The Central Bank of Nicaragua acknowledged the “weight” that remittances sent from abroad have on the economic growth of the country, the newspaper Confidencial reported on Tuesday.
Confidencial, citing BCN’s 2024 annual report reviewed by the newspaper, reported that the institution “acknowledged in various ways” the importance that family remittances sent from abroad had in Nicaragua’s economic dynamism.
According to the World Bank, Nicaragua is the third-most remittance-dependent economy in the world, surpassed only by Tajikistan and Tonga. In recent years, Nicaragua has experienced a dramatic surge in the amount of remittances received, with an overwhelming majority of the remittances originating from the United States.
Confidencial detailed that it took Nicaragua nine years (2012-2021) to go from $1.014 billion in remittances received to $2.147 billion, but then in 2022 it “grew almost as much as in those previous nine years,” followed by $4.660 billion in 2023 and a record-breaking $5.243 billion during 2024 — which represented over 27 percent of its entire Gross Domestic Product (GPD).
“The 2024 Annual Report clearly shows this relationship between remittances and GDP: if the 4.4 percent economic growth in 2023 (according to the revised data) occurred hand-in-hand with a 44.5 percent growth in remittances received, that of 2024 marks a decline: the 3.6 percent increase in GDP was accompanied by an increase of only 12.5% in remittances,” the report read.
Experts have repeatedly warned that the communist regime of dictator Daniel Ortega benefited both economically and politically from encouraging the mass migration of Nicaraguans out of their country. The experts explained that the migrants ultimately send remittances back to their friends and families, which in turn leads to an increase in local economic activity and an increase in the regime’s tax revenue while also calming “social unrest” by staving off poverty through the bolstered consumption generated by remittances.
Confidencial stressed in its report that, according to economists consulted by the newspaper, there would be a recession in Nicaragua without remittances.
“Nicaragua’s economic growth and development will be real when it depends less on remittances,” economist Marco Aurelio Peña told Confidencial. “Nicaragua is highly dependent on these remittances.”
“It is not an economy that develops by virtue of the productivity of its factors of production within the national territory,” he continued. “The remittance is money generated by Nicaraguans outside the national territory, in a labor market that is not Nicaraguan.”
Confidencial also cited Manuel Orozco, a specialist in migration issues at the Inter-American Dialogue, who stressed last week that Nicaragua’s domestic economic dynamism “is not growing; growth occurs in dependence on the exterior.”
“Without remittances, the economic crisis would last all this time. Even the collection of taxes from remittance income accounts for a lot of the large income revenue,” Orozco said.
“Migrants support almost a third of the national income, that is, they contribute a third of that growth,” he added. “Without monetary remittances, since there would not be as much purchasing power, the social inequality gap would worsen and there would be many more people in a situation of economic vulnerability.”
An unnamed Nicaraguan economist, who spoke to Confidencial from abroad on condition of anonymity to protect his family in Nicaragua, said that “there is no doubt” that Nicaragua’s fragile economy would go into recession if it were to lose more than a quarter of its gross domestic product as “there would be no real way to replace it in the short or medium term.”
Confidencial stated that although it is too early to know what will happen to the Nicaraguan economy in 2025, Ovidio Reyes, head of BCN’s board of directors, reportedly said that Nicaragua’s GDP could grow between 3.5 and 4.5 percent.
The newspaper pointed out that there is “one fact that economists are watching with interest,” as the amount of remittances received by Nicaragua in 2025 so far at of the end of February amounted to $909 million, $168 million more than the $741 million received during that same period in 2024 — which translates to a 22.6 percent increase in remittances received.
Similarly, Nicaraguan economists who spoke with the local newspaper La Prensa in late March asserted that the Central American nation will experience a reduction in the amount of remittances received as a result of the termination of the “Humanitarian Parole,” a program launched by the administration of former U.S. President Joe Biden in 2023 that allowed hundreds of thousands of Cubans, Haitians, Nicaraguans, and Venezuelans to legally enter the United States and live and work for an extended period of time. It is estimated that over 93,000 of all migrants who entered through the program are Nicaraguan nationals.
Christian K. Caruzo is a Venezuelan writer and documents life under socialism. You can follow him on Twitter here.
