a

GAO

United States Government Accountability Office

Report to the Committee on Banking, 

Housing, and Urban Affairs, U.S. Senate

March 2006 INTERNATIONAL 

REMITTANCES

Different Estimation 

Methodologies 

Produce Different 

Results

GAO-06-210
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 2006

INTERNATIONAL REMITTANCES

Different Estimation Methodologies 

Highlights of GAO-06-210, a report to Produce Different Results 

Committee on Banking, Housing, and 

Urban Affairs, U.S. Senate 

Remittances are the personal funds 

that the foreign born send to their 

home countries. In recent years, 

estimated remittances have grown 

dramatically, and policy makers 

have increased their attention to 

these flows. Organizations use 

various methodologies to estimate 

remittance flows, which result in a

range of estimates. In 2004, the 

Group of Eight (G8) leaders 

emphasized the need for improved

statistical data on remittances.

In light of the growing volume of 

remittances and the differences in 

estimates, GAO examined (1) the 

methodology that the Bureau of

Economic Analysis (BEA) uses to 

develop the official U.S. estimate, 

(2) methodologies that other 

countries and multilateral 

organizations use to estimate 

remittances, and (3) international 

efforts to improve the collection 

and reporting of remittance data. 

What GAO Recommends

While GAO makes no

recommendations at this time,

GAO observes estimates of the 

amount of remittances from the 

United States differ. More accurate

remittance estimates could help 

certain U.S. agencies make better

decisions. Therefore, policy makers 

may want to consider exploring 

options for improving the accuracy 

of U.S. remittance statistics. We 

received written comments on a 

draft of this report from the 

Departments of the Treasury and 

Commerce. They both generally

agreed with our observations. 

BEA uses a model to estimate remittances from the United States and, 

although the methodology has some strengths, the accuracy of BEA’s 

estimate is uncertain for several reasons. BEA estimated remittances for 

2003 at $28.2 billion; its model used data on the number of foreign-born 

residents, their income, the proportion of income that is remitted, and 

other demographic data. The strengths of BEA’s methodology are that, in 

theory, it estimates remittances sent through formal and informal 

channels. It also is low-cost because it uses existing data on the foreign 

born. However, BEA’s methodology was limited by the quality and 

timeliness of the data, particularly on the portion of income likely to be

remitted. BEA revised its model in 2005 to use new data sources, but the 

accuracy of its estimates depends on the accuracy of its assumptions 

regarding the remitting behavior of the foreign born and other factors. 

Some central banks and the Inter-American Development Bank (IDB) use 

different methodologies to provide estimates of remittances from the United 

States that vary significantly. For example, Mexico’s central bank estimates 

remittances primarily by collecting data from money transmitters. The IDB 

used a variety of sources, such as surveys of remittance senders and 

receivers, and information from remittance transfer companies and central 

banks, to estimate remittances from the United States to Latin America to be 

$30.6 billion in 2003. We aggregated BEA’s data to estimate remittances to 

this region to be $17.9 billion. 

BEA is an active participant in recent international efforts to improve 

remittance statistics. The World Bank and others established a remittances 

working group in 2005, which delegated tasks to other international groups 

to (1) clarify the definition of remittances and (2) provide guidance on how 

to collect and estimate remittances. BEA participated in the first group, 

which recommended a new definition of remittances. The second group will 

have its first meeting in June 2006. 

Regional Destination of Remittances Sent from the United States, 2003 

Caribbean

Europe Eastern

Asia

0 2 4 6 8 10 12

South

America

Africa

North

America

Oceania

Dollars in billions

Central

America Mexico

Source: GAO estimates based on underlying BEA tabulations.

Latin

America

and the

Caribbean

Philippines

www.gao.gov/cgi-bin/getrpt?GAO-06-210.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Yvonne Jones 

at (202) 512-2717 or jonesy@gao.gov. 
Page i GAO-06-210 International Remittances

Contents

Letter 1

Results in Brief 3

Background 6

BEA Uses a Model to Estimate Remittances Sent from the United 

States, but the Accuracy of BEA’s Estimate Is Uncertain for 

Several Reasons 11

Other Entities Use Different Estimation Methodologies Resulting in 

a Range of Remittance Estimates 15

BEA Is Involved in International Efforts to Improve the Collection 

and Reporting of Remittance Information 20

Observations 23

Agency Comments and Our Evaluation 24

Appendixes

Appendix I: Objectives, Scope, and Methodology 27

Appendix II: BEA’s Methodology for Estimating Remittances 30

Appendix III: Analysis of the Sensitivity of BEA’s Estimate to 

Judgmentally Determined Variables on the Remitting 

Behavior of the Foreign Born 36

Appendix IV: IDB Remittance Estimation Methodology 38

Appendix V: Comments from the Department of Commerce 42

GAO’s Comments 49

Appendix VI: Comments from the Department of the Treasury 52

Appendix VII: GAO Contact and Staff Acknowledgments 53

Tables Table 1: Remittances as a Percentage of Various Economic 

Indicators for Selected Countries for 2003 7

Table 2: Per Capita Remittances from the United States Compared 

to Minimum Wages for Selected Countries, 2003 8

Table 3: Comparison of BEA and IDB Estimates of Remittances to 

21 Latin American and Caribbean Countries, 2003 20

Table 4: Regional and Sub-Regional Remittances in 2003 as 

Estimated Using BEA’s Underlying Country-by-Country 

Tabulations 33

Table 5: Change in the Estimate of Remittances by Excluding Those 

in the United States for Less Than 1 Year 35
Contents

Page ii GAO-06-210 International Remittances

Table 6: Range of Estimates in Regional Breakdown of BEA 

Estimate of Remittances in 2003 (20,000 trials) 37

Table 7: IDB/MIF Estimates of Remittances to Latin American and 

Caribbean Countries, 2003 39

Table 8: Percentage Difference between BEA and IDB Estimates of 

Remittances from the United States to Selected Latin 

American and Caribbean Countries, 2003 41

Figures Figure 1: Largest Sources of Remittances, 1990-2004 6

Figure 2: Regional Destination of Remittances Sent from the 

United States, 2003 10

Figure 3: BEA’s Methodology for Estimating Remittances, 2005 13

Figure 4: Differences between Global Remittance Credits and 

Debits, 1990-2004 21

Figure 5: BEA Values for the Percentage of the Adult Foreign-Born 

Population in the United States That Send 

Remittances 31

Figure 6: Percentage of Income Remitted by Category 32

Figure 7: IDB Methodology for Estimating Remittances from the 

United States to Latin America, 2003 38

Abbreviations

ACS American Community Survey

BEA Bureau of Economic Analysis

CPS Current Population Survey 

G8 Group of Eight

IRCA Immigration Reform and Control Act of 1986

IDB Inter-American Development Bank

IMF International Monetary Fund

LPS Legalized Population Survey

MIF Multilateral Investment Fund

OFW Overseas Filipino Workers

TSG Technical Subgroup on the Movement of Natural Persons

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Page 1 GAO-06-210 International Remittances

United States Government Accountability Office

Washington, D.C. 20548

A

March 28, 2006 Letr

The Honorable Richard C. Shelby

Chairman

The Honorable Paul S. Sarbanes

Ranking Minority Member

Committee on Banking, Housing,

and Urban Affairs

United States Senate

The United States is the largest remittance-sending country in the world, 

with a majority of funds sent to Latin America and the Caribbean, and 

substantial amounts sent to Asia and Africa. In recent years, remittances 

have received growing attention from policy makers in both developed and 

developing countries because these flows serve as an important financial 

source for some countries. According to the World Bank, remittances 

received by developing countries were estimated to have been $167 billion 

in 2005, up 73 percent from 2001; however, given that the extent of 

unrecorded flows through formal and informal channels is unknown, 

actual remittance flows may be much higher. World Bank data show that 

remittance growth has outpaced private capital flows and official 

development assistance over the last decade. When combined with official 

U.S. development assistance, these flows significantly increase the 

percentage of U.S. gross national income sent to developing countries.

In 2004, the Group of Eight (G8) leaders emphasized the importance of 

remittances and the need for improved statistical data on them.1

 In the 

United States, some agencies have also expressed a need for improved 

remittance estimates. For example, the Department of the Treasury 

(Treasury) conducts bilateral outreach programs, and Treasury officials 

believe improved remittance statistics could help it better target its 

program to improve the financial infrastructure in countries that receive a 

large amount of remittances from the United States. In 2004, the Federal 

Reserve established a mechanism to facilitate the provision of low-cost 

remittances to Mexico through its automated clearinghouse; improved 

1

The G8 is a group of eight countries: Canada, France, Germany, Italy, Japan, Russia, the 

United Kingdom, and the United States. The G8 summit brings the heads of state or 

government of these countries together on an annual basis to deal with the major economic 

and political issues facing their domestic societies and the international community as a 

whole. Representatives from the European Union are also involved in the meetings.
Page 2 GAO-06-210 International Remittances

remittance statistics could help it identify other countries that could 

benefit from its low-cost remittance product. 

Different organizations use various methods to estimate remittance flows, 

which result in a range of estimates. In light of the volume of remittances 

and the differences in estimates, you asked us to review the methodologies 

used to estimate remittances from the United States.2

 Specifically, we 

examined (1) the methodology that the Department of Commerce’s 

(Commerce) Bureau of Economic Analysis (BEA) uses to develop the 

official U.S. estimates of remittances from the United States, (2) 

methodologies other countries and multilateral institutions use to estimate 

remittances from the United States, and (3) international efforts to improve 

the collection and reporting of remittance data. In addition, we recently 

issued a report that focused on remittance products, costs, and consumer 

disclosures for remittances sent from the United States to other countries.3

To address these objectives, we met with officials at BEA and the U.S. 

Census Bureau. We also reviewed documentation that described BEA’s 

methodology prior to 2005 and obtained documentation from BEA 

describing their revised methodology, which was implemented in July 2005. 

We met with officials from the Inter-American Development Bank (IDB), 

the Inter-American Dialogue, and the Mexican and Philippine central banks 

to obtain their estimates on remittances from the United States. We also 

obtained descriptions of the methodologies they used to estimate 

remittances, the reasons for using these methodologies, and the potential 

advantages and disadvantages of their use. We primarily report data for 

2003 because that is a time period for which BEA has statistically reliable 

data and because data for more recent time periods are preliminary. As a 

matter of consistency we use this period to report on the other entities as 

well. We do, however, report more recent data when available. We met with 

officials from BEA, Treasury, the Department of State, the U.S. Agency for 

International Development, the International Monetary Fund (IMF), the 

World Bank, and IDB to obtain information on international efforts to 

improve remittance estimates. Appendix I provides additional details on 

our scope and methodology. We conducted our work from December 2004 

2

In this report, we use “remittances” to refer to funds transferred by foreign-born individuals 

to their home countries from the United States. 

