Abstract: Researchers partnered with IPA, the World Bank, and Banco de la Producción to assess the volume and number of remittances sent to Nicaragua during the COVID-19 pandemic. The overall volume of remittances sent to Nicaragua increased—driven mainly by an increase in the number of transfers by new clients and to a lesser extent by an increase in the average amount sent by regular clients.

Remittances—transfers sent home by migrants to support their families—are a major contributor to Nicaragua's economy, representing 15.3 percent of GDP in 2021, up from 11.5 percent in 2018.¹ These flows are Nicaragua’s second largest source of foreign exchange and generate disposable income for at least one-third of the country’s households.² For decades, Nicaraguan migrants to other countries have been sending money to their relatives contending with insufficient economic growth and inadequate social protection policies, which shocks and crises can exacerbate.³ In both sending and receiving countries, remittances tend to fluctuate in response to adverse shocks like the COVID-19 pandemic.

Researchers partnered with the World Bank, Banco de la Producción (BanPro)—the largest financial institution in Nicaragua—and IPA to assess the volume and number of remittances sent to Nicaragua during the COVID-19 pandemic. To do so, they analyzed data from BanPro of all the remittances sent and received from 2017 to February 2021. They also analyzed administrative data on unemployment, the average monthly exchange rate, and COVID-19 cases from Nicaragua and the three main host countries of Nicaraguan migrants: the United States, Spain and Costa Rica. Additionally, the researchers conducted a phone survey with 3,092 households in four rural regions of Nicaragua. They measured indicators including whether households had received support from relatives abroad in the last month, their relationship with the household head, the amount of remittances and sending method, and self-reported reasons for the change in amounts received after the pandemic started.

The overall volume of remittances sent to Nicaragua increased during COVID-19, with the number of transfers received rising by 8.7 percent. This increase was mainly driven by a 7.3 percent increase in new clients sending remittances. Regular clients’ average transfers increased by USD 18 from April to December 2021 relative to the previous six months, though this contributed less significantly to the overall increase in remittances. 

Sources

¹ “Informe Anual 2022 | Banco Central de Nicaragua.” ,Banco Central de Nicaragua, 2022. https://www.bcn.gob.ni/publicaciones/informe-anual-2022.

² Orozco, Manuel. 2018. “Country Profile: Nicaragua.” The Dialogue: Leadership for Americas,. https://www.thedialogue.org/wp-content/uploads/2018/11/Nicaragua-2018-migration-profile-1.pdf.

³ Orozco, Manuel. 2021. “Migrant remittances to Central America and Options for Development.” Paper presented to the North and Central American Task Force on Migration, Georgetown University. 

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