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

The Salvadoran government is calculating the impact of the recent increase in the interbank rate announced by the United States Federal Reserve on family transfers.

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

Economy Minister Maria Luisa Heim expressed some concern about the future, noting that exports and remittances are key pillars of the national economy.

“Because there is an increase in interest rates, we could see deflation in investment, fewer jobs for Salvadorans, and that could mean fewer transfers to El Salvador,” Heim said.

Oscar Chacon, director of the organization that advocates for the rights of immigrants Alianza America, noted that it is too early to predict the behavior of remittances.

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

“I think we don’t know for sure, but we can say that based on past experiences, it’s very likely that people will continue to find ways to continue to help their families at at least the same rate as they have done in the past,” Chun explained.

Organizations advocating for immigrants report that in the United States there are approximately 200,000 Salvadorans covered by TPS, who have work permits valid through December.

This part retains the interest of sending money for a reserve in the event that a permanent extension of their current position is not achieved.

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Aileen Morales

"Beer nerd. Food fanatic. Alcohol scholar. Tv practitioner. Writer. Troublemaker. Falls down a lot."

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