By Maibe González, FI2W contributor
The flow of remittances between the Dominican Republic and the U.S. has undergone an interesting change recently, an apparent consequence of the economic recession that has affected many immigrant workers in the U.S.
Remittances — funds that immigrants send back to their home countries — are a major source of income in the Dominican Republic. Now, a leading New York-based money transfer firm, La Nacional, has reported a spectacular increase in the amount of money Dominicans are sending to the U.S.
“We have seen a significant increase in the number of money transfers made from the D.R. to the U.S.,” confirmed Reny Pena, supervisor of customer services and transfers at the company’s office in the Upper Manhattan neighborhood of Washington Heights.
Pena said that the volume of transfers from the Dominican Republic to the U.S. grew from between 80 and 120 monthly transfers in 2006 to the current rate of about 150 transfers a day. The increase has prompted the agency to expand the department that deals with U.S.-bound remittances from one to five employees.
“All of a sudden,” Pena said “this service became an important part of our business. In the past, we did not perceive it as profitable.”
Two years ago, the total amount of money sent from the Caribbean country to the U.S. was in the thousands of dollars. In 2008, the number soared to nine million dollars, Pena said. He didn’t yet have figures for this year.
“What we are seeing is a repatriation of capital, which means that, now that the economic situation has turned bad, Dominican migrants are dipping into their savings and assets back home to sustain their lives here,” he said.
That is the case of Ana Isabel Rodríguez, a Dominican immigrant who lives in Manhattan. She lost her job as a sales person for a major cosmetics firm last November. Now she is living off the rent of her beach house in Puerto Plata in the Dominican Republic.
“I didn’t want to rent the apartment, but that’s my only source of income now,” she said.
Reasons to transfer money from back home vary. “There is a large spectrum of cases,” said Pena, “from families in the D.R. helping their relatives here with child support, daily expenses and education, to Dominican immigrants withdrawing their savings in the D.R. to pay for their mortgages here.” With U.S. interest rates at historic lows, many Dominican migrants prefer to keep their money in the D.R., where returns are higher.
Despite its significant growth, the phenomenon of reverse remittances occurs only among a minority of Dominicans.
“I haven’t heard of anyone who’s getting money from the D.R.,” said Susana Sosa, a Dominican teacher at a middle school in the Bronx. “But the economic situation is definitely affecting people’s capacity to send money back home.
“I’m sending less money to the D.R. myself.”
The Inter-American Development Bank has projected a decline in remittances to Latin America for this year, due to contraction in the construction and manufacturing sectors –historical sources of employment for immigrants– and changes in U.S. immigration policies that may limit the ability of employers to hire undocumented immigrants.
Remittances from the U.S. to the Dominican Republic continue to be the main line of business for La Nacional, which does not expect to see a total reverse.
“Remittances from the U.S. to the D.R. will always be much higher. They are not even comparable,” said Pena. Remittances to the D.R. amounted to $3.1 billion in 2007, according to the Dominican Republic Central Bank, and they still represent the second largest source of income for the Dominican economy.
Experts can’t yet say how the world economic crisis is affecting the flow of remittances worldwide.
In reaction to news reports about La Nacional transfer numbers, Dilip Ratha, lead economist at the World Bank, wrote in his blog:
We have no way of judging the extent of such reverse remittances. Data on outward remittance flows are of questionable quality in most of the countries (…) A modest, and rather indirect, inference about reverse remittances can be drawn from a decline in foreign currency deposits –which are likely held by migrants or their relatives– in Dominican Republic and other countries. In the last 12 months, such deposits have declined by 7% in Dominican Republic, 12% in India, and 6% in Mexico.