3

GAO, International Remittances: Information on Products, Costs, and Consumer 

Disclosures, GA0-06-204 (Washington, D.C.: Nov. 17, 2005).
Page 3 GAO-06-210 International Remittances

to March 2006 in accordance with generally accepted government auditing 

standards.

Results in Brief BEA uses a model to estimate remittances from the United States and, 

although this methodology has some strengths, the accuracy of BEA’s 

remittance estimate is uncertain for several reasons. BEA estimated 

remittances for 2003 at $28.2 billion; its model used data on the number of 

foreign-born residents in the United States, their income, the proportion of 

income that is remitted, and other demographic data.4

 However, BEA’s 

methodology was limited by the quality and timeliness of data available to 

BEA, particularly the data on the portion of income that is likely to be 

remitted. BEA revised its model in 2005 to use new data sources from the 

Bureau of the Census on the demographics of the foreign born and more 

recent studies on the remitting behavior of the foreign born. It then revised 

its estimates back to 1991 using this new approach, which resulted in an 

increase in estimated remittances for all years. Two of the strengths of 

BEA’s methodology are that, first, in theory, it estimates remittances sent 

through both formal and informal systems; and, second, it is low-cost to 

BEA because it uses existing data on the foreign born.5

 The accuracy of 

BEA’s estimate, however, depends on the accuracy of its assumptions. For 

example, BEA’s revised model assumes that the proportion of income 

remitted is higher for U.S. residents from developing countries closer to the 

United States and that the percentage of the foreign born that remit is the 

same for all migrants from all countries, but varies depending on how long 

they have been in the United States. Further, it is not possible to directly 

link the parameters BEA uses to capture the remitting behavior of the 

foreign born to the sources cited. Our analysis of BEA’s estimates also 

found that they are particularly affected by the assumptions BEA used on 

the percentage of income remitted and the percent of foreign born that 

remit. We used a statistical technique that repeatedly and randomly 

4

We found this number to actually be $28.03 billion, which BEA agreed to correct in its next 

publication to be released in June 2006.

5

Formal systems are characterized by participation in the regulated financial sector. Such 

participation means that the institution involved in the money transfer is supervised by 

government agencies and laws that determine their creation, characteristics, operations, 

and closure. Formal systems typically include banks, credit unions, money transfer 

operators (including other wire transfer services), and postal services. Informal systems 

include those that operate outside of the regulated financial sector, including courier 

services and hawalas. Hawalas are one type of informal value transfer system often used in 

places where formal financial transactions are unavailable, expensive, or unreliable.
Page 4 GAO-06-210 International Remittances

samples from underlying data to obtain a range for 90 percent of possible 

estimates and determined that estimated remittances from the United 

States could range in value from $17.3 billion to $35.9 billion. Finally, BEA’s 

remittance estimate includes remittances sent by some of the foreign born 

who have been in the United States for less than one year, who, according 

to BEA’s definition of remittances, should not be included. 

Some central banks and the IDB use a variety of methodologies and data 

sources to provide estimates of remittances from the United States that 

vary significantly. For example, Mexico’s central bank estimates 

remittances by collecting data on the amount remitted through money 

transmitters and by surveying Mexican nationals returning to the country at 

the U.S.-Mexico border. The Philippine central bank estimates remittances 

by tracking the income of its residents working abroad that is channeled 

into banks in the Philippines and netting out living expenses to estimate 

remittances. The primary advantage of these methodologies is that they 

capture actual or projected estimates of remittance flows. Unlike BEA’s 

methodology, however, these methods are limited in their ability to capture 

remittances made through the informal sector. The IDB, which provides 

financing for economic, social, and institutional development projects for 

Latin America and the Caribbean, estimates remittances on a regional 

basis. The IDB developed its own estimate of remittances from the United 

States to Latin America and the Caribbean using a survey of the annual 

remittance amounts sent from Latin American residents of the United 

States to their countries of origin. In addition, the IDB has conducted 

surveys of residents in countries in the region who receive remittances and 

compared their estimates with those of central banks in these countries. 

These in-country surveys also have allowed IDB to estimate the amount of 

remittances these countries receive from the United States. Such survey 

efforts can provide statistically valid estimates but can be costly to 

implement and rely on the willingness of respondents to share information. 

The remittance estimates generated by the central banks, IDB, and BEA 

vary significantly from one another. For example, in 2003, the IDB 

estimated that $30.1 billion was remitted from the United States to Latin 

America and the Caribbean. Although BEA does not publish remittance 

estimates by region, we aggregated BEA’s country-by-country tabulations 

to estimate remittances to Latin America and the Caribbean and found this 

to be $17.9 billion. 

BEA is an active participant in international efforts to improve remittance 

statistics, but these initiatives, which began in 2005, are in the early stages 

and have not yet produced results that make it easier to reconcile 
Page 5 GAO-06-210 International Remittances

remittance estimates. Currently, countries and other entities that estimate 

remittances use a variety of methods such as model estimation, bank 

reporting systems, or surveys of remitters; each method has strengths and 

limitations as we discussed earlier. Further, few countries seek to reconcile 

their estimates with other countries, and others are unable to devote 

significant resources to collecting data on remittances. For these reasons, 

the heads of the G8 countries at the 2004 G8 summit called upon 

international financial institutions such as the World Bank and IMF to lead 

a global effort to improve remittance statistics. As part of this effort, the 

World Bank and IMF hosted a meeting in January 2005 and proposed that 

two different groups undertake an objective: (1) to clarify the definition of 

remittances, and (2) to provide guidance on how to collect and estimate 

remittance flows. In the first case, the United Nations Technical Subgroup 

on the Movement of Natural Persons, of which BEA is a member, 

recommended that “personal transfers” be defined to include personal 

transfers received by resident households from nonresident households. 

This definition was discussed at a June 2005 meeting of the IMF Balance of 

Payments Committee and is expected to appear in the updated 

international statistical standards that are scheduled to take effect in 2008. 

In the second case, Eurostat, the statistical agency of the European Union, 

agreed to host and jointly organize a meeting in June 2006 of a new group 

called the Luxembourg Group, to develop more detailed guidance for 

compiling remittance data. As of March 2006, BEA had not been formally 

asked to participate on this group but expected that it would be. No date 

has been set for the group to complete its work.

Although we make no recommendations at this time, we observe that 

estimates of the amount of remittances from the United States differ based 

on different methodologies. More accurate remittance estimates could help 

certain U.S. agencies such as Treasury make better decisions on how much 

(and what kind of) development assistance to provide, and U.S. companies 

could make better decisions regarding foreign direct investment. 

Therefore, policy makers may want to consider exploring options for 

improving the accuracy of U.S. remittance statistics.

We provided a draft copy of this report to Treasury and Commerce for their 

review and comment. Treasury concurred with all of our observations, 

while Commerce concurred with most of them. Commerce also provided a 

number of additional specific comments. Commerce’s comments and our 

response are discussed in appendix V. 
Page 6 GAO-06-210 International Remittances

Background Remittances have become an important source of financial flows to 

developing regions and have been resilient in the face of economic 

downturns. These funds can be used for various purposes, including basic 

consumption, housing, education, and small business formation; they can 

also promote financial development in cash-based economies. Because of 

the importance of these flows to many developing countries, in recent 

years, countries that send remittances and receive remittances, along with 

international organizations, have expressed increasing interest in 

understanding immigrants’ remittance practices. 

According to the 2000 Census, the 1990s saw the largest increase in the 

foreign-born population that entered the United States, compared with any 

other 10-year period. IMF figures show that in 2004, immigrants in the 

United States sent over $29.9 billion in remittances, more than any other 

country. Saudi Arabia was the second largest remittance-sending country; 

however, as shown in figure 1, the volume of remittances from Saudi Arabia 

has been falling since 1994, while that from the United States has been 

steadily increasing. 

Figure 1: Largest Sources of Remittances, 1990-2004 

France Germany

Switzerland

Saudi Arabia

United States

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Source: IMF balance of payment statistics.

Dollars (constant) in billions

0

5

10

15

20

25

30
Page 7 GAO-06-210 International Remittances

For some countries, remittances constitute the single largest source of 

foreign currency and can often rival direct foreign investment in amounts. 

World Bank data show that for selected countries remittances exceed the 

flows of official development assistance and foreign direct investment and 

are relatively large compared to exports and gross national income—

particularly for the Dominican Republic and the Philippines (see table 1). 

Table 1: Remittances as a Percentage of Various Economic Indicators for Selected Countries for 2003

Source: GAO analysis of World Bank data.

Notes: Data are derived from remittance estimates reported in the World Bank’s Global Development 

Finance. “Reserves” are total foreign exchange reserves, excluding gold. The countries selected are 

the top recipients of remittances in their respective regions.

Remittances are also very important for those households that receive 

them. Table 2 shows the minimum wage per month for several developing 

countries as well as our computation of the 2003 per capita remittances 

from the United States per month. As can be seen from this table, 

remittances received by households on a monthly basis tend to 

substantially exceed the monthly minimum wage for these countries. For 

example, per capita, remittances to households in the Philippines are 

almost five times the monthly minimum wage a Filipino worker would 

make in the retail and service sector.

Country

Remittances as a 

percentage of 

exports of goods and 

services

Remittances as a 

percentage of 

official 

development 

assistance

Remittances as a 

percentage of 

foreign direct 

investment net 

inflows

Remittances as a 

percentage of 

gross national 

income

Remittances as a 

percentage of 

foreign reserves

Brazil 3.4% 953.1% 27.8% 0.6% 5.7%

Colombia 18.3 383.5 176.2 3.8 28.5

Dominican Republic 27.1 3371.5 750.2 12.5 918.4

Egypt 16.6 331.3 1247.3 3.2 21.8

India 19.2 1847.3 407.7 3.0 17.6

Mexico 8.2 14147.9 135.3 2.3 24.8

Morocco 25.6 691.3 158.6 9.2 26.1

Nigeria 5.9 528.0 139.8 3.5 23.5

Philippines 20.2 1068.9 2470.2 9.1 57.7

Poland 3.3 194.2 56.1 1.1 7.1

World Total 1.8 223.5 30.2 0.5 5.6
Page 8 GAO-06-210 International Remittances

Table 2: Per Capita Remittances from the United States Compared to Minimum Wages for Selected Countries, 2003

Source: GAO calculations using BEA’s underlying tabulations for remittances from the United States in 2003 and data from the 

International Labor Organization’s minimum wages database.

Note: The minimum wage in developing countries generally applies to urban workers.

