This report by the Inter-American Dialogue’s Migration, Remittances and Development Program offers an overview of how foreign currency regulations affect money transfers to Venezuela in addition to describing and explaining Venezuelan migrant remitting behavior in six migrant host countries. It also provides an estimate of the aggregate volume of remittances sent to Venezuela.
The first section details how policies regulating local and international currencies have evolved under the Maduro administration, including those related to currency devaluation, the creation of parallel currency regimes, and the impact of the sovereign bolivar on money transfers.
The second section provides a comparative overview of remitting behavior, offering a profile of those who remit to Venezuela, how much they send, and many households receive remittances.
Finally, the last section estimates the volume of remittance flows to Venezuela based on remitting behavior and data on the propensity to remit. We find that these flows will grow considerably in the near future and will make an important contribution to the country’s households’ needs.
Key findings on Money Transfers to Venezuela:
- The flow of remittances to Venezuela is the second largest source of foreign earnings after oil.
- We estimate that remittance flows are reaching over 2 million recipient households, which equates to more than 35 percent of the country’s households.
- Due to the macroeconomic crisis, foreign currency controls have taken over any basic criteria for regulating money transfers and has become the primary factor determining how (and if) money transfer companies operate in the country.
- Under the Maduro administration, the increasingly restrictive foreign exchange environment forced buyers and sellers to use parallel, official and unofficial markets offering less favorable rates. One of the consequences was that money transfer operators were unable to offer attractive remittance payments in local currency or US dollars.
- In 2019, the administration introduced changes that allowed local banks and foreign exchange houses to perform more foreign exchange operations. This has resulted in an increase in both the number of money transfer companies entering the country as well as paying entities offering payment services.
- This context of evolving foreign exchange regimes has impacted remittance transfers to Venezuela. Compared to other countries in Latin America and the Caribbean, a smaller share of Venezuela’s emigrant population is sending money home due to a lack of prevailing payment systems, lack of regular access to a trusted money carrier, and/or the fact that money is not as practical as “in kind” goods.