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Remittances sent home by some 25 million Latin American and Caribbean immigrants are pegged to reach $60 billion in 2006

Wednesday September 13rd, 2006 / 22h42

QUITO -(Dow Jones)- Remittances sent home by some 25 million Latin American and Caribbean immigrants are pegged to reach $60 billion in 2006, according to a study released Wednesday by the Inter-American Development Bank, or IDB.

That figure is 20% higher than it was in 2005, Donald Terry, manager of the IDB's Multilateral Investment Fund, said at a press conference.

Of the total funds, 75% are sent from the U.S., 17% from Europe, and 8% from Japan.

According to Terry, between $10 billion and $12 billion of the total remittances are available to become development instruments, principally for investment in construction, commerce and bank savings.

Sergio Bendixen, president of Bendixen & Associates, a consulting firm that carried out a study called "The potential impact of Remittances on the Latin America and Caribbean economy," surveyed 3,000 migrants from Mexico, Colombia, El Salvador, Guatemala, Dominican Republic, Jamaica and Haiti in the first half of 2006.

Of those surveyed, 66% said they have no investment in their country of origin but would like to.

According to the Bendixen study, investment in insurance, bank institutions, housing and education, in that order, are the most attractive options for those who send and receive the remittances.

"This demonstrates that the remittances are becoming the principal instrument to reduce poverty in Latin America and the Caribbean," said Terry, who invited the private banking sector, and insurance and construction companies to develop attractive, low cost products for migrants.

According to Bendixen, the remittances represent an average 10% of the monthly income of each migrant worker in the U.S.

He emphasized that the percentage is significant as migrants in the country are considered poor.

In terms of Ecuador, Terry said that the remittances could reach $2.5 billion, 9% higher than the $2.3 billion reported by the central bank last year.

The remittances are the second-highest income earner for Ecuador, following oil exports.

The study was presented during the IX Inter-American Forum on Micro Enterprise that the IDB is holding in Quito.

-By Mercedes Alvaro, Dow Jones Newswires; 5939-9728-653; mercedes.alvaro@dowjones.com