Guest Column
End of the Remittance Bonanza?
Commerce and Immigration News
July 5, 2007
End of the Remittance Bonanza?
Frontera NorteSur
In the past decade, remittances from migrant workers in the United
States emerged as one of the pillars of the Mexican economy. From
north to south, entire communities became dependent on the flow of
money from relatives laboring away in El Norte. Current trends,
however, suggest that the remittance boom could have hit a peak.
Recent statistics from the official Bank of Mexico (Banixco)
report a slowdown in remittances entering the country.
The central bank reported that $7.3 billion was received during
the first four months of 2007, an amount that represents a drop in
comparison to 2006’s remittance total that reached an estimated
$25 billion. What’s more, Banixco disclosed that remittances
registered a drop this year of approximately $13.5 million from
March to April.
Some analysts attribute the dollar downturn to changes in the
pattern of migration. Rodolfo Rubio Salas, a researcher with the
Colegio de la Frontera Norte, told a Ciudad Juarez reporter that
more family members of migrant workers in the US are joining their
relatives north of the border.
“There has been a process of family reunification in recent
years,” Rubio said, “and this means that migrants don’t have to
send money to their families in Mexico.”
Mexico is likely to witness significant economic and political
consequences if migrant remittances continue on a downward spiral.
According to Chihuahua economist Ruben Borunda, small retail
businesses represent one sector of the economy that could be hurt
by further decreases in remittances. A study by the lower house of
the Mexican Congress reported that almost all remittance monies
are spent on personal necessities, with less than two percent
invested in productive activities.
Politically, remittances have surfaced as a point of contention in
the debate over the Calderon administration’s proposed tax reform,
which includes a proposal to slap a two percent tax on bank
deposits. Edmundo Ramirez Martin, a federal congressman from the
opposition Institutional Revolutionary Party (PRI) recently warned
that taxing bank accounts could have an adverse effect on the
migrant-fueled economy. Congressman Ramirez contended that 25
percent of remittances arrive in the heavy spending and traveling
month of December.
“(Remittances) are not made by electronic transfers but are
personally deposited in bank accounts in Mexico by the migrants
and their families,” the federal representative added.
From 2002 to 2006, remittances registered in Mexico leaped from
$9.8 billion to nearly $25 billion. As a source of foreign
exchange for Mexico, remittances are only surpassed by oil exports
and overshadow revenues from direct foreign investment and
tourism. Some accounts now report that Mexico is the biggest
receptor of remittances in the world, even ahead of India and
China.
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Sources: El Diario de Juarez, July 4, 2007. Article by Aracely
Castanon. El Sol del Centro, June 27, 2007. La Jornada, June 15
and 23, 2007. Articles by Roberto Gonzalez Amador and the Notimex
news agency.
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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