The IMF collects and publishes official estimates of remittances sent from 

its member countries, including the United States, as part of its balance of 

payments statistics. The IMF currently reports the sums of “workers’ 

remittances” and “compensation of employees” as the best measure of total 

personal remittances. According to IMF, “workers’ remittances” are 

transfers by migrants who are employed in countries other than their birth 

countries and are considered residents there; “compensation of 

employees” is made up of wages, salaries, and other benefits earned by 

individuals in economies other than those in which they are residents, for 

work performed or paid for by residents of those economies. As a result, 

compensation of employees applies only to individuals away from their 

place of origin for less than a year.6

In the United States, no U.S. government agency tracks the flow of 

remittances through the payment system. Because of its role in compiling 

balance of payments statistics, BEA provides to the IMF official estimates 

of U.S. remittance inflows and outflows. BEA publishes remittance 

estimates in a different manner than reported in the IMF’s balance of 

payment statistics. BEA includes estimates of remittances by the foreignborn population residing in the United States to households abroad in the 

published item called “private remittances and other transfers.” This 

Country

Minimum wage per 

month (in U.S. 

dollars)

Per capita 

remittances from the 

United States per 

month (in U.S. 

dollars)

Percentage of minimum 

wage per month to per 

capita remittances from 

the United States per 

month 

Month of income at the 

minimum wage that the per 

capita remittance from the 

United States would replace 

(in months)

Bangladesh $30 $137 457 4.6

El Salvador 49 189 386 3.9

Ghana 26 177 681 6.8

Philippines 38 178 468 4.7

Romania 84 200 239 2.4

6

This report only focuses on personal transfers, which we are calling remittances. We did 

not focus on compensation of employees because that represents labor income and a 

potential, but not an actual, flow of funds sent across a border.
Page 9 GAO-06-210 International Remittances

category is broader than the international definition of remittances, as it 

also includes payments or receipts of nongovernmental U.S. entities and 

foreign entities. Also, BEA publishes its estimates of “private remittances 

and other transfers” in its tables of international transactions accounts, 

defining it as the difference between transfers to and transfers from the 

United States. However, BEA provides to the IMF an estimate of 

remittances that flow from the United States to the world based on its 

underlying country-by-country tabulations. Until this year, BEA only 

provided this estimate to the IMF. For the first time, BEA published the 

estimate it provided to the IMF, as well as revised estimates back to 1991, in 

the July 2005 Survey of Current Business.

7

The majority of remittances from the United States flow to Latin America, 

which includes Mexico, Central America, South America, and the 

Caribbean (see fig. 2). A large amount also flows to Asia, including the 

Philippines. 

7

The Survey of Current Business is the monthly journal of the BEA. BEA describes and 

explains important features of BEA's economic accounts in this journal.
Page 10 GAO-06-210 International Remittances

Figure 2: Regional Destination of Remittances Sent from the United States, 2003

Note: The shaded parts of the bar signify those countries, or in the case of Europe, regions, that make 

up the large majority of remittances received from the United States in each location.

There are many obstacles to accurately estimating remittances. First, many 

transactions may go through unregulated informal channels from which 

information cannot be garnered for inclusion in official estimates. While 

there are no official estimates, some experts believe that a large amount of 

remittances flow through this system, with market observers estimating 

that informal flows can range from 50 percent to 250 percent of recorded 

remittance flows. Second, countries do not always report remittance 

estimates or do not report them according to commonly held IMF 

definitions, which exclude transfers by the foreign born who have been incountry for less than one year. Variations in data compilation procedures 

occur partially due to different interpretations of definitions and 

classifications. In most cases, however, data weaknesses and omissions are 

Central

America Mexico

Source: GAO estimates based on underlying Bureau of Economic Analysis tabulations.

0 2 4 6 8 10 12

Caribbean

South

America

Africa

North

America

Oceania

Dollars in billions

Europe Eastern

Asia Philippines

Latin

America

and the

Caribbean
Page 11 GAO-06-210 International Remittances

due to difficulties in obtaining the necessary data. For example, the World 

Bank and other international organizations have indicated that developing 

countries with large remittance inflows often have a relatively weak 

capacity and limited resources, even though remittances are a large item in 

their balance of payments statistics. Countries with large remittance 

outflows often give lower priority to improvements in remittance statistics 

because they are a relatively small item in their balance of payments 

statistics, according to the World Bank and other international 

organizations. 

BEA Uses a Model to 

Estimate Remittances 

Sent from the United 

States, but the 

Accuracy of BEA’s 

Estimate Is Uncertain 

for Several Reasons

BEA uses a model to estimate remittances (which it calls “personal 

transfers”) from the United States. Although BEA’s methodology has some 

strengths, the accuracy of BEA’s estimate is uncertain for a number of 

reasons. BEA estimated that remittances from the United States in 2003 

were $28.2 billion. To arrive at this estimate, BEA used a model that 

estimates remittances based on demographic information on the foreign 

born, such as their total number, income, and the percentage of income 

they remitted. In 2005, BEA revised its model for estimating remittances 

and incorporated more current Census Bureau data on the size and 

demographic characteristics of the foreign-born population of the United 

States; however, the model is limited particularly by lack of current data on 

the proportion of income immigrants were likely to remit and the 

assumptions BEA makes about its data. In addition, BEA uses the more 

current census data in a way that may double-count some immigrants.

BEA’s Methodology Relies 

on Existing Data and BEA’s 

Assumptions to Estimate 

Remittances

Prior to 2005, to derive its annual estimate of remittances sent from the 

United States, BEA developed a model comprised of three factors—the 

number of the foreign born, their family income, and the proportion of 

income remitted. The count of the foreign born, their income, and other 

demographic characteristics were obtained from information aggregated 

annually from U.S. Bureau of the Census surveys. These data were arrayed 

by length of residency in the United States and family types linked to 

marital status (e.g., married foreign head of households, native-born 

married to foreign-born spouse, and unmarried individuals). The remitter 

was assumed to be the household head. BEA extrapolated the foreign-born 
Page 12 GAO-06-210 International Remittances

population derived from the 1990 Decennial Census using indicators, 

including the Census Bureau’s annual Current Population Survey (CPS).8

To estimate the proportion of income immigrants were likely to remit, BEA 

relied on the 1989 Legalized Population Survey (LPS1) and the 1992 

Legalized Population Follow-Up Survey (LPS2), which were conducted as a 

result of the Immigration Reform and Control Act of 1986 (IRCA).9

 BEA 

then combined the information obtained from LPS1 and LPS2 with 

demographic and income information obtained from the CPS to arrive at 

the total amount of remittances sent from the United States. For a more 

detailed description of BEA’s methodology for estimating remittances, see 

appendix II.

In 2005, BEA made several revisions to its methodology to include more 

recent census data, and recent studies on the foreign born and their 

remitting behaviors. First, BEA incorporated data on the foreign-born 

population and their income from the 2000 Census and the American 

Community Survey (ACS), which is available annually, unlike decennial 

census data, and thus requires less extrapolation of population and income 

trends.10 According to BEA, these data will enable a better breakdown of 

the foreign-born population by all relevant characteristics on an annual 

basis. The ACS data on the number and income of the adult foreign-born 

population are arrayed by their gender, duration of stay, presence or 

absence of children, and per capita income of recipient countries and 

proximity to the United States. BEA then used its own judgment to 

determine the percentage of the adult foreign-born population that remits 

and the probability of remitting from information gathered from various 

academic studies published between 1995 and 2004, as well as LPS1 and 

8

The CPS is a monthly survey of about 50,000 households conducted by the Bureau of the 

Census for the Bureau of Labor Statistics. The CPS is the primary source of information on 

the labor force characteristics of the U.S. population.

9

Pub. L. No. 99-603, 100 Stat. 3359 (1986).

10ACS is a nationwide survey designed to provide indicators of communities. It will replace 

the “decennial long form” in future censuses and is a critical element in the Census Bureau's 

reengineered 2010 Census. The ACS is conducted every month by mail, telephone, and visits 

from Census Bureau field representatives; it includes approximately three million 

households annually. It is designed to provide estimates of demographic, housing, social, 

and economic characteristics every year for all states; as well as for all cities, counties, 

metropolitan areas, and population groups of 65,000 people or more. 
Page 13 GAO-06-210 International Remittances

LPS2, which BEA used in its earlier model.11 BEA revised its estimates back 

to 1991 using this new approach, which resulted in an increase in estimated 

remittances for all years. Figure 3 shows the data that are included in BEA’s 

model and how the remittance estimate is calculated.

Figure 3: BEA’s Methodology for Estimating Remittances, 2005 

In most cases, BEA provides only a global estimate of remittances and does 

not publish remittance statistics about remittances from the United States 

to individual countries. BEA stated that some data elements are not 

available for some time periods or geographic areas, so it must undertake a 

variety of methods to fill the data gaps in order to produce the underlying 

tabulations needed for an aggregate estimate for the world. BEA cautions 

that disaggregating its estimate for the world is error-prone and expresses 

confidence only in its aggregate estimate. Further, according to BEA, in 

moving from the global estimate to increasingly smaller geographic areas 

or countries, the average errors in the underlying tabulations increase. 

When it estimates remittances for selected regions, it publishes them on a 

net (inflows minus outflows) basis. 

11See Survey of Current Business, July 2005.

Foreignborn

population

Percentage of

foreign-born

population

that remit

x x

Average per

capita income

of foreignborn

population

Percentage

of income

remitted by

those who

remit

Source: BEA.

Population of remitters Per capita remittances

Total

personal x = remittances

Step 1 Step 2 Step 3
Page 14 GAO-06-210 International Remittances

The Accuracy of BEA’s 

Remittances Estimates Is 

Affected by the Quality of 

the Data and the 

Assumptions Used in the 

Methodology

BEA’s approach has several strengths: in theory, it captures both formal and 

informal channels of sending remittances. It is also low-cost because it 

relies on available data and not on eliciting data from a foreign-born 

population that may not have an incentive to provide accurate data. 

However, the accuracy of BEA’s estimate is affected by the quality of the 

data available to BEA. A critical component of the methodology relies on 

information about the remitting behavior (e.g., amount, frequency) of the 

foreign born. Prior to 2005, the primary data available to BEA were the 1989 

LPS1 and the 1992 LPS2; however, these surveys may not have been 

appropriate for use in estimating remittances of all the foreign born 

because they sampled a population participating in a special legalization 

program primarily aimed at Latin American immigrants. The LPS1 and 

LPS2 excluded undocumented aliens, temporary residents who did not 

wish (or were not eligible) for legal status, and legal immigrants who 

became legalized through processes other than IRCA. The survey design 

did not provide a way to more extensively sample immigrant groups more 

likely to remit than others (e.g. the foreign born with less than 10 years of 

residence in the United States). In addition, recent census data show that 

some basic demographic characteristics of the foreign born have changed 

significantly since the LPS1 and LPS2 surveys were done. 

