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Remittances have slowly but surely become an important feature of global financial flows and arguably a vital one for large parts of the world’s population, for whom remittances are a source of funds used for staple foods, health care, and schooling. Several remittance-related indicators are part of the UN Sustainable Development Goals (SDGs), and there has been much cheerleading for remittances among development professionals (Kapur 2004). The volumes are sizable, both in absolute and in relative terms. Remittances reached a record USD 554 billion in 2019, making them a key feature of global finance. Data from the World Bank shows that for low- and middle-income countries, not only do remittances far exceed foreign aid but they have now also overtaken foreign direct investment flows (Ratha et al. 2020). So what happens when a global pandemic strikes? In the spring of 2020, the World Bank predicted a 20 percent drop in flows for the year. By autumn 2020, this prediction was revised to a little above a 14 percent drop, spread over 2020 and 2021 (World Bank Group and the Global Knowledge Partnership on Migration and Development 2020), taking into account the effects of both the pandemic and persistently low oil prices. In receiving countries like Mexico, Pakistan, and Bangladesh, remittance volumes actually increased in the third quarter of 2020. So the pandemic has not led to something quite as straightforward as a drop. The picture is one of challenges but also continuity and resilience.
Remittances have faced three sets of significant challenges. The first two are directly linked to the pandemic and are about volume and physical access. Historically, remittances have buoyed economies experiencing serious downturns, but this time the crisis is global, and both sending and receiving economies are under stress. The migrants whose labor is the source of remittance funds have suffered job losses and have experienced restricted access to other payments as they are often workers with only limited social security protection. These circumstances have severely reduced the amounts available for wiring. Second, the physical requirements of remittance flows have been affected by the pandemic and lockdowns, from restrictions based on definitions of what constitutes an “essential service,” which kept many offices closed for a lengthy period and affected by curfews, to...