CEMLA, MIF/IDB and World Bank Launch enviacentroamerica.org To Make Costs and Conditions of Remittances More Transparent
The Center for Latin American Monetary Studies (CEMLA, for its initials in Spanish), the Multilateral Investment Fund (MIF), a member of Inter-American Development Bank (IDB), and the World Bank today launched enviacentroamerica.org, a free online tool to compare and make transparent the costs of remittances from the United States to six Central American countries and the Dominican Republic.
The web site provides detailed and updated monthly information on how much it costs to send money from the U.S. to Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and Dominican Republic. Costs are calculated based on amounts of $200 and $500.
"This initiative will help the Hispanic community to better understand the costs and options available before deciding how and with whom to send their money," said Paloma Monroy, remittance specialist with CEMLA, the agency implementing this initiative with joint support from MIF and the World Bank. "This tool will create more transparency in this market, contributing to reduced costs."
Enviacentroamerica.org provides information on the costs that different operators charge in five major remittance-sending hubs in the United States (California, Florida, New York, the District of Columbia and Massachusetts) to Central America and the Dominican Republic as well as the costs to wire money from Costa Rica to Nicaragua.
"Remittances are a vital source of income for millions of working families in Central America and the Dominican Republic," said Massimo Cirasino, who heads the Financial Infrastructure Division of the World Bank. "In that sense, the sponsors of this site seek to provide useful information that will benefit those most in need."
Only in the last quarter of 2011, an estimated $200 million or more were spent by immigrants from six Central American countries and the Dominican Republic to cover the costs of remittances to their families from the United States.
"By increasing market transparency, providing more information on remittance prices, migrants can have a better sense of the options within their reach, and they can choose the service that best fits their needs," said Natasha Bajuk, MIF’s remittances specialist.
An analysis of data from the last quarter of 2011 shows that:
- Immigrants from Central America and the Dominican Republic paid on average $12 for every $200 remitted.
- A one percentage point reduction in the cost of sending remittances will save migrants and their families an additional $150 million a year.
- The average price of sending remittances from the U.S. to Central America and the Dominican Republic fell slightly over the last three months of 2011, from 5.9 percent in October to 5.7 percent in December.
- In December, the most expensive services were to the Dominican Republic and Costa Rica, with an average cost of $14.60 (7.3%) and $13.60 (6.8%), respectively. The cheapest were to El Salvador, with an average cost of $9.40 (4.7%), followed by Honduras and Nicaragua, both with average cost of $9.60 (4.8%).
- In December 2011, the highest cost to wire $200 was from Miami and New York to the Dominican Republic, with an average cost of $15.60 (7.8%). The cheapest was from New York to El Salvador and Honduras, and Los Angeles to El Salvador and Nicaragua, with an average cost of $9.20 (4.6%).
- In general, it is cheaper for the remitter to send money into a recipient’s account ($9) than as cash ($11). However, the volume of wires through commercial banks is still small compared to money sent through remittance companies.
- Many remittance service providers offer to send money from the U.S. to Central America through debit and credit cards with payment in cash or by deposit into an account. However, the cost of remittance by credit or debit card, and paid in cash, is significantly higher than for the other methods of sending remittances.
Center for Latin American Monetary Studies
CEMLA is the regional association of Latin American and Caribbean central banks. Its main objectives since 1952 is cooperation amongst its members in order to promote a better knowledge of monetary and financial topics in the region, and to assist in improving the qualifications of central bank and other financial agencies personnel in Latin America and the Caribbean in the above fields.
Multilateral Investment Fund
The Multilateral Investment Fund, member of the IDB Group, is the largest provider of technical assistance for private sector development in the Latin American and Caribbean region. MIF projects are aimed to give low-income populations the tools to boost their incomes: access to markets and capabilities, access to finance, and access to basic services.
For over 10 years, the MIF has been a pioneer in tapping international remittances as a development tool. It has providing more than $60 million in technical assistance, loans and equity investments to finance 45 projects related to remittances across Latin America and the Caribbean.
The World Bank
The World Bank is a vital source of financial and technical assistance to developing countries around the world. It is not a bank in the ordinary sense but a unique partnership to reduce poverty and support development. We comprise two institutions managed by 187 member countries: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD aims to reduce poverty in middle-income and creditworthy poorer countries, while IDA focuses exclusively on the world’s poorest countries. These institutions are part of a larger body known as the World Bank Group.
Established in 1944, the World Bank is headquartered in Washington, D.C. with more than 100 offices worldwide. Within the World Bank, the Finance and Private Sector Development Vice Presidency supports government policies to help the financial and private sector build robust financial systems and support the business environment for economic growth.