BEA’s revisions to its methodology recognize these changes in the foreign 

born population. In its revision, BEA reviewed a number of academic 

studies to update the findings of the LPS1 and LPS2 and published the 

sources in the July 2005 Survey of Current Business, however, the 

estimates on the proportion of income remitted cannot be directly tracked 

to these source documents. Although this approach is more transparent 

than the prior approach of relying primarily on LPS1 and LPS2, BEA’s 

estimate is still affected by its “judgment” of how it incorporates 

information from the academic studies it is now using, and the assumptions 

it makes in its model. For example, two of BEA’s assumptions are that the 

proportion of income remitted is higher for U.S. residents from developing 

countries than developed countries, and that the percentage of the foreign 

born that remit is the same for all countries and only varies based on how 

long they have been in the United States. Our analysis suggests that the 

final BEA estimates of remittances are affected by these assumptions. We 

used a statistical technique that repeatedly and randomly samples from 

underlying data to obtain the range for 90 percent of possible estimates and 

determined this to be between $17.3 billion and $35.9 billion. See appendix 

III for the analysis we used to determine these ranges. 
Page 15 GAO-06-210 International Remittances

BEA’s Revised Methodology 

Includes Remittances Sent 

by Some of the Foreign 

Born Who Have Been in the 

United States for Less Than 

One Year

Remittance estimation in the balance of payments framework generally 

separates remitters by their length of residency in host countries. All 

remittances are presumably sent by the foreign born who have been in the 

host country for greater than one year, while those that are in a country for 

less than a year are presumed to be temporary, earning only compensation. 

For this reason, some experts compile remittances as the sum of (1) the 

remittances sent by those in country greater than a year and (2) the 

compensation for those in-country for less than a year. In its description of 

its revised methodology, BEA states that it excludes transfers by the 

foreign born who have been in the United States for less than 1 year from 

its measure of remittances; however, BEA uses a U.S.-residency-duration 

grouping of 0-5 years in its personal remittances calculation. It thus 

includes both employees who are in the United States for less than or equal 

to 1 year, and migrants who are in the United States for more than a year, in 

its estimates of personal remittances. Our analysis determined that BEA’s 

estimates of remittances are therefore potentially overstated by up to $377 

million because they include estimates for approximately 467,000 foreignborn individuals who were in their first year of residency in the United 

States, according to 2003 ACS data. 

Other Entities Use 

Different Estimation 

Methodologies 

Resulting in a Range of 

Remittance Estimates

Some central banks and IDB use a variety of methodologies and data 

sources to estimate remittances.12 The central banks of Mexico and the 

Philippines, two of the major recipients of remittances from the United 

States, track funds coming into their countries. The IDB, a multilateral 

organization that provides financing for economic, social, and institutional 

development projects for Latin America and the Caribbean, estimates 

remittances on a regional basis—primarily through the use of surveys. The 

remittance estimates produced by these methodologies vary from each 

other and from BEA’s estimates, thus further illustrating the dependency of 

estimates on their methods and data.

12We also met with the Asian Development Bank and the African Development Bank; 

however, these multilateral institutions did not estimate remittances for their respective 

regions.
Page 16 GAO-06-210 International Remittances

Central Banks of Mexico 

and the Philippines Track 

Remittance Flows into Their 

Countries

The Central Bank of Mexico, known as the Banco de México (Banxico), 

tracks remittance flows to Mexico with the help of a regulatory reporting 

requirement on money transmitters. Since 2003, Mexico’s methodology for 

estimating remittances has required firms that receive remittances to 

report the amount of money received and the number of transactions 

conducted between the United States and Mexico on a monthly basis. A 

Banxico official stated that the firms’ systems that channel the information 

to Banxico are designed to transfer money from person to person and that 

the firms make the determination if a transaction is a person-to-person 

transfer. He stated that these systems are not efficient enough for 

commercial transactions; the likelihood that other types of transactions 

may be getting into the systems is negligible because the systems that have 

been developed are designed for personal remittances. The Banxico official 

stated that Banxico is confident in its estimates because it believes the vast 

majority of firms (about 90 percent) are reporting and, while some 

transactions that are not personal remittances may be getting through, this 

is a very small portion. To track remittances through informal channels 

such as couriers, at the U.S.-Mexico border Banxico conducts a survey of 

Mexicans returning to visit relatives. The survey asks questions about 

funds and goods they are bringing to relatives. However, these individuals, 

according to the Banxico official, are often reluctant to answer these 

questions. 

The Philippine government has established a formal program whereby it 

registers and tracks its resident Overseas Filipino Workers (OFW). This 

program provides data to the government on the type of employment these 

workers obtain as well as their salaries. The Philippine central bank, 

known as the Bangko Sentral ng Pilipinas (BSP), estimates remittances 

channeled into banks, which are already net of living expenses of these 

workers. However, BSP officials caution that the country source data are 

not truly reflective of remittances coming from a country, particularly from 

the United States, because most remittance centers for OFWs (e.g., Saudi 

Arabia, Japan, and Taiwan) send funds through correspondent banks in the 

United States, which then send the funds to banks in the Philippines. The 

BSP only captures the most immediate source of OFWs’ funds coming into 

the Philippines, primarily U.S. correspondent banks. Thus, this 

methodology overstates the funds being remitted from the United States to 

the Philippines because it includes funds from other countries, not just 

from Filipino workers in the United States. 

The BSP also recently revised its methodology to track remittances that 

flow outside of banks using results of the Survey of Overseas Filipinos. 
Page 17 GAO-06-210 International Remittances

Specifically, these remittances are funds sent by OFWs through friends and 

relatives, or amounts brought in by OFWs when they return home. This 

revision caused the BSP to increase its overall estimate of remittances into 

the Philippines by $1.7 billion (20 percent) in 2004. BSP officials stated that 

they are in the process of updating prior years’ figures.13

The primary advantages of these tracking methodologies are that they 

capture actual or projected remittance flows, as well as rapid or sudden 

changes in the characteristics of remitters—such as the average amount 

remitted or the frequency of remitting. However, these methods are limited 

in their ability to capture remittances sent through the informal sector and 

to distinguish between personal remittances and other types of personal 

business transactions when money transfer operators and banks do not 

correctly code the remittance transactions.

The IDB Uses a Variety of 

Sources to Estimate 

Remittances Flows to Latin 

America and the Caribbean

Since the year 2000, the Multilateral Investment Fund (MIF) of the IDB has 

been studying the issue of remittances and their impact on the 

development of the Latin American and Caribbean region. In addition to 

using its own researchers, MIF’s methodology uses remittance information 

collected by other researchers. The IDB remittance estimates for selected 

Latin American and Caribbean countries are obtained from a combination 

of sources consisting of estimates from selected central banks of recipient 

member countries judged to have reasonable remittance estimates, 

transaction information from remittance transfer companies to selected 

countries, and information obtained from surveys of remittance senders in 

the United States and remittance recipients in Latin American and 

Caribbean countries. IDB officials stated that they compare the remittance 

estimates that they derive from their surveys of remittance recipients in 

Latin America and the Caribbean with the estimates from the central banks 

of these countries. These officials also stated that these surveys have 

allowed them to estimate remittances these countries have received from 

the United States. According to IDB officials, for countries for which they 

have not conducted an in-country survey, they use data collected from 

establishments that facilitate money transfers to each country. These 

13The BSP also reports on two categories of OFWs—those that work overseas for more than 

one year, which they report as workers’ remittances, and those who work for less than one 

year overseas, which they categorize as “compensation of employees.” The BSP officials 

told us they did this to comply with standards set by the IMF for balance of payments 

compilations.
Page 18 GAO-06-210 International Remittances

officials indicated that data were obtained from a sample of 45 moneytransfer businesses involving approximately 14 countries. The amount and 

frequency of the average remittance sent by residents from the survey 

countries was used to estimate the total remittance outflow to each 

country, according to IDB officials. They also indicated that MIF staff work 

with the researchers to reconcile the various estimates and arrive at 

country-specific estimates they believe are fairly accurate. For a more 

detailed description of IDB’s methodology, see appendix IV.

The advantage of using this method to estimate remittances is that the 

information is obtained from establishments that have a vested interest in 

maintaining accurate data on the amount and volume of remittances. 

However, estimates relying on reporting of information from remittance 

providers in the formal financial sector—such as money transfer 

operators—cannot account for remittances sent through the informal 

sector (e.g., by couriers or hawalas). In addition, they may not be able to 

distinguish between personal remittances and other types of personal 

business transactions if the money transfer operators and banks do not 

code the remittance transactions correctly. Although the consumer surveys 

IDB used to derive its estimates collect information directly from 

remittance senders and receivers, such surveys are difficult to administer 

because remittance senders may be reluctant to participate in the surveys 

due to language barriers, legal status, and lack of experience with 

institutions that administer surveys. IDB officials also stated that surveys 

only reach individuals with telephones. In addition, with these surveys 

there often is a discrepancy between the amount of funds remittance 

senders claim to send and the amount remittance recipients claim to 

receive. Finally, these surveys can be more costly due to the need to hire 

experienced survey firms with bilingual staff.

Remittance Estimates Made 

by These Entities Vary

The central banks of Mexico and the Philippines, the IDB, and BEA use 

different methodologies to estimate remittances, resulting in a range of 

estimates. For example, in 2003, the Mexican central bank estimated that 

Mexico received about $13.4 billion in remittances from the United States 

and the IDB estimated that Mexico received almost $12.9 billion in 

remittances from the United States. In 2003, BEA estimated the amount of 

remittances from the United States to Mexico at $8.9 billion.14 In terms of 

14BEA’s estimate for Mexico does not include $6.7 billion in compensation of employees for 

the foreign born from Mexico that were in the United States for less than one year in 2003.
Page 19 GAO-06-210 International Remittances

remittances from the United States to Latin America and the Caribbean, in 

2003, the IDB estimated this to be $30.1 billion. Although BEA does not 

publish remittance estimates by region, we aggregated BEA’s country-bycountry tabulations to estimate remittances to Latin America and the 

Caribbean, and found this to be $17.9 billion.

We found that the reasons for the large discrepancies in the IDB and BEA’s 

estimates for Latin America and the Caribbean were primarily due to 

differences in population size, the percentage of persons that remit, and the 

average remittance amount per year each used. Our analysis of BEA 

estimates of remittances from the United States in 2003 to 21 countries for 

which IDB also makes estimates show that BEA assumes that 54 percent of 

the foreign born population remits an average of $2,076 per year as shown 

in table 3.15 BEA assumes that the percentage of adult foreign born that 

remit varies by duration of stay and the absence or presence of children in 

the household. To determine the $2,076 that is, on average, remitted per 

year, we used information from BEA's underlying tabulations and 

calculated the average remittance per person for the 21 countries. BEA 

assumes that the percent of income remitted varies by the presence or 

absence of children, the type of countries of birth (according to economic 

development), and proximity to the United States. In contrast, based on our 

analysis of IDB’s survey results, 70 percent of percent of adult foreign-born 

Hispanics remit and on average, they remit $3,024 per year, as shown in 

table 3.

