In this way inflation is swallowing the continuous record of remittances in the country.

Remittances are hitting records, but inflation, which remains high in Colombia, means the resources hundreds of families receive are less than enough. It has remained stable over the last four months up to last February and this is evidenced by the data from the Bank of the Republic. In the last 12 months ending last February, $10.3 billion came into the country, 5.8 percent more than the amount seen in the same period in 2023. When the record was marked at 9,735 million.

These remittances represent to the Colombian people that this year they have received resources of the order of 43.2 billion pesos, if the average rate recorded by the dollar in the same period is taken into account, which is 1.2 percent higher in comparison. What was received in pesos in the same period of 2023.

But unlike February last year, the average dollar rate declined by about 871 pesos in the same month. In fact, A year ago, an average price of 4,802.75 pesos had to be paid for one dollar, but in February 2024 this price fell to only 3,931.85 pesos. So that shortage alone had already taken away a good portion of families’ income.

This is not the only thing. Recipients of remittances in Colombia can currently purchase less with these resources due to inflation, which stood at 7.74 percent last February.As revealed by the National Administrative Statistics Department (DEN).

This means there was a real decline of 6.1 percent in remittances coming into the country by the end of last February

Where are they from?

In February 2024, remittances sent by workers in Colombia reached $913.93 million. This is the second highest figure in history in the records kept on this matter by the Bank of the Republic.

Compared to the first month of the year, remittances increased by more than one million dollars, as in the first month they stood at $912.79 million.

Compared to February 2023, the increase in remittances was $81.23 million, That compares to $832.70 million that month.

It is noteworthy that in December last year the remittance indicator reached its historical maximum and reached $914.21 million.

Workers’ remittances reached $1,826.72 million between January and February this year.

There is an increase of $209 million compared to $1,617.72 million reported in the same period last year.

In 2023, the speed of remittances increased by close to 10 percent annually and broke the record of previous years, According to similar records of the Colombian issuing bank.

Basically, remittances come from countries that receive the most compatriots as immigrants.

According to the Bank of the Republic, the number of Colombian immigrants increased from 2.5 million in 2010 to more than 3 million in 2021. Most people arrive in the United States, which receives 27 percent of migrants, followed by Spain, which welcomes 14.9 percent of them.

As a result, the United States and Spain are the two main sources of remittance income. According to data from the Bank of the Republic, 50 percent of these come from the United States. 14 percent originate in Spain. And three countries – the United States, Spain and Chile – account for 71 percent of total remittances.

Perspective

Although remittances entering Colombia are far from reaching the volumes seen in some Central American countries and far from achieving their importance in their economies, they are received mainly by millions of Colombians from the United States, Spain and Chile. These resources sent are increasing. , every year.

According to estimates by the Bank of Bogotá, remittances will remain a relevant source of foreign exchange for the country until 2024; However, their impact on the income of Colombians, and with it the level of economic activity, will depend on the exchange rate.

For bank analysts, The calculations show that remittances will slow this year, moving from an annual expansion of 7 percent in 2023 to 6 percent in 2024 and totaling about 10.7 billion.

“This softness is primarily linked to the prospect of lower growth in the United States, Spain and the United Kingdom. The exercise undertaken is only part of the story, as the other variable that determines the local impact of remittances is the exchange rate, So for every 100 peso increase or decrease in the annual average exchange rate, households will have more or less 1 trillion pesos available for their consumption decisions.

For this reason, Bancolombia Group analysts believe that “Remittances can serve as a countercyclical instrument, especially if they can be channeled into areas that promote savings and investment.As is the case with the manufacturing sector and the financial system.

The unit’s analysts are not unaware of the role that these resources have played in the well-being of millions of families in the country who derive their livelihood from remittances. He also warned that in a situation like the present, the remittance potential is still untapped.

“While these financial flows have brought positive changes in terms of poverty alleviation and served to help households overcome the challenges of the economic cycle, their potential remains unrealized.” They say in Bancolombia.

A recent analysis from Banco de Bogotá warns that Remittances are consolidating as a relevant source for household spending And they also act as stabilizers of the exchange rate, establishing themselves as the second largest generator of current dollar flows, according to 2023 data, behind only oil (15.6 billion) and coal (9.2 billion ) Ahead of.

The penetration of remittances into the country strengthened, with a migration trend into the country between 2021 and 2023. The banking unit’s calculations show that the inflow of remittances is expected to grow from 1.1 per cent of gross domestic product (GDP) in 2014 to 2.8 per cent in 2023. This is the highest participation so far in the 21st century.

He also warned that 18 percent of the population in Colombia, or about 9.8 million people, received remittances last year. “Each Colombian recipient of remittances did so for a little less than $90 per month, or 378,000 pesos at the year’s average exchange rate, which is equivalent to about a third of the current minimum wage.”