That’s not so much of a problem for Cook Islanders: Financial Supervisory Commissioner Louise Wittwer says “remittances are insignificant here”.
A 2012 study showed Cook Islands households in Australia sent home an average $3951 a year – and that is thought to have declined since then.
However, remittances are an issue for the families of expat workers, some of whom rely on money transferred through the banks or wired home from the Western Union offices in Avarua and Muri.
Many expat workers send a portion of their income home to assist their families. A Fijian national who previously sent home $200 a week to assist with his siblings’ school fees and parents’ mortgage payments says he’s had to stop doing that.
Because of tourism grinding to a halt in the Covid-19 shutdown, he is one of many Cook Islands and expat workers who have suffered a massive drop in his earnings. He now collects only $200 a week.
“I am on a strict budget and can only transfer $50 per week, but I do understand that the virus pandemic has affected people globally, not just us here,” he said.
The World Bank projects a 13 per cent drop due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable in an economic crisis.
It says remittances relieve poverty in lower and middle-income countries, improve nutritional outcomes, are linked to higher spending on education, and reduce child labour in needy households.
The loss of this money will affect the ability for families to send younger children to school, as more of their finances will be directed to solve food shortages and immediate needs of their livelihoods.
“Remittances are a vital source of income for developing countries,” said World Bank Group president David Malpass. “The ongoing economic recession caused by Covid-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies.”
Cook Islands has no official or unofficial estimates of international remittances; the balance of payments statistics showed no data on private income transfers from abroad in any form.
Meanwhile, Wittwer has expressed confidence in the stability and integrity of the country’s banking sector to ride out the Covid-19 crisis and continue to serve its Cook Islands customers as they need. “The banking sector is sound,” she stated.
“Cook Islanders can feel assured that their money is safe in the bank, and that the banks are helping those Cook Islanders with their loans or financing as they might need.”