Will the rise in interest rates in the US affect remittances to El Salvador?

Will the rise in interest rates in the US affect remittances to El Salvador?

The Salvadoran government is calculating the impact that the recent increase in the interbank interest rate announced by the United States Federal Reserve could have on family remittances.

According to the records of the Central Reserve Bank, until April remittances to El Salvador reached 2,444 million dollars, of which more than 90% came from the United States.

The economy minister, María Luisa Hayem, expressed some concern about the future, noting that exports, along with remittances, represent fundamental pillars for the national economy.

“As there is an increase in interest rates, we can see a contraction in investment, fewer jobs for Salvadorans, and that may imply fewer remittances for El Salvador,” said Hayem.

Oscar Chacón, director of the organization that defends the rights of migrants Alianza Américas, pointed out that it is too early to predict the behavior of remittances.

He cited previous difficult situations, such as the crisis resulting from the COVID-19 pandemic or the 2008 financial crisis when, against all odds, the flow of money sent from the United States was maintained.

“I think we don’t know for sure, but we can say that based on past experience it is very likely that people will continue to find ways to continue helping their families at least at the same rate as they did in the past,” Chacón explained.

Organizations in defense of migrants recall that in the United States there are nearly 200,000 Salvadorans covered by the TPS temporary protection status, who have their work permits valid until December.

This segment maintains interest in sending money to have a reserve in case they do not achieve a lasting extension to their current situation.

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Written by Editor TLN

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