ECONOMYNEXT – Sri Lanka’s remittances coming from its overseas expatriate workers gained 13.9 percent to $587.7 million in October 2024 compared to the same month last year, helped by more expatriates using the official banking channels.
The island nation has expected the remittances to boost much higher after the September 21 election of President Anura Kumara Dissanayake, who’s party has promised to bring more remittances into the country.
The total remittances in the first 10 months of this year also crossed $5.4 billion with a 11.7 percent gain compared to $4.7 billion in the same period in the last year, the latest Central Bank data showed.
Worker remittances are one of the top foreign exchange revenue earners for the island nation which is still recovering from an unprecedented economic crisis hit in 2022.
The remittances have risen continuously after the central bank gave up a parallel exchange rate regime, which compelled most expatriates to switch informal Undiyal and Hawala money transfer methods.
The island nation witnessed a 57 percent jump in remittances coming through formal banking channels to $5.97 billion in 2023, from $3.8 billion a year earlier, helped by elimination of parallel exchange rate.
The island nation has been in the process of sending more migrant workers to bring in higher foreign exchange since the country declared bankruptcy in 2022.
Worker remittances coming through official channels fell sharply in 2021 after many expatriates switched to informal money transferring channels as they were given higher rates than formal banking channels.
The move came after the Central Bank printed to sterilize interventions and keep a policy rate down, triggering parallel exchange rates, which were settled outside the formal banking system.
From April 2022, the interest rates were raised by unprecedented levels, slowing credit and the need to print money to keep rates down.
President Dissanayake’s government has promised to bring down more remittances citing that more expatriate workers would send additional money due to confidence of a clean governance without corruption. (Colombo/November 09/2024)