15The 21 countries are Argentina, Belize, Bolivia, Brazil, Colombia, Costa Rica, the 

Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, 

Mexico, Nicaragua, Panama, Peru, Trinidad & Tobago, Uruguay, and Venezuela. We 

calculated the weighted average of the percentage of adult foreign-born remitters BEA uses 

for the 21 countries in Latin America and the Caribbean.
Page 20 GAO-06-210 International Remittances

Table 3: Comparison of BEA and IDB Estimates of Remittances to 21 Latin American 

and Caribbean Countries, 2003

Source GAO.

a

The IDB stated that U.S.-born adult Hispanics do not send remittances.

b

Not applicable.

c

The IDB survey of remitters in the United States found that 61 percent of all 16.7 million Hispanics 

(10.2 million) in the United States remit funds. However, when the U.S.-born adult Hispanics are 

subtracted from this population—because IDB officials state that they do not remit—then 10.2 million 

of the 14.7 million foreign-born Hispanics (70 percent) remit funds to their home countries.

BEA Is Involved in 

International Efforts to 

Improve the Collection 

and Reporting of 

Remittance 

Information

BEA is involved in international efforts that began in January 2005 to try 

and improve upon the collection and reporting of remittance data; 

however, it is too early to tell how successful these initiatives will be. 

Currently, remittance data are incomplete and cannot be reconciled 

because of inconsistency in the various institutions’ methods of collecting 

and reporting remittance data. Recognizing the importance of remittances 

and the need for improved data, the governments of the G8 at the Sea 

Island Summit in 2004 called for the establishment of a working group to 

improve remittance statistics. BEA is an active member of an international 

group supporting this effort, which recommended an agreed upon 

definition of remittances. In June 2006, a new group will also start an effort 

to improve guidance on collecting and reporting remittance data. BEA 

expects to be invited to serve on this group.

Number in the population (in millions)

BEA IDB

14.7

(Total adult 

foreign 

born)

16.7

(Total adult 

Hispanic 

population)

Less adjustment to exclude U.S.-born Hispanics who have 

been found not to remita

 (in millions) NAb 2.0

Adjusted number of Hispanic foreign-born population 14.7 14.7

Number of Hispanic foreign born who remit 7.8 10.2

Implied percentage of Hispanic foreign born who remit 54% 70%c

Average annual remittance sent $2,076 $3,024

Total estimated remittances to 21 Latin American and 

Caribbean countries (in billions) $16.3 $30.8
Page 21 GAO-06-210 International Remittances

International Estimates of 

Remittances Are Incomplete 

and Do Not Reconcile 

The international estimates of remittances vary by the methods used and 

the coverage, quality, and reliability of the data, making comparisons of 

such estimates difficult. In principle, the combined inflows and outflows 

for all countries should equal zero—as the outflows from one country or 

international organization become the inflows of another. However, many 

countries do not provide information on both remittance inflows and 

outflows, resulting in global remittance figures that do not reconcile. 

Figure 4 shows the remittance inflows (credits) and outflows (debits) from 

1990 through 2003. If global remittance figures reconciled, the lines in this 

figure would be the same. However, as can be seen from the figure, while 

the lines were fairly close prior to 1998, since then they have diverged with 

countries showing remittance inflows (primarily developing countries) 

larger than remittance outflows (primarily developed countries). 

Figure 4: Differences between Global Remittance Credits and Debits, 1990-2004

The IMF accepts member countries’ estimates of remittances at their face 

value because, according to IMF officials, all methods of estimating 

remittances have their weaknesses. According to IMF officials, the choice 

of methodology is primarily related to the availability of resources. IMF 

officials indicated that they were not aware of any country that has 

Outflows

(debits)

Inflows

(credits)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Dollars (constant) in billions

Source: IMF balance of payment statistics.

0

20

40

60

80

100

120
Page 22 GAO-06-210 International Remittances

institutionalized household surveys to generate remittance data. 

Remittance estimates submitted by IMF member countries do not reveal 

the methodologies used for the estimates. However, according to IMF 

officials, most countries report their remittances as residuals of existing 

data; others simply do not report remittances. 

International Working 

Group Was Established in 

2005 to Improve Remittance 

Data

In 2004, at the annual G8 meeting in Sea Island, Georgia, leaders of the G8 

countries recognized the important role remittances play and called upon 

international financial institutions such as the World Bank and the IMF to 

lead a global effort to improve remittance statistics. As a result, the World 

Bank, IMF, and the United Nations formed the International Working Group 

on Improving Data on Remittances. This group delegated the tasks of 

clarifying concepts and definitions on remittances and addressing 

compilation issues to other groups. The working group met in January 2005 

and included BEA and representatives from key remittance-sending 

countries, one key remittance-receiving country, and the Organization for 

Economic Cooperation and Development. 

The working group’s first objective was to clarify the definition of 

remittances. The group agreed that the United Nations Technical Subgroup 

on the Movement of Natural Persons (TSG), of which BEA is a member, 

should be the forum to discuss improvements in concepts and definitions 

for remittances. The TSG recommended, among other things, that the 

“workers’ remittances” item in the balance of payments be replaced with a 

new component called “personal transfers,” which would include all 

current transfers (in cash or in kind) sent or received by resident 

households to or from nonresident households. This new component 

would not be based on employment or migration status and would resolve 

the inconsistencies associated with “workers’ remittances.”16 This new 

definition was discussed at the June 2005 meeting of the IMF Committee on

16The TSG also proposed “net compensation” of employees to be compensation paid to 

persons working abroad for less than one year in the host country, less taxes on income, 

social security contributions, and travel and passengers’ transportation related to the shortterm employment. 
Page 23 GAO-06-210 International Remittances

Balance of Payments Statistics.17 BEA officials stated that they have begun 

using this new definition; however, it will be included in the publication of 

the revised Balance of Payments Manual, which is scheduled to be 

completed in 2008.

The second objective of the working group was to improve guidance on 

collecting and compiling remittance statistics, including the use of 

household surveys, if needed. The working group agreed that it would be 

useful to form a core group of compilers to review methods and develop 

more detailed guidance for compiling remittances data. Eurostat, the 

statistical office of the European Communities, offered to host the first 

meeting in June 2006 in Luxembourg, thereby creating the “Luxembourg 

Group,” which includes the World Bank and IMF’s statistics department. 

The Luxembourg Group will review, among other things, the extent to 

which household survey data can be used to improve balance of payment 

statistics. BEA expects to be invited to serve on this group. According to 

the IMF, the prerequisite to the group’s success is the commitment of 

national compilers to share their methodologies. The progress of this group 

will be reviewed by the IMF Committee on Balance of Payments Statistics, 

of which BEA is a member. No date has been set for this group to complete 

its work.

In the meantime, the international working group will coordinate with a 

recent project conducted by the Center for Latin America Monetary Studies 

to improve central bank remittance reporting and procedures. This project 

is supported by the MIF. The final report of the working group is to be 

presented by the end of September 2006, so that initial work of the 

Luxembourg Group can be incorporated.

Observations In recent years, remittances have received growing attention from policy 

makers because major industrial countries began to understand the 

magnitude and importance of these flows to developing countries. By their 

nature, remittance flows are difficult to measure. Some remittances move 

17The IMF Committee on Balance of Payments Statistics was established in 1992 to (1) 

oversee the implementation of the recommendations from other IMF groups investigating 

the principal sources of discrepancy in global balance of payments statistics published by 

the IMF, (2) advise the IMF on methodological and compilation issues in the context of 

balance of payments and international investment position statistics, and (3) foster greater 

coordination of data collection among countries. The BEA is a member of this committee.
Page 24 GAO-06-210 International Remittances

through informal channels that official data often cannot easily or reliably 

measure. Countries define remittances differently and use various 

methodologies to estimate them; it is therefore not surprising that 

estimates vary widely. 

Although there are international efforts in which BEA participates to 

improve remittance statistics, two issues suggest the challenges facing 

these efforts. First, current remittance data are incomplete globally and 

cannot be easily reconciled because of the inconsistency in the methods of 

collecting and reporting remittance data. Second, for source countries, 

remittances constitute a small share of their overall economy—thus there 

may not be enough incentives for these countries to improve their 

remittance estimates. For recipient countries, remittances constitute a 

larger share of the economy; but these countries lack the resources to 

improve their statistics. International efforts to improve remittance 

statistics have begun recently, and it is too soon to tell whether these 

efforts will improve the accuracy of remittance statistics.

In the United States, remittance estimates are important for agencies such 

as Treasury and the Federal Reserve; more accurate remittance estimates 

could help them better target their financial infrastructure and automatedclearinghouse remittances programs. With better data on remittances, the 

U.S. government could make better decisions about how much (and what 

kind) of development assistance to provide, and U.S. companies could 

make better decisions regarding foreign direct investment. As remittance 

flows from the United States continue to grow, U.S. policy makers may 

want to explore options for improving the accuracy of U.S. remittance 

statistics—such as conducting a new survey to determine the remitting 

behavior of U.S. immigrants, or adding specific questions to current 

government surveys to obtain better information.

Agency Comments and 

Our Evaluation

The Departments of Commerce and the Treasury provided written 

comments on the draft report, which are reproduced in appendixes V and 

VI, respectively. Commerce also provided technical comments, which we 

incorporated into the report as appropriate.

Treasury concurred with our observations, especially on the need for more 

accurate remittance data to provide policy makers with the information 

necessary to improve their decision-making process. Commerce concurred 

with most of our observations. Specifically, they concurred that estimates 

of remittances from the United States derived by BEA and those of foreign 
Page 25 GAO-06-210 International Remittances

governments and international organizations differ substantially and that 

there are several methodological reasons for these differences. Commerce 

also concurred that more accurate estimates would enable users of 

remittance data to make better informed decisions. 

Commerce, however, stated its view that BEA’s estimates are lower than 

most of the others we discuss because we compare BEA’s estimate of 

personal gifts to foreign residents (personal transfers) with much broader 

estimates of remittances, which include compensation paid to foreign 

workers who are temporarily employed in the United States. Commerce 

believes that a substantial portion of the differences between BEA’s 

estimates and those of other government or international organizations is 

accounted for by this definitional difference. Contrary to Commerce’s view, 

compensation paid to foreign workers temporarily employed in the United 

States was not included in the remittances estimates with which we 

compared BEA’s personal transfers estimates. We therefore do not believe 

that the differences among the estimates we discuss in our report are due 

to this definitional difference. Commerce further stated that some 

countries may overestimate their receipts of remittances from the United 

States because remittances may be channeled through banks in the United 

States from remitters not living in the United States. Of the countries we 

discuss in this report, we found this only to be true for the Philippines and, 

for this reason, we do not compare BEA’s remittances estimate to that of 

the central bank of the Philippines. As we discuss in our report, efforts are 

underway to improve remittance statistics, which may help make estimates 

more comparable in the future.

We are sending copies of this report to the Department of Commerce, 

Treasury, the Chairman and Ranking Minority Member of the House 

Committee on Financial Services, and other interested congressional 

committees. We will also make copies available to others on request. In 

addition, this report will be available at no cost on our Web site at 

http://www.gao.gov. 

