drop in remittances to Guyana could grow sharper in the weeks ahead, a projection supported by an official of one of the country’s largest remittance services.

“At the moment remittances through our company are roughly at the same levels as they were last year around this time. Frankly, we had anticipated that there would have been an increase in the remittance levels by this time,” the source said.

With remittances believed to be serving as an income subsidy for around 80 per cent of Guyanese, a sharp drop in remittance inflows will significantly reduce spending power during the busiest trading period of the year, Christmas.   Last year, remittances to Guyana totalled US$474m.

Remittances account for around 43 per cent of Guyana’s Gross Domestic Product, the highest in the region. Among CARICOM countries Haiti is next with remittances accounting for 35 per cent of GDP while 18 per cent of the GDP of Jamaica is accounted for by remittances.

Across the hemisphere remittances  in 2007 accounted for 1/3 more than foreign direct investments and more than ten times the amount of official development aid.