Change in trend: Argentina, like Peru, receives more and more remittances from abroad

Ana Clara Pedotti

03/21/2021 18:16

• Clarín.com

• Economy

Updated 03/21/2021 6:16 PM

The

coronavirus pandemic

and the standstill that the Argentine economy experienced in 2020 finished consolidating a trend that had been seen

since mid-2018

: more and more people in the country receive help from their family and friends abroad in the form of remittances.

A

remittance

is a

transfer of money from one country to another

, usually by

migrants

, either in the form of transfers, checks or even cash.

According to data from the World Bank,

one in nine people

in the world depends on this assistance to be able to meet their expenses. 

Argentina was

traditionally

considered 

a

remittance-sending

economy

.

During the 1990s, immigrants who came to work in the country sent help to their family and friends in their countries of origin.

Only at the

worst moment of the 2001 crisis,

the equation changed: of the total amount sent between countries,

40% was money outgoing

from Argentina.

But after the economic recovery in the early 2000s, Argentina regained its role as an "helping" economy to other countries in the region.

However, now this balance between the money received and the money sent is reversed:

70%

of the volume handled by remittance companies operating in the country corresponds to

contributions that come from abroad

to

support

residents'

expenses

.

The devaluation of the peso, inflation and the fall in the purchasing power of wages largely explain this change in trend.

While on average, Argentines who are abroad

send to the country about US $ 300

in aid;

residents of Argentina who still send aid to their countries of origin

only send about US $ 100.

"Since the second half of 2018 we have seen how the mix between what is sent and what is received changes. The proportion increased quarter by quarter in these two and a half years. But, in the

last quarter of 2020

the

record of money

that entered the country in the form of aid. It was the maximum peak of remittance income in the history of the country, even

surpassing the worst moment of the crisis of 2001/2002 "

, Maximiliano Babino, general manager of Western Union

, told

Clarín.

.

Babino links his company's numbers to the worsening of the economic crisis in recent years.

"They are not only related to the crisis suffered by many people, who need

money from abroad to make ends meet.

But they also show a situation that occurred, especially for immigrants in the country in recent years: On the one hand, their salaries leave them

less room to send money

to their countries of origin, and also, given the

lack of work,

many

decide to return,

"said the executive.

In the period from January to November of last year, almost 70% of the money paid by Western Union in the country came from countries such as

Chile, the United States and Spain.

Meanwhile, Paraguay, Colombia and also Spain still appear as destinations for these remittances from Argentina.

"Argentina has been transformed in the last period into a country where its inhabitants

need that help to make ends meet.

Not at the level of other Latin American countries, typically remittance destinations, but of some of the region, such

as Peru

" , He said.

Recently, the firm presented its digital solution, Wu.com, in the country to send direct shipments to a bank account anywhere in the world in virtual form.

Fintech XCOOP came to the fore before the pandemic with the launch, at the end of 2019, of a 100% digital money transfer model between countries.

Alex Toriglia, its CEO, explained that, despite the global uncertainty that was registered in 2020, they registered strong growth in their user base and in the money mobilized.

"Above all, we see a lot of incoming volume to the country in two corridors: the

United States-Argentina

and the

Spain-Argentina

. Many people who settled abroad are using our application to send help to their families," he said.

Of the 28 countries where this company operates, during 2020

Argentina was the one that received the most volume of money

, above Colombia, Peru, Brazil and Spain.

"The money from remittances is spent mainly on food, health and clothing, so we are talking about basic needs," said Toriglia, while affirming: "But during the pandemic we saw that Argentines with funds abroad also used our app to be able to receive that money in their accounts in the country ".

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