If you or your staff have any questions regarding this report, please contact 

me at (202) 512-2717 or jonesy@gao.gov. Contact points for our offices of 

Congressional Relations and Public Affairs may be found on the last page 
Page 26 GAO-06-210 International Remittances

of this report. GAO staff who made major contributions to this report are 

listed in appendix VII.

Yvonne D. Jones

Director, Financial Markets

and Community Investment
Page 27 GAO-06-210 International Remittances

Appendix I

Objectives, Scope, and Methodology AAppenednxidexiIs

Our reporting objectives were to examine (1) the methodology the Bureau 

of Economic Analysis (BEA) uses to develop the official U.S. estimates on 

the volume of remittances from the United States, (2) methodologies used 

by other countries and multilateral institutions to estimate remittances 

from the United States, and (3) international efforts to improve the 

collection and reporting of remittance data. 

To understand the methodology BEA used to derive its estimate of 

remittances from the United States, we met several times with BEA 

officials responsible for developing the estimate. They provided us with the 

2003 estimate on the total volume of remittances from the United States to 

the rest of the world—and explained how they provide this number to the 

International Monetary Fund (IMF)—so that the U.S. figures can be 

presented in the IMF’s balance of payments statistics. We also obtained 

documentation describing BEA’s methodology before 2005, including BEA’s 

Survey of Current Business and other written documentation. BEA 

officials provided us with examples of the various data used in their model 

to calculate their remittance estimate. In addition, we provided BEA with 

numerous follow-up questions about their methodology, and they provided 

us with written responses. To understand BEA’s revised methodology, we 

obtained relevant documentation from BEA and provided follow-up 

questions to BEA. We also met with the U.S. Census Bureau to understand 

the data underlying BEA’s methodology for estimating remittances. To 

understand how we evaluated the statistical reliability of BEA’s estimate for 

2003, see appendix III. We interviewed remittance experts from the IMF, 

World Bank, Inter-American Development Bank (IDB), and academia to 

obtain their views on BEA’s (and alternative) methodologies. 

To understand the methodologies used by other countries and multilateral 

institutions to estimate U.S. remittances to specific countries and regions, 

we met with officials from the IDB and their external consultant, the Asian 

Development Bank, the African Development Bank, as well as the Mexican 

and Philippine Central Banks. The IDB provided remittance estimates from 

the United States to specific countries in Latin America, the Caribbean, and 

to the region as a whole. The Asian and African Development Bank do not 

provide estimates for their respective regions. The Central Bank of Mexico 

provided estimates of remittances received by Mexico from the United 

States, while the Central Bank of the Philippines provided estimates of 

remittances received by the Philippines from the United States. In meetings 

with these entities, we obtained an understanding of the methodologies 

used to estimate remittances, the reasons for using these methodologies, 

and their strengths and potential limitations. We also obtained a report that 
Appendix I

Objectives, Scope, and Methodology

Page 28 GAO-06-210 International Remittances

described IDB’s methodology. Further, we obtained government 

regulations from Mexico and the Philippines to understand what financial 

institutions are required to report to Central Banks so that they can 

estimate remittances. To compare remittance estimates obtained from the 

Mexican Central Bank and IDB with those of BEA, we obtained BEA’s 2003 

estimates of remittances to specific countries. BEA officials cautioned us 

that the estimates to specific countries are less reliable than their overall 

remittance estimate and stated that these numbers should not be 

considered BEA estimates to specific countries.

Given our understanding that remittance estimates vary for a number of 

reasons and that international efforts are under way to improve remittance 

statistics, it was not possible for us to cross check the estimates of 

remittances from the United States against any accurate known amount. 

Because of this, for the purposes of this report, we focused on 

understanding the methodologies used by BEA, IDB, and the Central Banks 

of Mexico and the Philippines, to estimate remittance from the United 

States. We also focused on understanding the strengths and limitations of 

the methodologies of the BEA and the other entities to obtain a better 

understanding of the reasonableness of their approaches to estimating 

remittances. We presented BEA’s estimates and the estimates of IDB and 

the Central Bank of Mexico to show the range of estimates generated from 

different methodologies, rather than as a statement of their being precise 

measurements of remittances. We chose not to present the Central Bank of 

the Philippine’s estimate of remittances because central bank officials 

stated that their current methodology could not be used to report on 

remittances solely received from the United States.

To obtain a global perspective on international efforts to improve the 

collection and reporting of remittances, we met with officials from the IMF, 

World Bank, IDB, Asian Development Bank, African Development Bank, 

and experts in the field of remittances. We reviewed IMF documents on 

remittances as they are discussed in the balance of payments framework 

and reviewed IMF balance of payments statistics to get a sense for which 

countries regularly report on remittances. We obtained limited 

documentation (e.g., minutes from meetings) on international efforts to 

improve the collection and reporting of remittances. BEA and the U.S. 

Department of the Treasury (Treasury) also provided us with descriptions 

of these international efforts and identified the U.S. government officials 

that participate in these international bodies.
Appendix I

Objectives, Scope, and Methodology

Page 29 GAO-06-210 International Remittances

Our work was performed in San Francisco, California; and Washington, 

D.C., from December 2004 to March 2006 in accordance with generally 

accepted government auditing standards.
Page 30 GAO-06-210 International Remittances

Appendix II

BEA’s Methodology for Estimating 

Remittances ApendxiI

BEA’s model to estimate remittances combines data on the number of the 

adult foreign-born population living in the United States, the percentage of 

the adult foreign-born population that remits, the income of the adult 

foreign-born population, and the percentage of income that is remitted by 

the adult foreign-born population.1

 BEA first multiplies the foreign-born 

population, arrayed by selected demographic characteristics, by the 

percentage of the foreign-born population that remits to obtain the 

population of remitters. BEA then multiplies the average per capita income 

of the foreign-born population by the percentage of income remitted by 

those who remit to obtain per capita remittances. Finally, BEA multiplies 

per capita remittances by the population of remitters to obtain total 

personal transfers. 

BEA obtains estimates on the adult foreign-born population by place of 

birth and their average income from the American Community Survey 

(ACS), arranged by duration of stay in the United States, gender, and 

presence of children in the household. BEA obtains estimates of the 

percentage of the adult foreign-born population that send remittances to 

their country of origin from various academic studies, in addition to the 

1989 Legalized Population Survey (LPS1) and the 1992 Legalized 

Population Follow-Up Survey (LPS2); however, the estimates it uses cannot 

be directly tracked to these source documents. BEA obtains these 

proportions by making assumptions based on its judgment. BEA assumes 

that the place of birth of the adult foreign-born population does not affect 

the likelihood of remitting but that it does affect the percentage of income 

remitted. BEA also assumes that, once the presence of children in the 

household and the duration of stay are accounted for, men and women are 

equally likely to remit. In effect, only the presence of children in the 

household and the duration of stay determines the percentage of the adult 

foreign-born population that remit to their countries of birth under these 

assumptions, as shown in figure 5.

1

As indicated earlier, this report only focuses on personal transfers, which we are calling 

remittances.
Appendix II

BEA’s Methodology for Estimating 

Remittances

Page 31 GAO-06-210 International Remittances

Figure 5: BEA Values for the Percentage of the Adult Foreign-Born Population in the 

United States That Send Remittances

To determine the percentage of income that the adult foreign-born 

population remits, BEA makes assumptions about the development status 

and proximity of the country of origin of the adult foreign-born population, 

along with the presence of children in the U.S. household. BEA groups 

countries of origin into four categories indicating their propensity to send 

remittances and representing highest-remitting, high-remitting, mediumremitting, and low-remitting countries of birth. The highest-remitting 

countries are closest to the United States, while other developing countries 

are either high-remitting or middle-remitting, depending on their 

development status. Low-remitting countries are generally developed 

economies. Figure 6 shows that the percentage of income remitted varies 

by the presence of children and country groupings. Although average 

incomes are lower for women than for men, BEA assumes that the 

percentage of income remitted does not vary by gender. Furthermore, BEA 

assumes the duration of stay is negatively associated with likelihood to 

0

10

20

30

40

50

60

70

80

0-5 6-15 16-30 >30

Duration of stay (in years)

Percentage

Source: BEA.

Children present in U.S. household

Children not present in U.S. household

Family type
Appendix II

BEA’s Methodology for Estimating 

Remittances

Page 32 GAO-06-210 International Remittances

remit—but that it has no effect on the percentage remitted. Also, BEA 

assumes that there are no variations in the portion remitted for countries 

designated as low remitting. 

Figure 6: Percentage of Income Remitted by Category 

Table 4 shows the application of BEA’s methodology in estimating 

remittances from the United States in 2003. As can be seen from table 4, 

estimated total remittances are $28 billion. Also, as can be seen in table 4, 

in 2003, the Latin America and Caribbean region was the largest recipient 

region of remittances from the United States. Remittances to Asia and 

Africa represented approximately 24 percent and 4 percent of the total for 

the United States, respectively. 

Remitting countries by level of remittings

Percentage

Source: BEA.

Children present in U.S. household

Children not present in U.S. household

Family type

0

3

6

9

12

15

Highest High Medium Low
Appendix II

BEA’s Methodology for Estimating 

Remittances

Page 33 GAO-06-210 International Remittances

Table 4: Regional and Sub-Regional Remittances in 2003 as Estimated Using BEA’s 

Underlying Country-by-Country Tabulations

Source: GAO calculations using BEA underlying country-by-country tabulations.

Note: BEA officials stated that they would correct the total from $28.2 billion to $28.033 billion.

BEA’s Estimate of 

Remittances Includes 

Remittances from Some of 

the Foreign Born Who Have 

Been in the United States 

for Less Than One Year 

BEA’s revised methodology uses a U.S. residency duration of 0-5 years as its 

first category. This means that it includes both the foreign-born population, 

who are in the United States for less than or equal to 1 year, and those who 

are in the United States for more than a year. The definition of 

“remittances” is the portion of income sent as remittances by those who 

have resided in the United States for more than one year, thus excluding 

the foreign-born population residing in the United States for less than one 

year. BEA’s estimate of remittances is in effect overstated, because it 

Region or sub-region

Estimate of remittances (in millions of 

U.S. dollars)

Africa $1,003

North Africa 236

Africa (other) 768

Latin America and the Caribbean 17,914

Central America 11,487

Caribbean 4,360

South America 2,068

Europe 2,202

European Union 550

Eastern Europe & Transition Countries 1,613

Europe (other) 39

Asia 6,616

Eastern Asia 1,585

Southern Asia 1,613

South-Eastern Asia 3,055

Near East 313

Asia (other) 49

Oceania 103

Australia & New Zealand 26

Oceania (other) 77

North America 194

Total $28,033
Appendix II

BEA’s Methodology for Estimating 

Remittances

Page 34 GAO-06-210 International Remittances

includes the foreign-born population that has resided in the United States 

for less than a year. In contrast, “compensation of employees” is the wages 

and salaries earned by individuals in economies other than those in which 

they are residents. As a result, compensation of employees, which applies 

only to individuals away from their place of origin for less than a year, may 

be double counted. Furthermore, the inclusion of the foreign born who 

have resided in the United States for less than one year would overstate 

estimates of total remittances (personal remittances and compensation of 

employees) as some portion of the compensation of employees would be 

double counted. BEA officials stated that their objective is to estimate 

remittances for individuals who have been in the United States for more 

than one year and those who have been in the United States for less than a 

year but intend to stay for more than a year. They stated that the ACS 

surveyed only individuals who indicated the United States is their “usual 

place of residence,” which may exclude temporary residents, i.e., those 

who have been in the United States for less than a year.

ACS documents show that individuals are surveyed at their “current 

residence”2

 and that one of the goals of the ACS is to identify whether 

individuals are residing at the “current residence” or their “usual place of 

residence.” Thus, the ACS does not exclude individuals for which the 

United States is not their “usual place of residence.” The ACS manual on 

residency rules states that the term “current residence” is unique to the 

ACS; most other surveys, including the decennial census, use “usual 

residence,” as defined as the place where a person lives and sleeps most of 

the time or considers to be his or her usual residence. ACS defines current 

residence as one place of residence at any point in time, but this residence 

does not have to be the same place throughout the year. The criteria used 

to determine a person’s current residence is based upon a “2-month rule” 

stating that (1) if a person is staying in a sample unit at the time of the 

survey contact and is staying there for more than 2 months, he or she is a 

current resident of the unit; (2) if a person who usually lives in the unit is 

away for more than 2 months at the time of the survey, he or she is not a 

current resident of the unit; and (3) if anyone is staying in the unit at the 

time of contact who has no other place where they usually stay longer than

2

See American Community Survey: Field Representative’s Manual, U.S. Census Bureau, 

July 2004, Chapter 2.
Appendix II

BEA’s Methodology for Estimating 

Remittances

Page 35 GAO-06-210 International Remittances

2 months, he or she is a current resident of the unit regardless of how long 

he or she is staying there.3

We recalculated BEA’s estimates of 2003 remittances excluding the foreign 

born who have resided in the United States for less than a year. This 

calculation resulted in a reduction of $377 million in BEA’s 2003 estimate 

for remittances from the United States (see table 5). 

Table 5: Change in the Estimate of Remittances by Excluding Those in the United 

States for Less Than 1 Year

Correction

Region or sub-region

Corrected 

estimates 

for 2003

(millions of 

U.S. 

dollars)

(Millions 

of U.S. 

dollars)

Percentage 

change

Africa $990 $13.5 1.3%

Latin America and the Caribbean 17,654 260.4 1.5

Central America 11,293 193.6 1.7

Caribbean 4,320 39.8 0.9

South America 2,041 27.0 1.3

Europe 2,174 28.1 1.3

Asia 6,549 67.1 1.0

Oceania 100 3.2 3.1

North America 190 4.1 2.1

Total 27,656 376.5 1.3

Source: GAO calculation using information from the 2003 ACS, and BEA information on underlying tabulation of personal remittances.

Note: Totals may not add due to rounding.

3

ACS residency rules also show that there are only three situations when “current 

residence” is not dictated by the “2-month rule”: pre-college children away in school 

(considered residents of their parental home), children in joint custody agreements 

(considered residents of whomever they are staying with at the time of survey contact), and 

commuter personnel who stay in a residence close to their work but return regularly to 

another residence, usually to be with family (considered to be current residents of the 

family residence and not the work-related residence).
Page 36 GAO-06-210 International Remittances

Appendix III

Analysis of the Sensitivity of BEA’s Estimate 

to Judgmentally Determined Variables on the 

Remitting Behavior of the Foreign Born ApendxiI

BEA publishes single-value estimates of remittances to the rest of the 

world by foreign-born U.S. residents. To evaluate the statistical reliability of 

the estimate for 2003, we derived the estimate’s probable range and its 

corresponding breakdown into regional estimates. To accomplish this, we 

obtained details of the BEA’s underlying tabulations of remittances by 

country. We replicated the BEA methodology to obtain BEA’s estimate for 

the world and for each country in its underlying tabulation. In particular, 

we used BEA’s underlying tabulation and included additional information 

(e.g., the standard deviation and the shape of the distribution of each data 

series) from the sources that BEA primarily used to arrive at its estimate. 

We calculated the respective standard deviations of the values that BEA 

uses for the propensity to remit and the percentage of the foreign born that 

remit. 

BEA uses a variety of sources to estimate the propensity of the foreign born 

to remit and the percentage of the foreign born that remit. However, BEA 

stated that the values chosen cannot be linked to any specific source. BEA 

primarily used the LPS, a survey mandated by the Immigration Reform and 

Control Act of 1986 to estimate the portion of income that the foreign born 

in the United States were likely to remit; thus, we also relied on this data. 

We assumed that the distribution around the means of the variables used in 

the BEA methodology were lognormal to satisfy (1) the nonnegativity of 

the values used and (2) a desired bell-shaped distribution for the estimates. 

We converted the BEA estimation process from one that relied solely on 

the averages of the variables underlying the BEA methodology to one that 

accounts for the variation around the mean and its distribution. We used a 

Monte Carlo statistical technique—a technique that repeatedly and 

randomly samples from the underlying data—to obtain a range of possible 

values for each estimate due to the uncertainty in BEA’s judgmentally 

determined variables on the foreign born propensities to remit and 

percentage of the foreign born that remit. 

Table 6 shows the regional breakdown of BEA’s 2003 estimate and the 

statistically derived range for these estimates. In table 6, we show in the 

column labeled “BEA point estimate”—the regional components of BEA’s 

global estimate in 2003—obtained by aggregating the underlying countryby-country tabulations. We also show in the following two columns the 

range of estimates obtained by our uncertainty analysis, assuming that this 

uncertainty is only due to BEA’s judgmentally determined variables. In 

table 6, BEA reported $28 billion in total remittances from the United 

States for 2003; however, we estimate that the range for 90 percent of the 
Appendix III

Analysis of the Sensitivity of BEA’s Estimate 

to Judgmentally Determined Variables on the 

Remitting Behavior of the Foreign Born

Page 37 GAO-06-210 International Remittances

remittance estimates from the United States would be between $17.3 and 

$35.9 billion. 

Table 6: Range of Estimates in Regional Breakdown of BEA Estimate of Remittances 

in 2003 (20,000 trials)

BEA point 

estimate 

(millions of 

U.S. dollars)

90 percent of range of 

estimates when the 

uncertainty is due to 

BEA judgmentally 

determined variables

Africa $1,003 $510 - $1,547

North Africa 236 112 - 368

Africa (other) 768 394 - 1,196

Latin America and the Caribbean $17,914 $10,020 - $24,842

Central America 11,487 6,233 - 16,611

Caribbean 4,360 2,372 - 5,852

South America 2,068 1,252 - 2,637

Europe $2,202 $1,226 - $2,932

European Union 550 242 - 795

Eastern Europe & Transition Countries 1,613 847 - 2,322

Europe (other) 39 19 - 53

Asia $6,616 $3,702 - $9,372

Eastern Asia 1,585 907 - 2,154

Southern Asia 1,613 898 - 2,371

South-Eastern Asia 3,055 1,474 - 4,832

Near East 313 170 - 450

Asia (other) 49 23 - 75

Oceania $103 $58 - $144

Australia & New Zealand 26 13 - 39

Oceania (other) 77 38 - 118

North America $194 $101 - $264

Total $28,033 $17,265 - $35,909

Source: GAO calculations using the underlying tabulations of BEA’s 2003 remittance estimate.

Note: Totals may not add due to rounding. Uncertainty in BEA judgmentally determined variables 

means uncertainty due to the propensity of the foreign born to remit and the percentage of the foreign 

born that remit. BEA relies on estimates of the propensity to remit of the foreign born and the 

percentage of the foreign born that remit from a variety of sources, but states that the values chosen 

cannot be linked to any specific source. The 90-percent range excludes the highest and lowest 5-

percentile of estimates to reduce the effects of outliers.
Page 38 GAO-06-210 International Remittances

Appendix IV

IDB Remittance Estimation Methodology ApendxiIV

To estimate remittances from the United States to Latin America in 2003, 

the IDB contracted researchers to survey Latin Americans aged 18 years or 

older and living in the United States. These researchers queried Latin 

American immigrants living in various states of the United States about 

their remittance experiences. The survey interviewed 3,802 households in 

37 states and the District of Columbia from January through April 2004.1

The survey showed that 61 percent of Latin Americans send remittances to 

their countries of origin, sending an average of $240 approximately 12.6 

times per year. IDB extrapolated the results of the survey to the total 

population of adult Latin American immigrants in the United States—

estimated at 16.9 million in 2003—and estimated remittances from the 

United States to Latin America to be $30.1 billion for that year. Figure 7 

provides a diagram of the methodology IDB used to arrive at the $30.1 

billion estimate. According to IDB, the estimate captured remittance flows 

through the formal and informal sectors. The IDB also used the survey to 

estimate remittances from each of the 37 states and the District of 

Columbia. To obtain the state-by-state remittance estimates, the IDB 

obtained estimates for the average amount remitted and the number of 

times sent in one year by the Latin American immigrant population in each 

state and the percentage of the Latin American immigrant population in 

each state that sends remittances.

Figure 7: IDB Methodology for Estimating Remittances from the United States to 

Latin America, 2003

1

The margin of error was plus or minus 2 percent, according to IDB. The survey did not 

include remittances to Haiti and the English-speaking Caribbean.

Adult

Hispanic

population

Percentage of

Hispanic

population

that remits

x x

Average

dollar

amount per

remittance

Average

frequency an

individual

remits per

year

Population of remitters Per capita remittance Total x = remittance

Step 1 Step 2 Step 3

Source: IDB.
Appendix IV

IDB Remittance Estimation Methodology

Page 39 GAO-06-210 International Remittances

The IDB remittance estimates for selected Latin American and Caribbean 

countries are obtained from a combination of sources consisting of 

estimates from selected central banks of recipient member countries 

judged to have reasonable remittance estimates, transaction information 

from remittance transfer companies to selected countries, and from 

information obtained from researchers’ surveys of remittance senders in 

the United States and remittance recipients in Latin American and 

Caribbean countries. According to IDB officials, for countries where no incountry survey has been conducted, data from establishments facilitating 

money transfers to each country was used. These officials indicated that 

data were obtained from a sample of 45 money transfer businesses to 

approximately 14 countries. The amount and frequency of the average 

remittance sent by residents from the survey countries was used to 

estimate the total remittance outflow to each country, according to IDB 

officials. They also indicated that Multilateral Investment Fund (MIF) staff 

work with the researchers to reconcile the various estimates and arrive at 

country-specific estimates. Table 7 shows the IDB estimate of remittances 

that 21 Latin American and Caribbean countries received in total in 2003, 

and from the United States the same year.

Table 7: IDB/MIF Estimates of Remittances to Latin American and Caribbean 

Countries, 2003

Country

IDB/MIF 

estimate for 

total 

remittances

(in millions of 

U.S. dollars)

IDB/MIF estimate 

for remittances 

from the U.S.

(in millions of U.S. 

dollars)

Remittances 

from the U.S. 

as a 

percentage of 

the total 

Argentina $225 $180 80%

Belize 73 58 79

Bolivia 340 240 71

Brazil 5,200 2,600 50

Colombia 3,067 2,147 70

Cost Rica 306 245 80

Dominican Rep. 2,217 1,773 80

Ecuador 1,656 994 60

El Salvador 2,316 2,085 90

Guatemala 2,106 1,685 80

Guyana 137 109 80

Haiti 977 879 90
Appendix IV

IDB Remittance Estimation Methodology

Page 40 GAO-06-210 International Remittances

Source: IDB/MIF, Sending Money Home: Remittances to Latin America and the Caribbean, Washington, D.C.: (May 2004).

As indicated earlier, the IDB and BEA used different methodologies to 

estimate remittances, resulting in a range of estimates. While, in most 

cases, BEA provides only a global estimate of remittances and not bilateral 

estimates, BEA provided us with country-by-country tabulations that 

enabled us to construct estimates for the same 21 countries that IDB 

provided estimates for in 2003. As shown in table 8, IDB and BEA’s 

estimates vary; IDB’s estimates in general tend to be higher than estimates 

from BEA’s underlying country tables. However, for Guyana, Panama, and 

Trinidad and Tobago, BEA’s estimates are higher. The last column 

computes the difference between the estimates for each country as a 

percentage of the average of the estimates.2

 The average percentage 

difference is 72 percent, with a low of 7 percent for Jamaica and a high of 

168 percent for Brazil.

Honduras 862 775 90

Jamaica 1,425 1,069 75

Mexico 13,266 12,868 97

Nicaragua 788 709 90

Panama 220 176 80

Peru 1,295 777 60

Trinidad & Tobago 88 71 81

Uruguay 42 29 69

Venezuela 247 173 70

Sub-Total 36,853 29,642 80

Rest of Latin America and 

Caribbean countries 1,240 992 80

Latin America and 

Caribbean Total $38,093 $30,634 80

2

For example, the difference between IDB and BEA remittance estimates for Argentina is 

$81 million. The average remittance estimate is (180+99)/2 = $139.5 million. The fraction 

(81/139.5) is about 58 percent.

(Continued From Previous Page)

Country

IDB/MIF 

estimate for 

total 

remittances

(in millions of 

U.S. dollars)

IDB/MIF estimate 

for remittances 

from the U.S.

(in millions of U.S. 

dollars)

Remittances 

from the U.S. 

as a 

percentage of 

the total 
Appendix IV

IDB Remittance Estimation Methodology

Page 41 GAO-06-210 International Remittances

Table 8: Percentage Difference between BEA and IDB Estimates of Remittances 

from the United States to Selected Latin American and Caribbean Countries, 2003

Source: GAO analysis of information provided by IDB/MIF and BEA.

Millions of dollars

IDB estimate of 

remittances 

from the U.S.

Estimates from 

BEA underlying 

country tables

Percentage 

difference between 

IDB and BEA 

estimates

Argentina $180 $99 58%

Belize 58 43 30

Bolivia 240 98 84

Brazil 2,600 223 168

Colombia 2,147 740 98

Cost Rica 245 99 85

Dominican Rep. 1,773 700 87

Ecuador 994 478 70

El Salvador 2,085 1,013 69

Guatemala 1,685 611 94

Guyana 109 255 80

Haiti 879 630 33

Honduras 775 308 86

Jamaica 1,069 992 7

Mexico 12,868 8,905 36

Nicaragua 709 290 84

Panama 176 217 21

Peru 777 290 91

Trinidad & Tobago 71 205 97

Uruguay 29 22 28

Venezuela 173 61 96
Page 42 GAO-06-210 International Remittances

Appendix V

Comments from the Department of 

Commerce ApendxiV

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.
Appendix V

Comments from the Department of 

Commerce

Page 43 GAO-06-210 International Remittances

See comment 1.
Appendix V

Comments from the Department of 

Commerce

Page 44 GAO-06-210 International Remittances

See comment 2.

Now on page 2.

See comment 3.

Now on page 2.

See comment 4.

Now on page 4, 36-37.

See comment 5.
Appendix V

Comments from the Department of 

Commerce

Page 45 GAO-06-210 International Remittances
Appendix V

Comments from the Department of 

Commerce

Page 46 GAO-06-210 International Remittances

Now on pages 4, 15, and 

33-35.

See comment 6.

Now on pages 33-34.

Now on page 15.
Appendix V

Comments from the Department of 

Commerce

Page 47 GAO-06-210 International Remittances

Now on page 8.

See comment 7.
Appendix V

Comments from the Department of 

Commerce

Page 48 GAO-06-210 International Remittances

Now on page 22.

See comment 8.

Now on pages 23-24. 

See comment 9.
Appendix V

Comments from the Department of 

Commerce

Page 49 GAO-06-210 International Remittances

The following are GAO’s comments on the Department of Commerce’s 

March 10, 2006, letter.

GAO’s Comments 1. BEA commented on the Highlights page that the IDB estimates differ 

from BEA’s estimates because the IDB estimate includes “net 

compensation” of foreign workers and the BEA estimate does not. BEA 

also commented that data provided by foreign central banks and 

financial establishments are sometimes overstated because U.S. 

correspondent banks are used in transmitting funds for senders not 

living in the United States. We disagree with BEA on these points. This 

“net compensation” of foreign workers is a new concept that was just 

proposed by the Technical Subgroup on the Movement of Natural 

Persons (TSG) in June 2005, and we are not aware of any remittances 

estimates for 2003 that use this definition. Further, IDB never stated 

that any of the funds accounted for in their estimates came through 

U.S. correspondent banks for workers who were not located in the 

United States. This was true for the Philippines, which we noted in the 

report. BEA also commented that IDB’s estimates are substantially 

derived from data reported from central banks and private money 

transfer establishments. BEA is correct on the latter point and we have 

corrected the Highlights page to be consistent with the letter and 

reflect that IDB uses a variety of sources in making its remittances 

estimates.

2. BEA suggested that we place Mexico in North America or create a 

separate bar in our graphic in the Highlights page for Mexico. In this 

report, we used the United Nations’ Standard Country and Area Codes 

Classification, which places Mexico in Central America.

3. BEA commented that to develop an estimate that corresponds to our 

definition of remittances, we should have used BEA’s estimates of 

personal transfers and compensation of employees, net of their 

expenditures. However, we make it clear in footnote 6 that we are 

focusing only on personal transfers and that we call these remittances 

for the purpose of this report. 

4. BEA states that it has confirmed with the Bank of Mexico that Mexico’s 

estimates of remittances include net compensation of migrant Mexican 

workers in the United States. BEA states that if we added BEA’s net 

compensation of employees figure to its estimate of personal transfers, 

the two figures for 2003 would be closer. As stated above, this new 
Appendix V

Comments from the Department of 

Commerce

Page 50 GAO-06-210 International Remittances

definition was proposed in June 2005, and, to our knowledge, the 

Mexican central bank has not published 2003 figures for “net 

compensation” of employees. The Mexican central bank figures for 

2003 as reported by the IMF in its balance of payments statistics are 

almost $13.4 billion for workers’ remittances, which we use in our 

report, and $1.5 billion in compensation of employees. The $12.9 billion 

estimate BEA attributes in its comments to the Mexican central bank is 

the IDB’s estimate. 

5. BEA commented that the data used in our analysis of the potential 

effects of BEA’s judgmentally determined values in its remittance 

estimating methodology are unclear, as are the particulars of our 

modeling technique. As we stated, we replicated BEA’s methodology 

using its underlying tabulation of remittances by country and included 

additional information from the sources that BEA primarily used to 

arrive at its estimate. BEA further stated that there is a very small 

probability that the BEA estimate would be near the end points of the 

intervals and suggested that we use the midpoint of the intervals 

instead. As explained in appendix III, the purpose of our analysis was to 

show the effect of BEA’s judgmentally determined values on its 

estimate $28.03 billion in 2003. Using a range illustrates the uncertainty 

in BEA’s estimate. BEA also commented on our use of the lognormal 

distribution for the percentage of income remitted and the percentage 

of the adult foreign born population that remit. We chose the lognormal 

distribution because it satisfied the requirements that both of these 

variables were nonnegative and distributed in a bell-shaped curve.

6. BEA commented that we left the impression that BEA’s estimates of 

personal transfers contain a double count of $377 million and that any 

double count that may exist probably involves the compensation of 

employees, not the personal transfers account. We modified the text of 

our report to reflect that BEA’s personal transfers are therefore 

potentially overstated by up to $377 million because BEA’s estimate 

includes remittances sent by some of the foreign born who have been in 

the United States for less than one year.

7. Commerce reiterated its concerns about our comparison between 

BEA’s estimates and those of other organizations. Commerce restated 

its view that the methods used by the Mexican central bank and others 

capture both remittances and compensation of employees and further 

stated that BEA’s estimates for personal transfers and compensation of 

employees should be summed when making these comparisons to 
Appendix V

Comments from the Department of 

Commerce

Page 51 GAO-06-210 International Remittances

other organizations. However, none of the organizations with which we 

compare BEA’s estimates indicated that their methods captured 

compensation of employees, therefore, we believe our comparisons are 

appropriate.

8. BEA states that the TSG now recommends that “personal transfers” 

also include capital transfers. This is incorrect. The paper BOPCOM05/9 states that the TSG agreed to define “personal transfers” as 

consisting of all current transfers in cash or in kind. 

9. BEA disagreed with our statement that remittance data cannot be 

reconciled and stated that, because reconciliation projects are resource 

intensive and difficult, BEA must choose the statistical items it 

reconciles with which trading partners. We concur that reconciliation 

cannot be done easily. However, our observations were on 

reconciliation of remittance data on a global level, not between 

individual countries, as shown in figure 4. The global discrepancy has 

grown in recent years.
Page 52 GAO-06-210 International Remittances

Appendix VI

Comments from the Department of the 

Treasury ApendxiVI
Page 53 GAO-06-210 International Remittances

Appendix VII

GAO Contact and Staff Acknowledgments ApendxiVI

GAO Contact Yvonne D. Jones (202) 512-2717 or jonesy@gao.gov

Acknowledgments In addition to the contact named above, Barbara I. Keller, Assistant 

Director; Gezu Bekele; Tania Calhoun; Lynn Cothern; William R. Chatlos; 

Bruce L. Kutnick; James M. McDermott; Marc M. Molino; José R. Peña; and 

Rachel Seid made key contributions to this report.

(250220)
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